Amazon Launchpad and Crowdfunding: Creative Ways to Raise Capital and Launch Your Products on Amazon

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When you’re starting your entrepreneurial journey, you’d have to figure out how to transform your innovative product ideas into a reality. How do you raise funds for your seed capital? And how do you introduce your product to potential customers?

Luckily, raising funds and launching new products is not as hard as it used to be. Today, you can raise your seed capital through crowdfunding sites and startup incubators. There are also a lot of ways to market your unique products online. You can market them on social media or you can join the Amazon Launchpad or AL.

Established in 2015, AL aims to help crowdfunded companies to increase their exposure in the Amazon online selling platform. It’s sort of a head start. But, before we get to that let’s discuss what crowdfunding websites are and how they can help transform your ideas into a reality. 

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What is Crowdfunding and How It Can Work for Your Business?

Crowdfunding is the process of raising money through cloud and social media environments. Several crowdfunding websites give entrepreneurs and startups access to thousands of potential investors.

There are many ways to raise seed capital through crowdfunding, including;

  1. Donation Model

This crowd funding model allows hundreds of people to donate small increments of money to a creative or entrepreneurial project that they believe in. There’s no return on investment (ROI) for donors. What the donors get is that feeling of satisfaction and pride that they are able to support something that they strongly believe in. 

  1. Pre Order Model

This model allows people to pre-order a product for much later delivery. For example, a bamboo bike company is doing a crowdfunding campaign to raise funds. You believe in the project so you decided to “donate” $190 in exchange of a bamboo bike. Once the company raised the $200,000 required seed capital in 6 months, they’ll start production. That could take another six months, so your bike will be delivered at a much later date than when you preorder in eCommerce websites. But since you believe in the project, you won’t mind.

  1. The Reward-based Model 

The Reward-based model allows the investors to get the satisfaction of helping a project and immediately get a predetermined reward. For example, a writer raises money for a book on a crowdfunding site. A perfume company supported her and gave her 100 bottles of perfume that she can use as tokens of gratitude. So, when you donate $30 for her book project, a bottle of perfume will be mailed to you in a few days.

  1. Equity-Based Model

This is a relatively new crowdfunding model. The equity-based model allows a large number of people to invest small amounts of money in startups with the anticipation of receiving capital appreciation or dividends in the future. 

One of the best things about crowdfunding is that it’s more efficient than traditional capital-raising methods. It’s the simplest and less costly method to raise money for your business. It is also a great way to validate your business idea. If you’re getting a lot of preorders, it means that you are on the right track.

Also, pitching your business on social media platform is a great marketing strategy and it could help you attract a lot of attention. Plus, you don’t have to spend all your hard-earned life savings to fund an experimental business idea. You just have to get people to back you up. 

Crowdfunding is also easy to do. You don’t have to create a detailed business plan. You do not need to have special qualifications or accreditation to start your own crowdfunding campaign. All you need is a computer, an internet connection, strong persuasion skills, and a big idea. 

There are a number of crowdfunding platforms that you can use to raise seed capital for your business, including Kickstarter, Indiegogo, Crowd Supply, Crowd Funder and Experiment. These sites have funded millions of dollars for various products like Peeble Smart Watch, Coolest Cooler, Oculus Rift, and Baubax Travel Jacket. Indiegogo has raised money for several movies.

Once you’ve raised enough money for your entrepreneurial project and you’re done with the manufacturing process, it’s time to market your products. That’s where Amazon Launchpad comes in.  

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What is Launchpad?

Seed capital generation is not the only challenging part of starting your own online business. Once you’re done with the product, you have to deal with marketing and distribution.

Marketing a relatively unknown brand and product is beyond challenging. No one wants to buy something that’s untested and unfamiliar. This is the reason why the retail giant created the “Amazon Launchpad Program” or simply AL.

As the name suggests, this program helps startups market, launch, and distribute their products to hundreds (if not thousands) of customers worldwide.

This program helps startups get a head start and establish a strong presence in the Amazon ecosystem. Launchpad aims to move the products from mind to market. It helps startups get traction and push them to grow their business exponentially. 

Launchpad Program Requirements

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Launchpad helps startups gain much needed exposure in the online shopping world. The program was created to give innovative products and ideas a boost. One thing that’s unique about this marketing platform is that it exclusively sells products that are funded by crowdfunding platforms, startup incubators, and accelerators such as Kickstarter, Indiegogo, Hax, Harware Club, CircleUp, Techstars, Andreesen Horowitz, and Y-Combinator.

You have to meet the following criteria to enroll your product in the Launchpad Program:

  1. You must be funded by a VC firm, incubators, or crowd funding sites.

The AL program prioritizes startups that are funded by venture capitalists, incubators, accelerators, and crowdfunding sites. But, if you’re bootstrapping and you’ve managed to raise seed capital for your business on your own, you can still apply. Amazon will review your application and you’ll get a response in 7 to 10 days. 

