Amazon's Launchpad gives crowdfunding startups a boost

Amazon just launched a new platform that will allow startups to advertise and distribute their products to millions of its customers. 

Eduardo Munoz/Reuters
A UPS worker organizes Amazon boxes to be delivered in New York July 24, 2015. Inc's shares surged more than 20 percent in early trading on Friday, adding more than $46 billion to the company's market value, after strong growth in the e-commerce giant's cloud business drove a surprise quarterly profit.

Startup activity is on the rise in America, and now Amazon is getting in on the game.

On Tuesday, the e-commerce giant launched a new platform that will allow startups to advertise and distribute their products to millions of its customers, including those using Amazon Prime. The platform, known as Launchpad, will help startups sell products whose creation was originally financed through crowdfunding and venture capital. The initiative is Amazon’s way of satisfying customers’ growing appetite for unique products and customized goods, observers say.

“Many consumers today are looking for more individualized products and services — creating a long tail of consumer goods that others like CircleUp [a platform to crowdsource investments for consumer products] are also capitalizing on, wrote Ingrid Lunden for Tech Crunch.

“In packaged goods, one of the categories of products that CircleUp helps raise funds to develop, it estimates that big brands have lost around $4 billion in sales to these smaller companies in the last year. For Amazon to continue to capture as wide a number of customers as possible, it wants to offer those people choice on its own platform, too,” she continued.

Meanwhile, CNET journalist Ben Fox Rubin writes that Launchpad is an additional attempt by the company to cultivate its own uniqueness.

“The new page is another way Amazon can make its online store different from other retailers to ensure customers keep coming back for its unique items….Still, Amazon's latest program appears to be fairly close in concept to a page launched in March, called Amazon Exclusives, where the e-commerce giant has pulled together toys, sporting equipment and accessories from ‘up-and-coming’ brands,” Mr. Rubin wrote.

“In addition to Launchpad and Exclusives, Amazon has opened an art marketplace and started offering its own line of ‘Elements’ [home products] that have included diapers and baby wipes, though Amazon quickly stopped selling the diapers to make improvements to the design following customer feedback,” he added.

Amazon is now partnering with over 25 crowdfunding platforms –  including Indiegogo and Y Combinator – and venture capital firms to help a vetted group of startups sell their products. Each startup will get its own designated product page where it can share information about the company and what it’s selling, a move that will allow consumers to get to know those inventing and selling the products they buy.

Young companies whose products are still in the manufacturing stage will also get a boost, as customers can pre-order products through Amazon.

Amazon will fulfill orders, manage inventory, and provide customer support for the startups.

In exchange, the startups pay Amazon a commission on product sales.

Launchpad is currently hosting around 200 products that include everything from plant-based water filters and chickpea pasta, to mattresses and home WiFi-systems .

"As the pace of innovation continues to increase within the startup community, we want to help customers discover these unique products and learn the inspiration behind them," Amazon vice president Jim Adkins said in a statement.

"We also know from talking to startups that bringing a new product to market successfully can be just as challenging as building it,” he added. 

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