Do you like to start your e-commerce business? But because of a lack of resources, you ‘re not in a position to go ahead with your business plan.
Looking for business funding can be frustrating. Banks won’t let you lend finances because they may find your idea risky. Venture capitalists say you ‘re not fundable, and Angel investors, well, as the name suggests, they can be hard to find.
But you are so confident about your idea of e-commerce business and very sure that it will fill the problems with solutions through your platform and will be a success.
In this sort of situation, you can make use of Crowdfunding. As the name suggests It gives you support from the crowd. People who invest in your idea to make it a reality.
In addition, crowdfunding may also provide a way for entrepreneurs to validate demand for their ideas by encouraging others to “buy-in” pre-orders, donations, and investments before they start development.
What is crowdfunding?
Crowdfunding is the process of collecting money, whether the small or large amounts, from a larger group of individuals.
To achieve the goal/idea, crowdfunding owners must announce their fund requirements on the fundraising page.
They must also determine the exact date by which the money has to be raised.
Crowdfunding is often used by start-ups, small businesses, artistic projects, and charitable organizations.
Taking a small amount of money from a large community of people, they can complete their Crowdfunding goal and start working on their product.
Example of a successful Crowdfunding campaign, A British plant-based initiative has been the quickest initiative on crowdfunding site Seedrs to cross £ 1.5 million.
The fundraising, still in its private phase, is set to go public over the next few days. This, which to date has earned £3million, has surpassed its £2million goals with 40 days remaining of the campaign.
How does Crowdfunding work?
There are many platforms that provide the Crowdfunding facility that we will discuss later in this post. Some of these platforms focus on charitable fundraising, while others focus on entrepreneurship fundraising.
However, getting started on these platforms is more or less the same thing.
The owner will set up a profile on any of the Crowdfunding platforms. The owner should give a detailed description of their project and purpose there.
The audience should have a clear idea of what your project is all about and where their money is going to be used.
The most popular crowdfunding pages feature videos that show the product or goal in depth, introduce key players, provide a history, and explain the future impact of the project on a global scale. It encourages contributors to fit the profile of the organization.
In this case, donors are also referred to as ‘backers.’
Various incentives/rewards are offered to the backers for their support. For example, for donating $40, the owner can offer a coffee mug to the donor. Or the owner can offer an invitation to the opening ceremony for a donation of $100. The owner can offer more enticing rewards for the backers as per their donation level.
You will have to consider expenses, every Crowdfunding site has its own unique set of features, fee structure, you will also have to pay taxes on your earnings, the cost of rewards.
After submitting your project to the platform with a goal and a deadline. You cannot just rely on organic traffics, social shares. You will have to run social media campaigns so that more and more people can be aware of it and you can get more chances to get contributions.
Who can start Crowdfunding?
Anybody can start a Crowdfunding project. Whether you have a small business and want funding for your business idea.
Or you’re a startup that has some great ideas that can help people around the world.
Or an artist/designer/maker who has some great skills that can offer something different from what is already available.
Also, you have to solve any problem or provide something better that no one else does.
There are millions of people out there who are ready to help you with your project, and you’re just going to have to connect with them with the right messages and promotions.
The best e-commerce crowdfunding sites
Whether you want to start your own Crowdfunding e-commerce business or start a charity, or you are a content creator, artist, or a startup, there are many Crowdfunding platforms that can help you.
Here are the Top 11 Crowdfunding platforms for starting your e-commerce business
Kickstarter is one of the most popular platforms for crowdfunding. It was launched in 2009 and Kickstarter has become a successful platform for artists, designers, artists, musicians, and creative people all over the world.
In particular, it applies to creative projects in the following categories: Art, Comics, Crafts, Dance, Design, Fashion, Film & Video, Food, Games, Journalism, Music, Photography, Publishing, Technology, and Theater. Make an album, write a book, create an immersive theater experience, make a film.
Kickstarter has a large community of active users, backers who are constantly contributing to creative projects. It does a great job of promoting interesting projects.
Fees: 5% when you reach the goal (Processing fees not included)
Indiegogo is a popular forum for crowdfunding helping companies, artists, and charities. Although it sounds similar to Kickstarter at first glance, it comes with unique features and campaign choices of its own.
