Where can a vendor go when Amazon is out of reach? We’ve thought up a platform for niche gadgets
The largest internet platforms have taken their rightful place at the top of the mountain, but working with them has its own nuances. What ever shall we little hamsters do?
Imagine a situation: regular electric broom, which you funded using Kickstarter, successfully raised the necessary funds for the manufacture of one thousand units. A portion you sold immediately as part of a crowdfunding campaign, another portion you hung onto. It is now that you’ve run into the main problem had by most enthusiasts and small producers of goods: you are so anxious to finish the development, and the transition from development to manufacture of a working product that you haven’t even stopped to think how are you going to sell it!
Actually, pretty much every other startup or small manufacturer ends up in the vicious cycle “before you can sell something, you need to make it”. This is a classic ailment of any small business which can eventually lead to bankruptcy and the cessation of activities. Of course these movements can be avoided by an astute sales director who prepares all the necessary “aerodromes” into which your product will “parachute”, but this isn’t usually the case. Having invested so much time, energy and often money fulfilling obligations to investors you are left with a bunch of unwanted devices in whose dead weight lies the ungotten profit for your operation. In such situations a small portion of manufacturers launch their own retail platforms based on the own website and the rest go to Amazon or other such large platform providers.
And it gets worse…
It ain’t easy being small!
Any large retailer earns money through volume of sales, not so much through their exact position as Amazon’s reports themselves testify, whose profit grows proportionally to the growth of sales volume. All other trading platforms are oriented towards the increase of turnover, including those on the internet, which leads to maximum unification and creation of limitations for manufacturers and providers.
Let’s talk about Amazon as a more obvious path for selling our gadgets. The system of sales on this platform is based on several key aspects: First, a detailed description of the product in a strictly regulated form. Second, the quantity of feedback greatly influences the position of the product. Third, average users and subscribers to Prime receive different selections of products (thanks to this and other marketing tricks product turnover on Amazon expressed in monetary terms was $107 billion in 2015, and $135.98 billion in 2016).
If one can meet the first demand of this titan regarding the conducting of trade, than the second and third pose considerable problems. If you are engaged in producing goods with low circulation and your product turnover is several thousand devices per year (at best), thus placing you in a niche market, than you have problems. On Amazon, as with other such platforms, there is a rating system based on the quality and quantity of feedback from real users. In the case of of the american platform, the minimum necessary feedbacks is 25. Without this number your product will not be displayed in search results, and to get the necessary exposure you’ll need to utilize banner ads or generate traffic some other way. The approach to distributing advertisements is justified, if we’re talking about some kind of series product, which is planned to be sold over a long period of time in enormous volumes. Then you can set up an advertising firm, attract the media, and put up ads on Google.
When we’re talking about small quantities of some unique product, such an advertising firm will devour any kind of profit from your sales or dig you or any beginning manufacturer into a bottomless pit of debt.
There is, of course, the option to hand off the product to some large retailer who has their own sales network at a price very close to the manufacturing cost. However, this brings us right back to the issue of drawing away of profit and of future growth, meaning the producer will have to start cranking out more than just a couple hundred units a month.
The problem isn’t with the manufacturers, but with the sellers.
You’ll surely agree that a well known brand does not always mean a high quality product, and offers on the market do not always meet the needs of a particular category of consumers. If 9 of 10 consumers are satisfied with a given product’s function, then a large manufacturer will not bother with the tenth. It’s simply not profitable for the manufacturer.
Smaller manufacturers could fill this niche and take care of the final, tenth piece of the proverbial pie. It all depends on the sales markets. In order to ensure the survival of small manufacturers, whose products are not reaching a large audience, the products must quickly and smooth be sold and advertised by the retailer. All things considered, large retailers are much more interested in selling hundreds of thousands of smart phones from famous brands than several hundred specialty gadgets.
We’ve faced the aforementioned situation when we were dealing with the supply and eventually with the production of PlayPad children’s tablets. Lack of access to classic platforms and sales markets for small manufacturers presents a paradoxical situation: there is demand for some specialized product, the product itself exists. But the manufacturer and buyer simply can’t get together because the buyer has no idea that said product exists.
Of course, the proverbial wrench in the spokes for low-circulation products is the very platforms themselves and the extant doctrines of online trading. Rules for distribution and trading were written with the largest trading platforms in mind, but nevertheless apply to the smallest participants in the market. Basically, the whole modus operandi of the modern internet retailer creates a suffocating effect for those who are not ready or able to put down hundreds of thousands of dollars or even millions for marketing and exposure.
Why did we create Hamster Marketplace?
We already have the same experience of such platforms as Amazon. We are talking about our own site and a personal sales channel. However with the growth in production and market share, we’ve arrived at a classical scheme of cooperation with large offline retailers such as M-VIDEO (one of the biggest Russian online and offline retailer company).
This experience can’t be called traumatic exactly, but it’s worth keeping in mind that in this “dance” the leading role is exclusively played by the trading network. We could at least agree or disagree to the working conditions which we offered us.
It is for exactly this reason that the idea for a trading platform which could act as a real middleman between producer and consumer was born. Such a platform would stand in opposition to such pseudo-platforms as AliExpress, Amazon, and eBay. Now, why would we mention “pseudo-platforms”? Let’s just say that it’s foolish to deny that all the aforementioned resources and companies standing behind them first and foremost are acting in their own interests of growth and the attraction of profit. Sometimes, these interests coincide with the interests of the sellers and manufacturers… and sometimes they do not. It is exactly this dictatorship that we wish to eliminate.
What is Hamster Marketplace? For starters, we took the currently popular idea of a decentralization and self-management through the mechanism of blockchain. In most aspects, the platforms copies the working business processes of Amazon, with one major difference: there won’t be any board of directors or Jeff Bezos calling all the shots. The platform will be managed by the producers and sellers themselves! In this way we wish to achieve self-management, where the decisions made by the platform will meet the demands of an actual majority of manufacturers, not just a small group of manufacturing titans.
These are the founding principles of Hamster Marketplace:
Hamster Marketplace doesn’t have the earning of profits as one of its goals.
Hamster Marketplace is controlled by non-intermediary participants with the status of manufacturer with the help of HMST tokens.
Development and functioning of the platform is taken from the budget based on the blockchain votes of token-owners with the status of manufacturer.
The platform’s budget expenditures are transparent and fixed in blockchain.
If the world is ready for collective financing of small projects, then, most likely, the time has come for the collective management of trading platforms.
Indie-electrons and do-it-yourself-ers from all corners of the Earth, UNITE!
Giving a fresh glance to our website, we suddenly realized that it is entirely about money. Fundraising is of course important, but we also need a link back to the collective. Next week there will a new page added for vendors and those who feel for our cause. In the meantime, let’s get to know each other. Are you in need of such a platform? How should it be set up? With what conditions should it operate? Feel free to write on our e-mail
icohmstr@gmail.com or share your opinions, doubts and suggestions in the comments.
