Sell before scaling production: use preorders and small purchases to test demand
A study followed 116 Italian startups for about a year. Entrepreneurs trained to state hypotheses and test them with market feedback performed better and changed direction more readily, without a higher early-abandonment rate. If nobody will prepay or place a small order, do not assume buyers will appear once the product exists.
What it takes
A few tens to hundreds of RMB for a sample or page in China, then approach dozens of real customers for prepayment or small orders. This adds several weeks compared with immediately producing stock. Resisting the urge to manufacture first is difficult.
What you may gain
A randomized controlled trial followed 116 Italian startups for roughly a year, randomly assigning training to one group and comparing outcomes. Entrepreneurs taught to formulate hypotheses and rigorously test them through market feedback performed better and were more likely to pivot, without a higher rate of early exit. The authors interpreted this as reducing continued investment in false-positive opportunities: projects that look promising but are not viable. The research was conducted in Italy and published in 2020.
Context & considerations
This is one small Italian study, hence grade B. Title, citation and abstract were checked through Crossref and Semantic Scholar; full-text effect sizes were not verified. The practical inference is to distrust “build it and they will buy” if no one will commit to a preorder or small purchase.
Research & references
Camuffo A, Cordova A, Gambardella A, Spina C (2020). A Scientific Approach to Entrepreneurial Decision Making: Evidence from a Randomized Control Trial. Management Science 66(2):564-586. https://doi.org/10.1287/mnsc.2018.3249