It’s that time of year—the holiday shopping season is right around the corner. As an entrepreneur myself (and one who’s slightly obsessed with hot trends), one of my favorite things about this season is seeing what the hot holiday fads will be. Remember Teddy Ruxpin? Or Tickle Me Elmo? Sure, the holiday season is prime time for entrepreneurs to profit from fads—but there is actually opportunity to make money from fads all year long. Here’s how you can take advantage of them.
First, understand that fads are not trends, though occasionally they can turn into one. Most fads last for just a season; others hang on for a few years. Fads tend to end relatively quickly, and often very suddenly. Trends, in contrast, can last for a decade and, even when they do end, they fade away more slowly.
There’s nothing wrong with getting caught up in a fad. The problem arises when entrepreneurs mistake a fad for a trend, and put all their eggs in that basket. Then you’re stuck with unsellable inventory, or, if you’ve based your whole business on the fad, a business with no future.
It’s great if you’re fortunate enough to profit from a fad, but be smart enough to recognize, admit, and most important, act when the fad has peaked. The ideal is to get out as fast as you got in, and move on to the next big thing.
So how can you spot the next profitable fad? Here are some ideas.
1. Keep current on industry news
Industry publications and websites are good indicators of fads (as well as trends). Don’t just focus on your industry, either. Fads often cross over from one industry to another so that, for example, an Native American influence in home décor and accessories might also show up in the world of fashion.
2. Watch what’s hot on the New York Times Bestseller list and in TV ratings
These are often indicators of popular themes and interests. For example, the popularity of the Twilight book series for teens and the “True Blood” TV series for adults has led to a whole industry of vampire-themed books, accessories, cosmetics, home décor…you name it.
3. Make connections
Think about how the trends you’re seeing could translate into a fad for your market. For example, go into any tween- or teen-oriented clothing store today and you’ll notice lots of plaid shirts in the girls’ department. The heroine of the Twilight novels wears plaid shirts. Smart marketers noticed this and thought that real-life teen girls would probably want to dress like her. Similarly, when cell phones first hit the teen market, entrepreneurs who make jewelry and accessories came up with the concept of charms and other “jewelry” that girls could attach to personalize their phones.
4. Watch the kids
Notice I’m bringing up teens a lot? That’s because kids, tweens (ages 9 to 13) and teens are prime markets for fads, and have a lot of influence in getting their parents and grandparents to buy for them (it’s actually called “pester power”). And since tweens and teens have their own disposable income as well, these are smart markets to enter if you’re hoping to capitalize on fads.
5. Understand your market
Whether you’re targeting kids, women or male technophiles, understanding your market’s needs, wants and interests is key to spotting fads they might buy. Using social media makes it easier than ever to see what your target market is into—it’s easy to ask your customers questions on Twitter or post surveys on Facebook.
6. Get out there
Go to trade shows and conferences. Or simply head to the malls, downtown or wherever crowds congregate. This is a great (and easy) way to spot fads as they’re breaking. Maybe you notice several kids wearing rainbow suspenders (OK, I’m making that one up). Is it a coincidence…or a fad ready to happen?
7. Trust your gut
I can talk and talk about how to spot fads, but there’s no real science to it. No one can predict what will go viral, or what will flop, so if you’ve got a good feeling about something, take a risk. Fads are inherently risky, but that’s part of the thrill.
8. Plan ahead
Once you’re invested in a fad, enjoy your profits but keep your eye on the horizon. Know when it’s time to get out of one fad and into the next. Of course, some fads prove to be trends. Ugg boots seemed like a passing fancy when they first hit the market, but have proved to be a solid trend. Helping encourage the product’s staying power, the company is constantly innovating, introducing new products that kept it out of the fad category.