How Prelaunch taps preorder fervor for gadgets and more
A new Web site is taking lessons from the crowdfunding approach used by startups to let other companies collect money up front. The catch? Some of its clients don't need the money.
Look at the word "crowdfunding" -- there's no avoiding that the phenomenon is about raising money, and for a wide range of purposes.
Still, cash is but one of the three C's of crowdfunding. The others are coverage (that is, publicity) and community. All three components are interconnected. The more cash you raise, the more coverage you'll likely garner, and the larger your community will grow, which should help in raising more cash.
If the coverage and community sound as though they would provide benefits to product development outside of the world of startups, it's because they do. Many of today's product managers from top-tier brands use a host of imperfect research tools to help hone the feature tradeoffs and designs of their products. Some don't even do that.
Prelaunch is a new site that dispenses with some of the elements common to Kickstarter campaigns. These include a range of reward tiers that might include things like T-shirts or postcards as well as the all-or-nothing drama. The proposition is simple. Brands offer their products for preorder up to a year before they are available at retail (although most companies choose 30 to 90 days).
Consumers choose to follow a product or preorder it. In exchange for putting up the early money, consumers are privy to discounts and other special treatments from the manufacturer, although what exactly they get may vary by brand. While Prelaunch encourages brands to ensure that the preorder customers get their products first, or at least early, it is ultimately up to the partner companies.
Prelaunch has about 30 products up on its site right now, and its clients form an eclectic club. Epson is offering up the second-generation Moverio augmented-reality eyewear and an activity monitor. Up-and-coming portable audio specialist Bem Wireless has a wrist-based speaker, and recent Kickstarter alum Kapture Audio offers a wristband that can record snippets of audio from an always-on cache. The assortment of wristwear may not be a coincidence. Prelaunch co-founder and president Donald Brewer was formerly the vice president of technology at Fossil and started up an e-paper watch company called Phosphor.
Of course, retailers such as Gamestop and Amazon.com have long offered preorders on hot items, but Brewer notes that Prelaunch has an advantage in that brands get to maintain the relationship with those who preorder. In addition, there's nothing preventing a brand from creating its own preorder site. Apple, for example, often hints at presales of new iPhones, as do its carriers. And one of Prelaunch's clients -- Kapture Audio -- allows preorders at its own site as well as at Prelaunch. But Prelaunch contends that it is the only destination focused exclusively on preorders, a place where consumers can freely learn about products that aren't just ideas, but which are scheduled to come to market.
As for the allure for the companies, Brewer points to the value of being able to query preorder customers about why they purchased in order to hone their messaging prior to launching to a broader customer base. On the other hand, since consumers are interacting with more established companies, there's far less risk involved in creating a preorder. Unlike with Kickstarter after the conclusion of a campaign, consumers can always cancel a Prelaunch preorder.
Prelaunch exists in a middle ground between crowdfunding sites and retailers. But while taking on the risk of the average crowdfunded product might seem a bit too risky for large retailers, preorders are a compelling opportunity. As Prelaunch grows, its main challenge will come from retailers that may not have as well-developed a feedback loop, but that can offer a much larger customer base and lower preorder customer acquisition costs.