How will crowdfunding help Toc succeed?
Crowdfunding minimizes the risk for start-ups. As explained nicely on Wikipedia, crowdfunding is the practice of funding a project or venture by raising monetary contributions from a large number of people. And Kickstarter is a crowdfunding website. How can Kickstarter help Toc?
First of all, take a moment to imagine how difficult, costly and risky it is to set up a new business in a highly competitive market, especially the watch industry.
The first thing you need to do is to design a product that will fit the market place you are targeting. This will take many attempts to match the image you have created of it in your mind. You need to get a manufacturer to build prototypes which will undoubtedly need to be changed and amended until you hit a final product that that you can be proud of. Getting every detail right is everything but this is not cheap.
After this you need to order enough to supply reviewers, bloggers and press around the world so that they might write a positive article about the product you have poured blood, sweat and tears into. Then you need to advertise and market as best as you can across every possible platform.
High & Expensive Manufacturer MOQ’s?
All manufacturers have a minimum order quantity (MOQ) before they will make anything, possibly 300-500 or so. This is where the real cost and risk is, what if you never sell any or you only sell 50 and each watch is worth €400. If you have to order 300, you are left with €100,000 of stock that might never sell and your business goes bust quite quickly. Disaster.
Then imagine a way of taking most of these risks out of your launch, especially the last part, the upfront manufacturing. Wouldn’t this be amazing. This is exactly what Kickstarter does.
How does it work and can Kickstarter actually raise money?
Kickstarter has raised over $2.8bn in funding for over 117,000 project all over the world. Anyone can back any project. There has been over 12m backers and nearly 4m of these have backed more than 1 project.
Kickstarter is a website that allows businesses create a campaign page where you can upload images and videos of your product. You can also write all the key detail and specification of the product as well as tell the story around why the campaign is launching so ‘backers’ know what they are committing to. Backers can comment and ask questions if needed.
The business must then choose a funding target (€20,000 in Toc’s case) and the number of days you want the campaign to run for, such as 30 days, and when you are ready to go, you launch.
You the backer, sees a few different options in terms of what you can back/pledge. Essentially, all the ‘backers’ are doing is pre-ordering the watch (in our case) at a highly-discounted rate. For instance, Toc's first 100 watches will be priced at €179 (with free shipping), instead of the normal retail price of €379, then the next 150 will be €189 and so on.
Backers put in the details and choose their payment option but payment is only taken after the 30 days are up and only if the campaign has hit its target.
Otherwise no payment is taken from the backers at all. Then 50 or 60 days later the backers receive the beautiful new watch in the post.
What it also allows is for Toc to cut out the middleman and the large margins applied by importers and retailers, sometimes up to 1000%. You can read more on this in my last blog. http://www.thetocwatch.com/new-blog/2017/1/2/how-can-toc-launch-a-luxury-watch-thats-actually-affordable
The crowdfunding platform, so simple a concept, gives businesses like Toc a real chance at success without the huge burden of losing a large investment. A successful campaign means we can hit our minimum order quantity and go to full manufacturing. What it has allowed in our case, is for us to focus on design and build quality so that we have the chance to sell a high-quality watch that would rival large established luxury brands.
So, there you have it, it’s that simple.
Please follow us and help us spread the word.
And don’t forget to come out and support us when we launch on Kickstarter. (26th of July 2017)
Without your support, we cannot hit our target.
Thanks for reading.
Written by Will, Toc Watch.