Crowdsourcing is a way to circumvent the typical business model of ordering inventory then selling it. But why use crowdsourcing for Amazon products?
With crowdsourcing, Amazon sellers can conduct market research to see if a product idea is viable, bring in customer support and a following, as well as generate purchases—all before ordering any inventory. This removes a lot of the risk of starting your own physical product business selling on Amazon.
Using the techniques and tips shared by Adam Ackerman in this training, you can learn how to select products to sell, set your fundraising goals, market your product on sites like Kickstarter or Indiegogo, and bring money into a new or established business.
Special Crowdsourcing Offer
Standard Business Model
What is Crowdsourcing?
Crowdsourcing Business Model
Choosing a Product to Crowdsource
Setting a Crowdsourcing Goal
Matt Clark talks with Adam Ackerman about how to successfully utilize crowdsourcing to advance your Amazon business—without tying up operating cash flow in inventory order (especially before you know if the product idea will actually even sell). In the video, Ackerman, who has raised millions of dollars for various products, explains how to crowdsource using platforms like Kickstarter and Indiegogo.
In normal business, the standard model involves buying initial inventory, selling that inventory, and then using that money to buy more inventory to slowly scale up. There is a lot of initial risk because you have to spend money to buy that initial inventory, without knowing 100% whether or not you will be able to sell it all.
Crowdsourcing is the chance to promote your product or idea to millions of potential customers (backers), who can preorder the product from you. You can sell your product before even ordering a prototype.
This is an opportunity to raise money for products and businesses that don’t exist with very little financial risk. Crowdsourcing allows you to validate ideas and see if there is a market for products before you spend the money to buy a bunch of inventory.
With crowdsourcing, the business model changes to: find/create product, pre-sell product, once it is already fully funded, place an order for inventory. Profit is made first (and you can pay yourself), then the product is ordered and distributed, which completely flips the normal business model.
And because this generates a backer email list, you now have a database to continue selling to.
Crowdfunding can also give you a competitive edge for when you want to bring your product to Amazon as you will have already acquired positive reviews from customers.
But how can you get started?
Start by looking through Amazon to find inspiration. Find a product or type of product that you are interested in and that you can see yourself growing in.
Look at the top selling products and ask yourself these questions:
- How big is the opportunity?
- Is this something people want or need?
- Is there mass appeal?
- What are the existing features?
- Is there room to add on or modify the product? (These are known as iterations).
Then, select a few similar products and compare their best seller ranking- this shows you how well the product sells in its category and where it ranks.
Read the bad product reviews in order to find consistent complaints about the product. These are areas to improve on. Additionally, google “Amazon best sellers,” which will show you the top selling items in each category.
From there, sketch your design changes and share them with a 3-d designer that you can find on sites like Upwork or Freelance. Then show those designs to your manufacturer. You can also talk to them and see if they can make the modifications without needing a 3-d model.
While Amazon allows you to do slight modifications to existing products and brand them as your own, crowdsourcing requires something more unique. It is important to think about new design features or function, such as a new material, that the manufacturer can often make. These changes don’t necessarily have to be revolutionary.
You can do this with something you already sell. Modify it, then crowdsource and relaunch. This works for new or older businesses. You can also crowdsource for a secondary version of the same basic product.
Keep in mind that 2/3 of people on Kickstarter or Indiegogo do not meet their fundraising goal simply because they don’t fully understand the process.
Consider the following helpful crowdsourcing tips:
- Utilize the features on the crowdsourcing webpage to highlight the important tips about your product.
- Have a video that shows how the product works/ the process of creating it. It should be very clear what the product is.
- Have professional photos. It should be very obvious what the product is.
- Use keywords to make your product stand out, such as “revolutionary.”
- Focus on how your product could change people’s lives (don’t get lost in tech information)
- Establish a scenario where the potential backers connect with the product and can see themselves as potential customers. Point out a problem they probably have that your product will solve.
- Validate every claim that you make about your product
- Include the story of the creator and how it was invented. Make it personal.
- People like to support the underdog and the actual human behind the product.
- Include video testimonials and offer a guarantee if you can, such as a promised timeframe. Eliminate all risk for the backer.
A major mistake many people make is setting an unrealistic fundraising goal.
You want to create momentum. You want people excited about your product and to engaged, people don’t want to waste time on unreachable goal. Use a lower goal—it looks better and people get excited about being involved.
A lower goal also means that you will reach that goal faster. The faster you reach your goal, the more likely you are to be featured on the crowdsourcing site as a favorite product. This can create even more free traffic for your product.
The specific goal you set will depend on your product and how much you need to get started. Go for the lowest amount you can get away with.
Matt Clark is the Chairman and Co-Founder of Amazing.com, a serial entrepreneur, and investor. He’s been featured on Forbes, CNBC, and Entrepreneur.com.