How Indiegogo’s Trying to Make Retail Easier for Hardware Startups
Last week, crowdfunding platform Indiegogo partnered with retailers Target and Brookstone to get crowdfunded products into their stores more quickly. Three Indiegogo success stories — Oomi, Nanoleaf, and Butterfleye — will soon sit on the shelves of Target Open House in San Francisco, and Brookstone will also feature a number of such products both in store and online.
“Some of the most interesting connected products start on a crowdfunding platform,” Kate Whitcomb, Target’s Growth and Innovation Lead, told us. “Because the world of IoT products is so new and growing so quickly, we know there are a lot of good ideas that are still in development. Giving a physical store space to the product that we so often see in 2-d seemed like a logical step for us as we continue to use Open House to get more up-and-coming products into the hands of consumers.”
Most hardware startups face a long journey before they can afford the terms required for a retail launch. Making it less elusive or risky for these companies could change how hardware founders bring their products into consumers’ hands.
To learn more about what these retail partnerships mean for the hardware industry, we sat down with Indiegogo COO Dave Mandelbrot to get his take.
Why was this an important move for Indiegogo to make?
The relationships were really important because the primary goal for us at Indiegogo is to enable entrepreneurs to get all the way from their original concept to retail. Historically, the primary role that Indiegogo played in that was helping those entrepreneurs get their initial funding. Over the last year, we have focused our energy on all of the different steps to enable entrepreneurs to make it to retail, including having their physical products in retail stores. These relationships are the culmination of our efforts to make it easier for entrepreneurs to get their products to market.
What standards are you looking for when picking companies to feature in store?
One of the things we’re looking for is a high level of confidence in the ability of the entrepreneur to ultimately get their product to market. In our Target relationship, we’re looking for products that have already been funded, developed, and manufactured, and that are ready to be sold in stores. Having hardware that’s ready and has established clear demand in the market through their campaign, those are the ones that are very interesting.
Is there a funding threshold these startups need to pass to be considered for inclusion?
We don’t have a hardline funding goal. There are certain categories of products that both Target and Brookstone are both interested in. But for the most part, we’re looking for products that have a lower than $500 price point and have raised over $1 million on their campaign on Indiegogo.
How is the process of getting into retail going to be streamlined for the average hardware startup?
The major shift that’s going to happen in the next five years is a shift in the balance of power from the retailer a little bit more to the hardware startup. Right now the path into a retail store for a startup is to pitch their product through the buyer. The startup needs to get on the buyer’s calendar and get them interested and convinced that their product is worth having in the retailer’s limited space. Currently the buyer has had to take a high risk in incorporating that product onto the shelves. The buyer has very much been in power in that relationship.
What’s going to start to happen is that entrepreneurs who have been able to demonstrate high demand for their product through their funding campaign will be able to go into those discussions with much more data to show the likelihood of success of that product and, in many cases, the buyer is going to be coming to the startups before the product is actually shipping.
This is going to be a much better opportunity for the entrepreneurs and the retailers to become partners in bringing their product to retail. And it takes away a lot of the risk for the entrepreneur who no longer has to take on a large manufacturing commitment and the risk associated with that.
“It’s really exciting to see these products in the stores. But what’s more exciting is to see how this platform is starting to bring about real change in this industry in a way that’s allowing entrepreneur’s products to get into the hands of consumers much more quickly than they ever were able to do in the past.”
— Dave Mandelbrot, Indiegogo COO