  1. All of your ASINs must have at least 3.0 star rating.

To achieve this, it’s important to sell high quality products. You should also thank the reviewers for their feedback. When you do, you show your customers that their feedback is important to you. This increases customer satisfaction and inspires customer loyalty.

It’s also important to watch out for unfair negative reviews and ask Amazon to remove them. 

  1. All your ASINs must have at least 10 reviews.

There are a lot of ways to solicit reviews. You can actively ask the customer to post a review after you resolved an issue or a concern. You can also get reviews from reputable reviewers through Amazon Vine. This program costs about $2,500 but it’s included when you join AL.

2. You must have an innovative product.

Amazon Launchpad backs innovative and unique products. If you’re selling bottled purified water, Amazon would probably reject your application. But, if you are selling bottled water that can cure cancer, the retail giant will most likely approve your Launchpad application.

3. You must have a physical product. It should be consumables, clothing, accessories, or hardware. 

4. You must have an active Seller Central Account, but you must be a relatively new seller. This means that your account should not be more than 12 months old. 

5. Your account must be in good standing. This means that you should have a low order defect rate. You should also have a low return percentage.

6. Your product must be available or at least in the manufacturing process. Your product must be ready to ship within 30 days after you filed your application. 

7. You must participate in Amazon’s FBA (Fulfillment by Amazon) service. This means that you have to ship your inventory to Amazon. The upside of this is that you don’t have to worry about shipping and customer service. Amazon will take care of it. But, the downside is that you have to wholesale your products to the retail giant. This means that you’ll be losing a chunky part of your profit margin. 

8. You must be a registered brand owner. This means that you must register your brand with the USPTO (United States Patent and Trademark office. This does not only give you exclusive rights to your trademark. It also allows you to access various Amazon Brand Registry benefits such as advanced brand protection and enhanced marketing content. 

Launchpad Price and Benefits 

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Amazon Launchpad has a lot of awesome benefits. It has a solid on-boarding process that helps you set up your account and get troubleshooting support. 

Your product will get maximum exposure in the Amazon ecosystem. You will have access to Amazon Vine. This means that you can get reputable reviewers to test and review your products. It also gives you access to the Launchpad marketing services. 

You also get access to an Amazon account executive who can help you lay out your Launchpad advertising services. You can place your ads on the AL storefronts, emails, online events, and holiday gift guides. 

Brand owners also have access to exclusive webinars and other educational programs. These educational opportunities equip you with the necessary skills that you can use to you accelerate your company’s growth. 

You will have a dedicated page for your products where you can place company overview, product detail, and a brief Q & A with the company’s founders. This section allows you to tell your product’s story. 

AL helps you with your product branding. It increases product exposure and brand equity, so you’d continue to earn huge amounts of revenue even if you’re no longer in the program. 

Amazon Launchpad is free, but it has a few indirect costs. As mentioned earlier, you have to enroll your product in the Amazon FBA program. This means that you’re going to wholesale your product to Amazon for a low price, so you’re going to lose a significant amount of profits. A lot of huge companies do this. But, having an incredibly low profit margin can hamper the growth and cash flow of a small business or startup. 

You will also have to give away free items for market testing. This can help validate the demand for your product. Take note that advertising is not free. You still have to pay for PPC ads. Amazon still expects brands to bring their own traffic and they’ll only place purchase orders or POs for products that’s fairly popular among customers. 

Amazon reserves the right to transition the product out of the program anytime. But, most brands stay in the AL program for at least a year. 


How to Get Started

So, how does a Launchpad work? Well, getting started is not that complicated. You just have to follow these steps:

  1. Fill out the application form. It usually takes 7 to 10 days before you get a response. 

  2. Create your listing. The AL support team can help you walk through this process.

  3. Scale your business. You can increase your sales by creating engaging content. This allows you to control the conversations about your brand and help you present your products in a positive light. 

The Cons of the Launchpad Program

AL is awesome, but it has a few downsides, too. It has a “Net+60” cycle. This means that you have to wait 60 days after the purchase order. This could seriously affect your cash flow. Plus, you would have to ship a batch of free products for market testing. 

Final Thoughts

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Amazon Launchpad is incredibly beneficial to budding startups and new businesses. It gives you access to a world-class fulfillment service and educational opportunities. Plus, it helps you build a strong presence in one of the widest and the biggest digital space. It allows you to work with Amazon’s amazing marketing and account management team. 

When you’re in the AL program, the profit margin is quite low. But, all the exposure you get from the program can help you gain traction and achieve a steady, long-term revenue increase. It can also help you accelerate your startups’ growth. 

If you need pros to help you with leveraging on the Amazon launchpad or even with your preferred crowdfunding strategy, let MarketplaceOps help you. Simply reach out to us by email and we’ll happily assist you with your Amazon marketplace and/or eCommerce needs.