The most notable difference is the option to select a fixed funding objective (all-or-nothing like Kickstarter) or a flexible funding objective for your campaign. You collect your funds with adjustable funding targets irrespective of whether you have reached the target by the deadline.
The flexible funding option is particularly useful when you are able to fulfill your promise to backers even if you don’t raise the funds, say if you are launching a new line of goods for an existing company.
U.S.-based startups might also consider Indiegogo’s equity crowdfunding offering — where you can submit your campaign to investors on the site looking for a financial stake in your project for consideration.
Fees: 5% when you meet your goal. (Processing fees not included)
Celery has an array of resources on your own website for custom crowdfunding and pre-ordering, all setup.
The one-step high-conversion checkout is put on your website, where you can charge right then or decide to charge later (to see how much demand there is for a product).
Combining pre-order, crowdfunding, and abandoned cart resources is enough to send a hard look to Celery.
This platform is tailored for people who choose to bring all funders to their own website (to maintain branding and get emails, etc.). Anyone who needs some kind of pre-order features too. Entrepreneurs seeking to escape the heavy Indiegogo and Kickstarter fees.
Fees: 2% per transaction + all Stripe fees
Crowdfunder is not for startups without any funds. The site clearly notes it’s an angel investor group and venture capitalist group. And you have a smaller chance of gaining grants, but it ties you to people with big pockets.
Many of the projects here go for millions of dollars, much like the typical rounds of funding you ‘d see in Silicon Valley.
The great news is you get to communicate with big-time investors who could eventually join your team in the future.
This platform is designed to provide businesses with the opportunity to work with prominent VCs and angel investors. Those who already have the perfect business strategy and (preferably) the money that comes in. People willing to pay high monthly costs to play the game and get connected to a rich individual.
Fees: Starting at $399 per month
Shopify is one of our go-to eCommerce platforms, but did you know that you could also set up your own crowdfunding site?
While Shopify doesn’t seem like the perfect option for crowdfunding right out of the box, it does have the right applications and themes to get you in the right spot.
Just sign up for Shopify, for example, and then install the Crowdfunding Manager app. They used to have a free crowdfunding theme built, but that seems to have disappeared.
This is for businesses and individuals who need a full eCommerce site and a platform for crowdfunding. Those with to spend a little extra monthly cash. This choice is recommended for beginners and experienced users, as Shopify is easy to set up but you do have experienced editing custom coding options.
Fees: $29 per month for a full Shopify website + $19.95 per month for the crowdfunding app
Patreon is one of the most popular sites on this list, with special emphasis on artists, bloggers, YouTubers, podcasts, cartoonists, musicians, live streamers, and the like.
Although many of the top crowdfunding sites support limited-run campaigns, Patreon was built to generate recurring revenue through paying memberships to creators and internet celebrities with loyal audiences. You may choose to allow patrons to pay for unique community benefits “per month” or to pay for “creation” to allow you to create more.
Patreon creators offer all kinds of exclusive benefits based on different levels of payment, such as exclusive content, branded swag, sneak peeks, yells and more. If you’re a creator who often delivers new content and has a strong online fan base, a Patreon page might be worth it.
Here you can build a community of dedicated fans and serve exclusive content (through the various Patreon integrations) that will unlock on the basis of the patron ‘s membership level.
Fees: 5% (excluding payment processing fees)
Fundable is part of the Entrepreneurs.co network and is one of the largest crowdfunding platforms that enable entrepreneurs to provide incentives or equity in return for funding (only registered in the U.S. for now).
Startups that offer rewards generally raise less overall (under $50,000) but get more backers, while startups that offer equity usually raise more capital from fewer investors, according to their location.
However, to succeed with equity fundraising, you need all the ingredients that accredited investors expect to see: a track record of growth, a solid business plan, and, if not more, a pitch deck.
Fees: $179 per month while fundraising (including processing fees)
Crowdcube is a UK equity crowdfunding site. It has a fairly limited number of campaigns, but companies accepted and active on the platform with their fundraising objectives will join the “Funded Club” of Crowdcube, benefiting from the exclusive benefits of their partner organizations.
To request investors from your network, you can promote your pitch or appeal to the established Crowdcube investor community.
Fees: 7% if you meet your goal (not including any other fees, or transaction fees)
GoFundMe has a unique approach to crowdfunding, as most campaigns are for charity or for good reasons.
