Crowdfunding & Ecommerce: How's That Work?

As an entrepreneur, you probably have a ton of ideas for new products or businesses that you'd love to pursue. But coming up with the funds to get your idea off the ground is a whole other story, isn’t it?

If this sounds all too familiar, then crowdfunding for your next Ecommerce venture may just be an option to consider...

What is it?

Crowdfunding is a platform that lets you pitch your business idea to a group of people who may be interested in investing. Most platforms are free to join, and unlike traditional investment, you don't have to give away a huge stake in your company.

Instead, funders make small contributions to the overall target, and sometimes entrepreneurs can offer alternatives such as sponsorship deals or free samples.

Is it for me?

As with anything in life, there's arguments for and against this way of raising money...

The pros:

  • It gives you money that you may not be able to borrow from a bank
  • It's easier than traditional ways of applying for a loan
  • You don't have to give away a big part of your company – keeping you in control
  • It can help motivate you, so that you can reach your goal
  • It works as a marketing tool as you get to promote your product to a large audience
  • It can help improve your product by engaging with the crowd and getting feedback

The cons:

  • It can give other people ideas to take your concept and make it their own
  • It's up to you to do the pitching – which can be quite time consuming
  • You may not always reach your funding goal
  • Some platforms are not regulated by financial authorities

Whether you're for or against, there's no denying that crowdfunding is growing each year. In fact, by the end of 2014, it's estimated that at least 270,000 jobs will arise because of crowdfunding, and it will help add more than $65 billion into the global economy.

And, there's plenty of entrepreneurs just like you who have found success by crowdfunding their idea. Check out our top 5 below...

1. The Pebble Watch

The beautifully designed Pebble watch is known as one of the most successful projects to date. Their target was $100k, but it actually raised more than $10m from 68,000 backers! You can now buy the watch from their website: getpebble.com

2. Tile

This is a great idea for anyone who loses their stuff frequently. Tile is a device that you add to your keys, phone, wallet – anything that gets misplaced, and it helps you keep track of your belongings. The founders raised $2.6m, completely smashing their target of $200k – and they say it's all thanks to their excellent PR strategy.

3. SkyBell

If you have a delivery at your door but you're not in then SkyBell can really come in handy. It's a video doorbell that connects to your phone, so you can speak to the person at your door wherever you are. The creator raised $585,000 using crowdfunding and was backed by thousands of investors in 50 countries.

4. Little Ducks Organic

We know the importance of healthy foods, but sometimes convincing kids to eat fruit can be quite a challenge. That's why Little Ducks came up with a great idea to create fun looking fruit snacks that are organic. They raised $890,000 in crowdfunding and their product has turned into a fruity success.

5. Goldiebox

This entrepreneur had no luck pitching to toy makers, so she turned to crowdfunding - and her product really took off. Goldieblox is a toy and book series that aims to inspire young girls to become engineers. She raised $285,881 in crowdfunding, won loads of awards, and her toys are now available to buy from her ecommerce store .

How do I get started?

Once you've got your idea then the next step would be to think about the platform you want to use. We've included some of the best platforms below to help you make your decision a little easier...

Kickstarter is one of the most popular platforms for creative entrepreneurs to use, with an impressive 9.9 million visits per month globally. It costs 5% of the funds raised, plus 3-5% transaction fees and it includes various creative categories such as: design, food, games, music and technology.

Indiegogo is a global platform that offer crowdfunding for businesses, non-profits and artists. If you reach your goal it will cost 4% of the funds raised, and 9% if you don't, plus payment processing fees. It offers various categories including video, fashion and small business.

Crowdfunder is a platform that mixes online and offline crowdfunding resource and encourages collaboration as well as investments. It costs 5% if you meet your funding goal and payment processing fees.

RocketHub is a worldwide platform that has helped businesses, educators and governments get the funding they need. It costs 4% if you meet your goal, 8% if you don't, plus payment processing fees. They also offer a great blog with tips to help you master the platform.

Plan your campaign

Once you've found the right platform, you need to think about your pitch. Your marketing and PR campaign is a crucial factor to convincing people to invest in your ecommerce idea. Here's some ideas that will really help you start a successful campaign...

  • Create a video : Adding a video to your profile is a great way to kickstart your pitch and get your idea across in a short space of time
  • Include photos : Taking awesome photography that shows off what it is you want to create, will also really get across the design and style of your product.
  • Approach influencers: Send out press releases, or even free samples to social media influencers and bloggers, as they can really help you get more exposure
  • Give incentives: free samples to the people you are pitching to will not only attract more attention, but if your product is good enough, it can convince them to invest in your product

Good luck!

Hopefully this blog has give you plenty of advice and inspiration on crowdfunding. If you do decide to put your idea forward then let us know how you get on – we'd love to hear from you! And if your product turns into a success, don't forget to use us for your Ecommerce platform .

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Comments
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2
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Craig Bickford
December 21, 2014 6:56 AM
Unfortunately, a lot of times the product engineer or designer is just the wrong person to create a pitch. I've seen many good product ideas fail at crowdfunding because of poor marketing techniques on the project page and/or a lousy pitch video.
Keri
December 21, 2014 9:07 AM
I had no idea that Pebble was a crowdfunded product. Fascinating.

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