Through a special arrangement, what follows is an excerpt of an article from Retail Dive, an e-newsletter and website providing a 60-second bird's eye view of the latest retail news and trends.
In 2012, Kickstarter published a blog post reiterating that the site "is not a store." The funding site emphasized to project's supporters that the final product won't necessarily live up to expectations, or even ever appear.
Despite that stipulation, Kickstarter has clearly ignited a new way to conduct e-commerce. In fact, retailers have taken notice: in June Etsy began piloting a crowdfunding feature to help its sellers raise money to expand their businesses and Amazon has included a crowdfunding feature as part of its Exclusives storefront.
But it isn't just small sellers such as those taking advantage of marketplaces like Etsy and Amazon (or using Kickstarter itself). San Francisco-based crowdfunding and e-commerce platform Celery enables retailers of many stripes and sizes to facilitate pre-orders and/or crowdfunding on their own sites.
"We've talked to many larger brands that want to bottle the magic of Kickstarter while maintaining control of their brand," Celery CEO Chris Tsai told Retail Dive. "Similarly there are many venture-backed startups that want the experience of purchasing to be their own experience. So they want to launch their products themselves instead of using Kickstarter."
Source: trycelery.com
Although some use the terms interchangeably, pre-orders, by contrast to crowdfunding, include a promise for delivery of goods. If the retailer doesn't collect enough orders to justify manufacture of a vendor order, the money is returned.
A Kickstarter campaign makes sense for smaller artisans or entrepreneurs trying to realize a dream or make an idea happen. But more established companies aren't interested in ceding control of their brand or their logistics to a platform like Kickstarter, PayPal or Amazon.
Still, a crowdfunding approach can help companies like Pebble or even larger ones like Disney and Timex, who have worked with Celery to crowdfund certain products, to determine whether they need 6,000 or 60,000 in inventory.
"ThinkGeek is a pretty innovative company, and similar to Disney Maker Studios, they're saying, 'Why should I keep guessing about how much inventory to buy, when I could have my customers tell me?'" Mr. Tsai says. That retailer, recently acquired by GameStop, is using a preorder system for its Star Trek Bluetooth Communicator; whether anything emerges will depend how many Trekkies put up their money.
Finally, a crowdfunding or preorder approach is a way to bring loyal or "VIP" customers in on a project or new product early. And the "tease" of a crowdfunding campaign can stimulate interest in a product as well as measure it.
"Some retailers are realizing it's a powerful marketing mechanism," says Mr. Tsai.