What is Crowdfunding and How Can It Work For You?

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If you’re an Amazon seller, you already know the ins and outs of the Amazon marketplace. But what if you’re a startup with the problem of: how to market your brand to a wider audience? With how competitive the marketplace is, it’s a challenge for tiny startups to stand out in Amazon.


The Amazon Launchpad Program may be the place for your brand. The Launchpad Program is an Amazon marketplace that supports crowdfunded startups, venture capitalist firms, and other accelerators. Any Amazon seller is eligible to be a member of the Amazon Launchpad program; however Amazon selects the users it allows inside this exclusive marketplace.


Today, we’ll go over the fundamentals of crowdfunding platforms such as Kickstarter, and then we’ll launch into the Amazon Launchpad Program. Most of the vendors that now use the Amazon Launchpad programs are startups for which crowdfunding has worked for them. We’ll show how it can work for you.

WHAT IS CROWDFUNDING?

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According to Forbes Magazine, trends show that crowdfunding will reach $90 billion by 2020. It will then surpass venture capital as the leading source of startup funding. In 2014, $16 billion of resources were crowdfunded, up from only $880 million from early adopters in 2010. All in all, the crowdfunding method works.

In e-commerce, crowdfunding initiatives are made when someone raises funds online, usually through a crowdfunding platform. Crowdfunding is an increasingly growing industry, with brands such as Kickstarter leading the way.

Source:  Kickstarter

Source: Kickstarter

Projects that have been funded in Kickstarter have also transferred and gained traction on Amazon. For example, the Baubax 2.0 smart travel jacket raised 3.9 million on Kickstarter from February-April 2018. The whole Baubax travel line is now sold on Amazon.

HOW DOES KICKSTARTER WORK?

Kickstarter, which has been the leading crowdfunding platform, show that “a growing number [of successfully funded projects] have reached six, seven, and even eight figures.” Since 2009, 6 billion people have funded a project, and 154,451 projects have been successfully crowdfunded.

Each Kickstarter project is created and funded independently. Individuals are able to build their own product pages, videos, and more. They’re set a funding goal and deadline. Then, they’re able to acquire pledges for the project. The only fee to fund a project is a 5% fee issued by Kickstarter to the total amount.

Kickstarter reverses the traditional approach of entrepreneurs. Instead of manufacturing the project first, marketing, then selling the product; they market the product first, then manufacture and sell. They’re able to test the product with individuals who are interested and give pledges.

After that the crowdfunding kickstarts. If the project succeeds, the pledges are cashed in. If the project fails, no one is charged. It’s really an all-or-nothing approach to crowdfunding.

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WHAT DOES THIS MEAN FOR AMAZON SELLERS?

Amazon sellers, too, can be heads of their own startups and use crowdfunding platforms such as Kickstarter as a resource. The program that’s making this happen is Amazon Launchpad, launched in 2015. Amazon Launchpad actually started when heads of Amazon decided they wanted to do something like Kickstarter. What they have now is Amazon Launchpad which is partnered with Kickstarter. Launchpad has also launched internationally in countries such as Italy and Spain.  

The Amazon Launchpad Program is “a service for startups to launch, market, and distribute their products,” says Amazon. What is a startup? A startup is a newly established brand which would need a little help. The Launchpad program makes things easier for up and coming startups in the step after crowdfunding a product: how to expose products to a larger audience. It’s dedicated to selling and promoting products made by startups and other accelerators. Think of it as a startup accelerator in and of itself.

The Amazon Launchpad Program makes it easier for startups to launch, market, and distribute their products throughout the Amazon Marketplace. The Launchpad is ideal for small brands that dream of following the Amazon or Kickstarter model, from a small startup to a multi-billion dollar company.

According to Business Insider, “In just one year, Launchpad has seen quick traction. At launch [in 2015], Amazon had only 25 partnerships with VCs, incubators, and crowdfunding sources and sold about 200 products. Now [in 2016], it works with over 100 leading VC firms, including Andreessen Horowitz, and has helped over 700 startups sell roughly 1,400 products around the world.”

It has partnered with crowdfunding platforms such as Kickstarter, seed funding organizations like Y-Combinator, and other startup accelerators. Although it prioritizes startups with crowdfunding platforms as well as venture capitalist firms, it’s open to any existing Amazon seller.

Any Amazon seller can be approved, provided they have an innovative idea for their startup. Your startup can make use of both crowdfunding platforms Kickstarter or Indiegogo and Amazon Launchpad. The ideal Launchpad vendor will be a startup who has crowdfunded their products and is now ready to launch, market and sell their products.

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How Is the Amazon Launchpad a Different Marketplace?

As we’ve said before, the Amazon Launchpad program is an exclusive marketplace for starting an online business. These vendors already have a base for their successfully crowdfunded products, and have in the process tested out their products. They have potential consumers for the product. What they need is only a little advantage in the marketplace with innovative tools in order to officially launch their product. That’s what Launchpad provides.

Here are just three benefits for Amazon Launchpad vendors:

  1. Amazon Launchpad gives startups the options to use cutting-edge technology for their marketing tools. Marketing online is tough. Perhaps you already know how to advertise with Amazon. But with Launchpad, you also get full onboarding support. As an Amazon Launchpad vendor, you’re privy to in-house advertising and landing pages. What’s more, you have user-friendly videos and larger photos/images at your disposal for showcasing products. You can take advantage of Amazon listing optimization tools, Amazon keyword tools, and other relevant tools at your disposal. You can also trademark your products. Anything and everything that has to do with Amazon ads for the Amazon market.

  2. Inventory management is easier using the Fulfillment by Amazon and Vendor Express programs. Storage facilities, customer service center, and shipping arrangements are taken cared of by Amazon. You’ll be enrolled in the Fulfilment by Amazon program and Vendor Central marketplace automatically.

  3. Supported merchandising benefits are available. Products are eligible for two-day shipping and sold through Amazon’s main website. Exclusive promos are also available for members.

Since it’s an exclusive marketplace, Amazon Launchpad has benefits that are different from a regular seller or vendor. Almost everything is streamlined here and made easier. Amazon’s marketing services are famous for having a wide selection of tools; the Launchpad vendor is in on those plush the analytics that come with it.

LAUNCH UP WITH AMAZON LAUNCHPAD

What’s better for Amazon startups than a guaranteed audience? Launchpad gives you that little bit of push in order to achieve your brand’s goals, especially in the beginning years.

Amazon has taken a proven method of success and translated it to their own marketing platform. Launchpad gives sellers like you the starting push to be able to grow and become a more successful brand.

Crowdfunding has come a long way since its first early market operators in 2010. It’s only becoming more and more lucrative. Amazon has taken note of that, and came up with Launchpad as a way to help early entrepreneurs.

Maybe you think the Amazon Launchpad is for you. If you want to know the pros and cons of Launchpad, or generally want to know about product listings, advertising, or competitive metrics, MarketplaceOps is here for you. We are a team of online marketplaces and e-Commerce experts who have been in the industry for many years. We’re willing to help you every step of the way. If you have more questions about our article or if you simply need help in starting or handling your Amazon business, just reach out to us by sending an email or clicking the link here.