The central question of modern retail is where to find buyers. Nobody thinks about the importance of manufacturers: why take up mental space with what will come on its own? That is how the majority of major online retailers operate, as do practically all existing offline networks. They fight only over the major players: getting the chance to be directly supplied by Apple or Samsung at the initial wholesale price is the ultimate dream of any player in the retail market. But no one considers the interests of small manufacturers (vendors). The main reason for this is that you can’t “get much out of” them. A small manufacturer is only interesting to a similarly small or local retailer, one who doesn’t have enough of an assortment or has a unique target demographic.
And yet, small manufacturers—yesterday’s startups—contain huge potential for both the market and consumers. Hamster Marketplace is oriented specifically toward small manufacturers of unique products, but for the platform to fill up with vendors that its target audience expects, those manufacturers still need to be found: many of them hide in their cocoon of a promo website that doubles as a storefront for a single product, or they are drowning in the sea of Chinese-made copycats and look-alike offerings on Amazon and AliExpress. So how do we get them out?
Bringing Vendors from Kickstarter and Indiegogo
The two first and most important platforms for Hamster Marketplace, as sources of both vendors and buyers, are the crowdfunding giants Kickstarter and Indiegogo. That is where the project creators intend to find the majority of the first wave of manufacturers that will directly sell their products on the platform. Every day, hundreds of projects successfully complete on Kickstarter, meaning they were able to raise the amount they set.
According to the platform’s own statistics, over the course of Kickstarter’s existence, over 130 thousand projects have successfully completed, and a total of $2.86 billion was raised from 13 million backers. Those figures are staggering. Plus, projects from the Technology section account for one fifth of all of the platform’s fundraising. In exchange, the startups offer their backups actual products. Over 4 thousand projects in all categories are actively raising funds on Kickstarter.
There are no up-to-date statistics on Indiegogo, but this platform is even more popular among various tech projects and just cool devices. The site has 15 million unique visitors every month, which is a huge number for such a specialized platform. Numerous tech projects have been funded through Indiegogo since 2008. And some of them were less amusing and curious and more crazy.
As an example, let’s take one of the high-profile Indiegogo projects, XM42, a handheld flamethrower that raised almost 400% of its initial goal in 2014. Three guys from Detroit were able to raise $157 thousand to develop and launch production, supported by 248 backers. The project was a good one in all respects, from idea to implementation. Granted, under the laws of several countries the team’s product was classified as “other weaponry” and was banned for sale and shipment.
But the most interesting phase for a project that was seemingly successful and of interest to the market began after crowdfunding concluded. These guys had a retail problem. In the end, over the last few years they have had to give up on selling through their own website and hand off their products to be sold by dealers in stores across the US:
Judging by the project’s website, the team is still looking for new sales channels, as clearly shown by the contact info and associated information.
The situation is even worse for lower-profile projects, whose hauls range from $50 to $400 thousand. This money is usually enough to launch production and ship units to backers, but not enough for marketing and sales to allow for subsequent growth and scaling the business.
Hundreds of successful crowdfunding projects simply disappear after fulfilling their obligations to the backers that supported them. The reason that it is simply inconvenient to buy through the slapdash promo website of each individual project, where problems come up with accepting payments, delivering to other regions, and basic trust. Meanwhile, on the major platforms, as we said before, these products get lost in the sea of mass-market Chinese goods.
Hamster Marketplace offers such vendors:
- reasonable conditions for gaining access to the platform;
- being surrounded by the same kinds of projects;
- the absence of mass-market Chinese goods, as seen in the AliExpress catalog;
- no fees from the platform itself for the sake of making a profit;
- IT support; and
- a transparent blockchain-based interaction system.
Small manufacturers are undergoing stagnation and decline, just like small retail. Modern retailers, whether large retail chains or online giants, have simply smothered the sector. Meanwhile, even if consumers want to support private manufacturers independently selling their own wares, they often can’t find them at all, or doesn’t suspect that the opportunity for direct purchase exists. This state of affairs is beneficial only to retailers and dealers, who increase the end price of products by 35-400% to cover their resale services.
We believe that attracting just a few percent of the manufacturers who successfully launched themselves through crowdfunding would be an excellent start for Hamster Marketplace and a unique opportunity to signal a new approach to retail sales. This applies to both working with small-batch manufacturers and the fundamental issues of organizing retail such that the platform founder does not become the owner of a cash cow, but instead merely sets up operations and, like a good manager, steps aside to let his child go on to exist independently without additional oversight.