There’s a new buzz-word in innovative market industry – Pretail, and as it suggests, it denotes services or products that are still at the concept stage, but not yet ready for mainstream retailing.
Pretail products have really taken off in the last couple of years, thanks to crowd-funding sites such as Kickstarter, where, budding inventors, entrepreneurs or literally anyone with a great manufacturing or market idea can ask for investors to back their project.
And with technology taking huge strides every six months or so, there is a real sense of demand for the most current and up-to-date products, and to emphasise just how much money is being channeled through such crowdfunding sites, consider that in 2012, donations & reward-based crowdfunding (which features PRETAIL) grew 85% to an estimated USD 1.4 billion.
So how does Pretailing work?
First you must have the ‘idea’, that elusive product that gets the imagination of investors working, and excites them enough to hand over their money. Now, more than ever before in our history, can anyone set up a company, present a product to the global market, and ask for funding from total strangers.
And this is the beauty of it, because if your idea does not get the required investment needed to take it forward, your product probably would not sell in the industry anyway, so it is a pretty good indication of what people are looking for by how many of them actually believe in the product enough to stake their cash on it.
Another reason why Pretailing is working so well is that historically, people love to come up with an idea first, before anyone else, and if they cannot, they want to be involved with the people who can.
And by ‘prepurchasing’ a stake in the product, the inventor or entrepreneur has a ready-made market who are completely invested in not only making the product work, but will be able to give valuable feedback to ensure a perfect product. It really is a win situation for all involved.
Pretailers also have the added benefit of being only one of several investors, sometimes hundreds, all with a stake in the company, and this shared experience forms a trust amongst not only the investors, but also with the creators.
There is greater transparency within the shared online self built community, and even if the inventor runs off with the money, you still have a pool of willing investors who have a shared vision of where they want to spend their cash.
Plus, as investors can choose exactly how much they want to stake on a product, it is rare than any one amount will be more than a few thousand at best, with many stakes starting at just one dollar.
Once the product has enough funding, it goes from pretail, to etail and then mainstream retail. And lucky investors get a huge buzz out of seeing their products in retail stores.
One such example of the success of pretail is the Waka Waka Personal Solar Power Station. It is a pocket sized solar device that can recharge nearly all types of mobile phones and tablets, and includes a bright LED light which will shine for a further 10 hours.
If you use the WakaWaka Power simply as a light source, it can provide you with more than 40 hours of excellent reading light on a single day solar charge. The Waka Waka was funded on the Kickstarter crowdfunding site, and is currently in production.
Another successful story is that of The Good Night Lamp, which was also funded on Kickstarter and features a set of internet-connected lamps. You purchase the Big Lamp, and as many Little Lamps as you wish, which you then give away to friends and family around the world. When you then turn on your Big Lamp, your Little Lamps will also turn on, it’s a way of saying “I’m here”, or “I’m around” or “I miss you”.
And Kickstarter is not the only crowdfunding platform in town at the moment, check out www.christiestreet.com and www.makethatthing.com, two other crowdfunding sites that offer inventors and investors a way of coming together and taking a product from conception to market.