Retailers, whether they're small boutique shops or big-box stores, are always on the lookout for new SKUs (stock keeping units) and products to sell. Keeping relevant and updated products on the shelf can often play a key role in helping a retailer connect with customers and bring in consistent revenue over a long period of time.
Though this desire for new products is nothing new, retailers have found some innovative ways to source these SKUs.
Choosing Which Products to Sell
Whether a retailer is looking at an individual SKU or an entire new product line, it has to think about a variety of issues. Generally speaking, retailers also interact with an array of sources and supply partners to figure out what can be sold in the stores.
Some factors that come into play might include:
In order to find SKUs that are relevant, profitable, and popular, you as a retailer have a couple of options. You can look at what the competition is selling, browse through trade magazines, survey customers, or even launch your own private label brands.
These options can sometimes become stale and repetitive, however. Enter crowdfunding.
Retailers Monitor the Rise of Crowdfunding
Six or seven years ago, crowdfunding was a fairly small niche. It attracted a few early adopters but was largely regarded by the general marketplace as a neat funding tool with limited potential.
Fast forward to 2016, when crowdfunding has become a multi-billion dollar industry that one report says is on pace to account for more funding than the entire venture capital industry.
"If we look at what is driving this growth and change ... we see that the collaborative economy has brought new disruptive models to giant existing industries like real estate and transportation, leveraging automation and the Internet to create massively scalable businesses," Forbes contributor Chance Barnett observes.
And though equity crowdfunding is worth keeping an eye on, standard crowdfunding is what retailers are watching. From small businesses to massive big-box stores, retailers everywhere are beginning to see the value in bringing crowdfunded products to market.
Target -- one of the largest bricks-and-mortar retailers on the planet -- is among the interested ensemble. "One of the new ways we're discovering up-and-coming games is through crowdfunding sites, like Kickstarter and Indiegogo," says Nik Nayar, Target's vice president of toy merchandising.
"We brought in our first game that originated on Kickstarter -- Utter Nonsense -- last year and it's already become a hit with our grown-up guests. Having the right mix of classic and new options means there's something for everyone."
Best Buy is another big-box retailer that keeps an eye on crowdfunding platforms. In 2013, the company was one of the first bricks-and-mortar stores to reach out to successful crowdfunding entrepreneurs and suggest selling those products on its shelves.
In addition to being a source of unique and innovative products that don't exist anywhere else, crowdfunding platforms such as Kickstarter and Indiegogo are attractive to retailers because of their proof of concept. "When you go to trade shows, or to cold call merchants, you're much more likely to be successful if you have proven sales," product designer Grant Bell explains. "Crowdfunding provides an evaluation you can talk about."
It's not just retailers on the street and in malls, though. Large ecommerce platforms have also tapped into this evolving niche. Just last year, Amazon partnered with more than 25 crowdfunding platforms to create Amazon Launchpad, which features hundreds of crowdfunded products from new startups.
Three Crowdfunded Products You Can Find in Stores
To give you an idea of the different kinds of products that have made the leap from crowdfunding to retail, check out three of the most popular from recent years:
There are dozens of other crowdfunding products -- perhaps even hundreds at this point -- that are currently in the process of moving into retail. Clearly, retailers now view crowdfunding as a tool for sourcing products and introducing new SKUs.
The Future of Crowdfunding and Retail
Crowdfunding isn't going anywhere; that much is quite clear. Whether it's traditional crowdfunding, equity crowdfunding, or anything in between, the collaborative/sharing economy is well established.
In the coming months and years, it'll be interesting to watch how this current retail trend of bringing crowdfunded products into stores evolves. It appears that we're only at the beginning of this trend, and it wouldn't be surprising to see more widespread adoption of it in the future.
Keep an eye on this marketing phenomenon and make sure you're privy to the changes in your industry.