Picture this: you’re in an episode of Shark Tank, except instead of Mark Cuban, you’re pitching to real live customers who are actively investing in your great ideas. If that sounds enticing to you, then crowdfunding, or the practice of raising small amounts of money from a large number of people, could be right up your alley!
Of course, there’s only one way to find out if crowdfunding is the secret ingredient missing from your eCommerce sauce of success, and that’s through reading this article. Luckily, we’ve made it a good one (did you expect any less?), so hop along for the ride!
What Is Crowdfunding?
If you’ve been in the eCommerce game for long enough, you’ve likely already come across crowdfunding, even if indirectly. Take PopSockets, for example. Most are familiar with the brand, but a lesser known fact is that these handy smartphone grips actually got their start as a crowdfunding campaign! And they’re not the only ones — crowdfunding has taken on a wide array of niches, from quirky artistic projects to functional household items.
LIke we mentioned before, crowdfunding is simply a way to raise capital through the financial support of “backers,” a.k.a. people who believe in your project and want to see it through to completion. Traditionally, if you wanted to get a business plan off the ground, you would either have to pitch it to investors or bootstrap the whole thing yourself, but crowdfunding makes it easier to fulfill your entrepreneurial dreams by enlisting the help of eager netizens, whether they be friends, family, or anyone else who’s just as jazzed about your inventions as you are.
Crowdfunding can be powered by a few different platforms, but the most popular ones are Kickstarter and Indiegogo — we’ll be covering those in a later blog post. For now, we’re going to explore what leads entrepreneurs down the path of crowdfunding, and whether that path should be next up on your itinerary.
7 Things to Think About
Instead of listing pros and cons, it’s better to analyze the different aspects that make up the crowdfunding experience. That way, you can see if they align with your business blueprint and overall goals. Let’s get started!
Launch with a Bang
Are you one for dramatic beginnings? Crowdfunding is an awesome way to create buzz and get people excited about whatever it is that you’re launching. It’s not uncommon to see backers becoming personally invested in campaigns and sharing their enthusiasm with others, thus creating a domino effect of “heck yeah, I’d buy that!”
Establish a Connection with Your Market
We’ve already talked about the importance of niches, or specialized segments within an existing industry (like apparel or pet accessories). With crowdfunding, there’s the added bonus of networking within that specific market, thereby boosting brand visibility and credibility.
On a similar note, crowdfunding is a fairly straightforward way to get invaluable feedback. In fact, you can think of crowdfunding campaigns as big brainstorming sessions that can take your product development through many exciting twists and turns! Some changes may be minor, some may be major, but all are suggested with the intent of helping your business thrive.
Type A personalities, rejoice! Developing products, writing copy, creating marketing collateral, and setting up perks are just some of the many tasks that comprise launching a crowdfunding campaign.
It’s worth noting that crowdfunding requires a similar amount of work as a regular eCommerce store, but the main difference is that most of this work is consumer-facing, as backers will need to know your plans from A to Z.
Communication Is a Must
If you’re more of a lone wolf, it’s time to join the pack. Crowdfunding campaigns require communication, and a lot of it (again, not unlike regular eCommerce stores!). Sharing news and updates with your backers is pretty much non-negotiable, even in the case of shipping or supply chain delays.
Fortunately, most backers are pretty understanding of factors that are outside of your control…. as long as you keep them in the loop!
Success Isn’t Guaranteed
Granted, success is never guaranteed, but there’s sometimes the misconception that crowdfunding campaigns are self-sustaining organisms in the eCommerce biome. Contrary to popular belief, simply launching a crowdfunding campaign will not magically draw in enthusiastic backers or free press. The truth is that the basic principles of eCommerce, like solid products and effective marketing, apply to any online venture.
It’s true that pressure creates diamonds, but when it comes to people, it may be a different story. Deadlines, high stakes, and hundreds or thousands of eyes watching your every move can be exciting to some and a total nightmare to others. At the end of the day, backers have invested time and money into your campaign, which means there’s the inescapable expectation to pull through on all your promises.
Who Is the Best Crowdfunding Candidate?
Hey, we’re not ones to lay down the crowdfunding law. If you genuinely feel like crowdfunding aligns with your business’s best interest, then, by all means, have at it! The perfect campaign is a pretty rare bird, so not checking off all of the boxes may not be an inherently bad sign.
With that being said, we hope the above considerations have made the decision-making process that much easier! We wish you luck on all your endeavors, and if you ever need a little help… well, you know who you should be hitting up.
Questions? Comments? Let’s hear it!
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