How Amazon Launchpad Is Helping Start-Up Companies
Amazon Launchpad is a platform setup with the intention of helping start-ups to grow by taking advantage of Amazon’s pre-existing network of fulfilment and marketing. Applicants are generally accepted from a pre-approved list of funding sources such as Kickstarter, venture capitalist firms and other types of start-up accelerators; but they also consider applicants who raised finance using alternative methods. Once accepted onto the Launchpad, Amazon offer a range of marketing and PR tools to help grow a business.
At what point in a project would Launchpad come into its own?
Unlike platforms such as Kickstarter or Indiegogo, Amazon have focussed on what comes next, the big unknown. Rather than looking to fund potential products, Launchpad helps to sell established ones; this enables a start-up to grow by benefitting from marketing support and related PR opportunities. With a global supply chain, being a part of Amazon’s extensive sellers list gives a company access to new markets that they may not have been able to penetrate independently.
By allowing start-ups to present themselves in the same way as an established seller gives them the same opportunities, and by working with Amazon to develop marketing strategies they can gain more exposure in ways that may not have been obtainable without Amazon’s dominating Internet presence. A start-up can also take advantage of Amazon handling the customer service side of the product and an invite to Amazon Vine its exclusive review feature which puts products into the hands of Amazon’s top reviewers. This helps to enrich the product story and gain credibility through reliable reviews that have the potential to boost product sales or highlight potential issues and improvements.
The bad bits
As with everything in the world, it’s not always rainbows and sunshine (we’re British so we’re used to it), Launchpad also has its bad points. The first of which is the wholesale nature of Amazon, wholesaling products is standard practice for most companies but this loss in margins can have a big impact on small start-ups. Their payment terms can also present a hurdle as the company would have to accept net-60 terms giving a two-month lead time from sale to payment from Amazon. Another and probably the biggest hurdle is the fact that a place on the Launchpad is not guaranteed, a company can go through the process of applying, to not get program approval depending on the success of an initial sample of product supplied to Amazon. The pricing would also be decided by the team at Amazon, if they believe that the suggested pricing for the product is too high they will reduce it in-line with other similar products. The company would also have to pay an additional 5% fee for being on the program on top of the standard Amazon fees applied.
Closing thoughts
Regardless of its drawbacks and the initial investment needed to join Launchpad; if successful, Amazon’s undeniable dominating presence offers many benefits that a flourishing start-up needs to grow, being able to sell in a marketplace with established distribution and customer service systems can help to give piece of mind both to the company and investors. Incorporating Launchpad into a business plan for a consumer product could prove to be a lucrative move, with a global reach the product could move from strength to strength. The main takeaway point in this article is that Launchpad isn’t “just another crowd funding platform”, the aim of Launchpad is not to help a start-up gain initial investment but to benefit from Amazon’s e-commerce power.
