Crowdfunding and e-commerce have both grown tremendously over the past decade. Businesses have had to learn to build online presences and cater to a generation that prefers to order from behind a screen. Crowdfunding has also been instrumental in turning ideas into successful brands, products and even in rare cases billion dollar acquisitions. Here are just a few ways crowdfunding and e-commerce aren’t too far apart, and why e-commerce is a natural logical step for finishing crowdfunding campaigns.
1. Crowdfunding helps build a brand around your product
Brands gain their value as they become more recognized by consumers. Brand recognition is a key step in gaining a larger share of market sales. For example, if a Chevron and a Circle K were both right next to each other, and they were both selling gasoline at the same price, the vast majority of people would choose to get their gas at Chevron just because that’s the brand they know and trust. When you use crowdfunding to gain investors for your product, it doubles as advertisement, and allows you to simultaneously build a brand around your product while building trust with your customers.
2. Product history helps identify your target market
E-commerce allows you to identify the demographics of your target market. When you begin a new project through crowdfunding, you can use e-commerce data from similar products to gain a better understanding of what type of people historically purchase the type of product that you are trying to produce. In a sense, crowdfunding is just using pre-sales as the capital to produce a product. This lends itself to become a close sibling of standard e-commerce, allowing you to reliably take sales data from e-commerce and use it for crowdfunding. Furthermore, this also allows you to better target your advertising to a given group of people, which will ultimately allow you to optimize marketing, sales, and shares for you product.
3. Crowdfunding helps you get feedback before you manufacture.
The issue with standard e-commerce is that you must assume the risk of producing your product, then subsequently hope the market likes your product enough to allow you to sell your inventory. With crowdfunding, you can get feedback from your backers before taking on the risk. That way, you can refine your product to the needs of the consumer and hedge your bets against risks. This allows you the added benefit of having your project create a level of attachment to your brand since your earliest customers will know you’re listening to them.
4. A saturated e-commerce market spurs crowdfunders to innovate
Sometimes e-commerce becomes complacent. For that matter, the market in general stagnates over time. Once people have a working model, they do not like to “fix what ain’t broke.” Crowdfunding allows for new people to join the market with new ideas and innovations. These are often done by people who are not already in the market, but would like to enter the market with brand new ideas. This has given us a fantastic industry of changing products like the oculus rift and fidget spinners. Overall, crowdfunding allows for new innovations to develop and enter the e-commerce market in ways that e-commerce is unable to do on its own. These inventions lead to competition that will ultimately benefit the e-commerce market.
5. E-commerce makes it easier to launch crowdfunded projects
As stated before, crowdfunding has pretty much become a form of pre-sale for e-commerce. This makes crowdfunding more or less a cousin of e-commerce. The growth and trust that e-commerce has gained over the years has allowed crowdfunding to become more and more capable of taking place. When the internet was at its infancy, there were many times you saw some online deals that you wanted to take but simply did not trust. This is the same reason why Netflix’s number one means of gaining customers became referrals. People initially didn’t completely trust Netflix because it was born on the web. As people started hearing their friends talk about how great Netflix was they became more inclined to test it out and eventually get hooked. To this day, we still have doubts when purchasing stuff online. It has become less of an issue nowadays, but we still gravitate toward well designed and executed platforms. As e-commerce becomes more and more prevalent, skepticism diminishes, and our trust and willingness to put money into products and ideas increases.