But that’s not to say you can’t use this for your new business idea!
You will find however that most company or product concepts have some sort of tragic or inspirational story behind them. Some of the latest ventures, for example, is funding a cookie business made by a girl with Down Syndrome.
Fees: 5% for GoFundMe (not including transaction fees)
Seed and Spark only focus on films. Since filmmakers need eCommerce shops, it makes sense to point this gem out of a crowdfunding source here.
This effectively tears down the entire production so that donors can give money to other aspects of the series.
You might want to throw some money into the ring, for example, and specify that it’s going to the cameras or the casting.
For short filmmakers, writers, feature-length filmmakers, everyone making videos or movies, this forum is something like a YouTube series.
Fees: 5% (Option to pay by the contributors) (not including transaction fees)
Examples of Crowdfunding E-Commerce
There are many successful e-commerce companies that have started Crowdfunding campaigns. Here are some:
In 2012, Walnut Studiolo, Valerie and her husband Geoffrey had the idea for a new product. A bicycle frame handle made from leather, that could comfortably allow cyclists to carry their bikes.
They decided to start their campaign with Kickstarter. Within three days, they met their fundraising goal and wound up raising over five times the amount of money they asked for.
There were three main reasons they choose Kickstarter:
- The couple wanted to fundraise a small amount of money for purchasing the leather in bulk quantities.
- They wanted to reach out to the Kickstarter audiences and do something newsworthy to bring attention on their product.
- Using videos they wanted to engage and teach their potential customers how the product can be useful. Kickstarter shows the videos first and with this feature, they attracted a lot of attention.
Get started with E-Commerce Crowdfunding
1. Share your message
Let your potential backers know how your product or business idea will help them. Share who you are, what you plan to do, where the idea for the project came from, what is your budget, and why you are passionate about it.
This shows you are actually putting some thought into the concept which helps to prove your project ‘s validity and credibility.
- Make sure you produce both a super-looking project-header picture and a convincing video.
- You’ve got incredible video pitch to make. Ensure sure the content of the video is crystal clear, that the story is convincing and that the product shines.
- Show that you are credible by clearly speaking, outlining the concept, and the benefits and showing exactly how it works.
- Emotionally communicate with a personal story in such a way that a potential sponsor may relate to it.
- Finally, talk about why it’s a special product. People need to know what problem you solve which will appeal to customers.
2. Offer attractive incentives
After a great message, you need to get some great rewards for your backers to make your campaign more convincing. It’s a good thing to have some attractive rewards for them.
Also, keep in mind that the rewards are going to cost you, and if it’s a physical product, it needs to be shipped and delivered. This will also add to the price point. Give the rewards that you actually can deliver to them.
3. Set your goal
If you’re launching your Kickstarter campaign, be mindful it has an all-or-nothing fundraising model. You get to keep the money if you hit or exceed your funding target. If not, then you’re not getting anything. Platforms like Indiegogo are based on a completely different model, where you can retain the funding irrespective of how you are achieving your goal.
You should have a clear idea of how much money you are going to need for your e-commerce business started. Please keep in mind that once you have launched the initiative, you can not adjust your funding target.
4. Promote your campaign to a targeted niche audience
There are many ways you can promote your campaign, word of mouth is one of the effective ways and free ways to get started. However, it will have a limited impact.
To reach out to larger audiences, you will need to
- Social media marketing
- Influencer marketing (reaching out bloggers, YouTubers, etc.)
- Host webinars, events to interact with the live audience
5. Stay connected with the backers about your project progresses
You will need to keep in touch with the backers through weekly, or monthly updates. If you ignore this, then gradually they will lose interest and you might not able to reach out the more people.
Take advantage of communication tools and stay connected with the backers. Be clear about the progress and share the updates whether good or bad.
6. Production and Shipping
When you have raised the funds then you can start production. You can do that by yourself if you have the equipment. Else you can contact with a manufacturer who can do the production on behalf of you.
When you’re producing your products with manufacturers, make sure you’ve shared all the details about how you want the product to be.
After production, you will have to ship the products to the backers and ask for their feedback.
Based on their feedback, make changes to your products. Improving your product based on their feedback is essential.
I hope this post is helpful.
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