Pre-commerce allows new product ideas and prototypes to be mass produced only after reaching an initial threshold of investment from consumers. It taps into early investments of capital or knowledge from consumers before full production. Examples include Pebble Watch, Tesla Model 3, and Oculus Rift. Pre-commerce differs from crowdfunding by focusing on social mechanisms rather than broadcast marketing. It allows companies to test market fit through minimum viable products and gain feedback before significant investment in production.

1. PRE‐COMMERCE
D E F I N I T I O N , T R E N D S A N D W H Y Y O U S H O U L D C A R E

2. WHAT IS PRE‐
COMMERCE?
Pre-commerce is a product
development method which allows
new product ideas/prototypes to be
mass produced only when they have
reached an initial threshold of buy-in
from investors/consumers.

3. Taps into upfront
investments from
consumers
In terms of either:
Capital
Knowledge
Applies to
products not yet
at the mass
production stage
PRE‐COMMERCE

4. QUICK EXAMPLES
Pebble Watch Tesla Model 3 Oculus Rift

5. That improves the success rate of a
crowdfunding/pre-commerce
campaign to 99%
Where momentum of the collective
action takes over
The "magic" number 34%
represents a tipping point:
TIPPING
POINT

6. HOW PRE‐COMMERCE
DIFFERS FROM OTHER
FORMS OF COMMERCE

7. There is a prevalent
viewpoint that sees pre-
commerce as a trend
within social commerce.
The most common tactic
within social commerce
is using BUY BUTTONS
on business social
media accounts.
SOCIAL
NETWORKS
+
COMMERCE
=
SOCIAL
COMMERCE

8. It’s more accurate to make
pre-commerce a category of its own
because it involves more than just
the selling mechanisms.
Pre-commerce touches other areas of the business,
from product innovation, supply chain
management, to marketing and sales.

9. COMPARISON

10. MARKETING
STUNT
While most campaigns on platforms
like Kickstarter employ social media to
trigger the viral effect, pre-commerce
is not a short-term, quick-win kind of
tactic.

11. MOST
MARKETING
STUNTS AIM
TO:
Stir excitement/ debate/
curiosity pre-launch
01
Cause a short-term sales
surge
Cause a brand uplift (either
short or long-term)
In a marketing sense, pre-commerce shares purpose #1 and #3
02 03

12. The underlying thinking is to jump in before the traditional product
life cycle kicks in (pre-commerce sales & profits as dotted lines)

13. HOW PRE‐COMMERCE
LETS YOU GET AHEAD OF
COMPETITION

14. Pre-commerce is a powerful product
development engine, fuelled by
evolutions in consumer preferences
for innovative products and
community engagement; as well as
lower entry barriers for new product
development.

15. Consumers increasingly
value experiences over
physical goods, which
gives rise to experiential
buying.
Pre-commerce fits in
with this consumer
preferences evolution.
CONSUMER
EXPERIENCE
PHYSICAL
GOODS

16. Provides a sense
of belonging that
goes beyond the
thrill of
possession
Injects "status"
into the buying
experience
Taps on the
increasing
demand for new
trends and novel
products
PRE‐COMMERCE

17. MARKET
EVALUATION
Pre-commerce allows innovators to
test their product-market fit with a
Minimum Viable Product (MVP)
equivalent.
Since consumers would only back
projects they like, it helps:
Accelerate innovation
Ditch waste
Tweak offerings along the way

18. The failure rates of new
products launched
traditionally or through
crowdfunding are similar
on the surface.
But the risks could be
reduced with pre-
commerce. Would you
rather pour millions into
a product to learn a
lesson, or one-hundredth
of that amount?
RISKSTRADITIONAL
LAUNCH
40-80%
CROWDFUNDED
LAUNCH
40-90%

19. Being able to gauge demand
before mass production allows
for more accurate financial
forecasting and less inventory
risk.
Innovators can also combine pre-
commerce with e-commerce to
reap benefits.
SUPPLY
CHAIN

20. A pre-commerce
fashion startup
that lets women
pre-order fashion
straight off the
runway
Leverages sales
data it collects
from the pre-
commerce
business
Informs
traditional retail
buys using hard
data rather than
intuition
MODA OPERANDI

21. QUICK
BENEFIT
RECAP: Focuses on social mechanisms
rather than broadcast
01
Cuts down on the
middlemen, e.g. retailers
Direct feedback from
potential customers
02 03
MARKETING
EFFICIENCY
MARGIN
EFFICIENCY
PRODUCT
EFFICIENCY

22. HOW PRE‐COMMERCE
TICKS ALL THE BOXES
FOR TESLA

23. Just one day after the official unveil event, Model 3 pre-orders already
outnumbered Tesla’s previous model deliveries.

24. In Australia, people lined
up to pre-order Model 3
“despite not knowing
what it will look like, how
it’ll drive, or even how
much it’ll cost.”
They might even have to
wait longer as the left-
driving countries will get
the car first. This goes
to show experience
trumps physical goods.
EXPERIENCE
BEING
FIRST
EARLY
ADOPTER

25. MARKET
TESTING
Clearly a lower end model has lured in
more consumers from the “entry-level
luxury” segment as they have shown
explicit interest by giving Tesla money
in advance.

26. No new capital required after
around 6 months of taking pre-
orders.
With information about the high
demand, Tesla has put together
plans to ramp up production
capacity.
SUPPLY
CHAIN

27. LOCK‐IN
ADVANTAGE
Those who have prepaid are more
likely to go through with the purchase
and less likely to buy something that
catches their eye in the meantime.

28. THE STARTUP VS.
INCUMBENT DEBATE

29. FEAR OF
COPYCATS
There is a fear, especially among
large corporations, that pre-
commerce would reveal their
strategic plan for everyone to
see.
A potential scenario is when
information about new product
development is leaked, which
gives fast followers time to get
their product to market right
behind yours.

30. Pre-commerce actually works out
better for established brands in this
case. If your idea/prototype is
already out in the marketplace,
supporters will defend your company
against copycats.

31. People are paying
for the experience
rather than the
physical goods.
This goes back to
the experiential
buying trend.
You already have
a brand name and
an engaged fan
club.
WHY?

32. Forward-looking incumbents
have come to accept:
"It’s better to own a bit of a
disrupting startup than be the
prey of a new business model
from an unknown competitor.”
FINAL
THOUGHTS

33. “What separates your brand and
company from a world of innovative
independent designers is only a
semi-permeable membrane.”

34. T H A N K S F O R R E A D I N G
C R E A T E D B Y
Read full blog post at: blog.enabled.com.au/pre-commerce