Tuesday, March 5, 2013

Crowd Funding: The New Concept of Funding for Product.

The Internet has already had a tremendous impact on the field of supply chain management. We see how a number of companies (Cisco, Dell, Adaptec, Zara, and Texas Instruments) have used the Internet successfully to lower costs and add value to their businesses. Companies now can search for its supplier by using websites such as alibaba and ariba. These days, internet with online stores also becomes competitor for conventional brick and mortar retail stores. Companies don't need to have its chain of distributions and stores to market its products to customers. Simply by using websites such as amazon and eBay, the company can reach its customers. This online business promises larger profit margin for companies. The web helps small and medium companies to compete with big companies.

Now, there is new opportunity that offered by internet. It is called crowd funding. There is website called kickstarter that offered new business model for Startup Company or people with new product idea. Kickstarter’s model combines investment and charity. Innovation is a key competitive weapon in today’s marketplace. And yet, companies have trouble getting their products to market. Several years ago, if you have an idea about product, you need to use your own funding to produce it. The other choice is to attract venture capitalist to fund your company. If you don't have your own resource of funding or venture capitalist to back you up, it's not the end. Now you can try crowd funding on kickstarter. Some analysts said it also to test whether your idea has opportunity to success in market.

The website reported several successful projects get funding that needed. There are a dock made for the iPhone designed by Casey Hopkins, LunaTik watch kits, and Pebble E-Paper watch. Without pre-orders from future customers, these projects would never become reality. It’s cutting out the middlemen, the sponsor become the investors and also customers.

Beside its success stories, there are also lots of projects that have bad ending story. Some projects were unable to collect its fund or failed to produce. Some projects also reported have experienced significant delays. For example: The inexpensive 3D-printing Printrbot ran about six months behind schedule. Pebble E-Paper watch has changed its September shipping date to "soon". They said it needs time to collect fund from crowd funding. These projects also found it's not easy to renegotiate price with suppliers when they know how much fund you have from kickstarter.

So what do you think about crowd funding, is it make supply chain network even slimmer by combining investor and customer? Will it become a trend in the future or just a niche segment that uncovered from private and venture capitalist funding? After all kickstarter was first developed to support donation for charity not to create new business. 


1 comment:

  1. Normally, small business raises money for crowd funding. Supply Chain Management is a very big area for crowd funding.


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