If executed well, crowdfunding is a fruitful process. People are able to finance their idea or project using small amounts of funding from a large group of people. In theory, this process sounds fool-proof, however, it can be difficult to accomplish.
One problem that arises with crowdfunding deals with experience. A lot of creators tend to be relatively young and not have experience in things such as production, supplying, sourcing etc. This can be an obstacle for them when trying to figure out the rest of the process. It is important for them to get advice from people who have experience and knowledge on such topics.
Once the product reaches its goal, the creator needs to start shipping. Time management for this is extremely important as backers want to help you again and hence don’t want to wait too long on their orders. Furthermore, it can be challenging for creators to create a price structure and determine a budget due to unaccounted for shipping costs, tax, failed attempts etc.
Moreover, the more rewards there are, the more difficulty the creator will face with organization. The knowledge for such logistical procedures improves with practice and experience, but for a novice creator, they can prove to be quite challenging.
Another problem that arises for crowdfunding creators is related to production and the difficulties that arise from it. There are some goods that can be easily produced from home but then there are others, which require parts imported from all over the world or need to be produced in another place all together. With goods such as these, accountability between the creator and the manufacturer is very important in order to ensure successful delivery. Sometimes multiple manufacturers are needed for different parts and it is important to have good coordination and organization with each manufacturer. In addition, it can be difficult for the creator to share their prototype with the manufacturer if they are located halfway across the world.
Furthermore, language barrier and different time zones can also make communication difficult and increase the already challenging process of production. To produce goods, it might be necessary for creators to find sourcing agents or a sourcing company that can help with product sourcing. Overall, production is a challenging feat for creators and not something to be taken lightly when analyzing the different aspects involved.
Finally, problems can arise with one of the last steps of the crowdfunding process, shipping. Figuring out the cost of shipping to different countries can be a very tedious job that requires a lot of coordination. Furthermore, if a good is being shipped from a warehouse in another country, it can be even more difficult for the creator to organize the shipment. Finding a reliable yet inexpensive way to ship can be very challenging especially for someone lacking experience.
Before a good gets shipped however, the creator also has to face obstacles when considering packaging. Packaging involves costs such as time and money. Branding and reliability are also factors that need consideration and prove to be quite difficult to decide and manage for creators.
Though crowdfunding is a collaborative and efficient way to make money, there can some setbacks involved in the process. It is important for creators to meticulously prepare for their campaign, making sure to account for every single part of the process in addition to any back up plans. Overall, choosing to crowdfund can be profitable as long as the creator is aware of the disadvantages and pain areas that come with.
Disclaimer: The information provided in this article is based on interviews done with service partners and research of topics discussed on various platforms. While there are many challenges, the objective is to highlight these so that creators can find a path to success post funding of their projects.
Tiger Pug is a China based sourcing and fulfilment company that supports crowd funding project creators with product development, sourcing and global fulfilment. To contact Tiger Pug write to firstname.lastname@example.org or wechat tigerpug or whatsapp +8618813228742
Author – Ms. Subah Sehgal, Student, University of British Columbia, Vancouver, Canada