October 18, 2013
Gumroad was found in August 2011 but launched in February 2012 by Sahil Lavingia, a 19-year old Indian college dropout. According to Ryan Delk, Gumroad provides a platform with a vision to 'share and sell the stuff you make directly to your audience.' Ryan Delk works in Growth & Business Development practice for Gumroad. It is headquartered at San Francisco, CA.
Series A, 5/12
Gumroad saw success within a few weeks after its launch. It had more traffic than Pinterest had in its first 10 months according to businessinsider.com. Artists even with modest Twitter followings had made thousands of dollars by selling their creatives on Gumroad. The company has been listed as one of the top 5,000 sites in Japan. Multiple authors have earned more than $100,000 by selling via Gumroad.
Gumroad facilitates creators to sell directly to their respective audience so as to promote a living by doing what they love. Gumroad attempts to make transactions as simple and frictionless as possible. Bypassing complicated forms and pay walls, Gumroad’s clients send a link, and their customers purchase the digital or physical product on an immediate basis by clicking on the link. No account signup. No cumbersome approval process.
Here is an introductory video on Gumroad:
In order to use Gumroad, sign in with either Facebook or Twitter and follow the steps below:
A link has to be submitted in the entry form, either to a blogpost, spotify playlist, invite for an iPhone app, Instagram, a research paper or any other creative stuff.
Then a price has to be set by the seller and an option of an email on purchase and/or to upload a photo is given.
Interested buyers are asked for their credit card number to buy the product and sellers pay the fee of 5% plus 30 cents per sale.
The payment to the seller/client is made every other Friday, for sales upto the previous Friday. The payment can be made through Direct Deposit (ACH) or PayPal (required - balance pending of $10). The required minimum balance for Zengin payouts is $100.
Gumroad covers all fees for both the payout options, irrespective of the country. No additional monthly, setup or hosting fees. Everything is included: file hosting, file download, payment processing, customer support, payout deposits analytics.
The various features of Gumroad’s platform include:
Overlay – This brings in the Gumroad purchase pages onto the client’s site, facilitating online transactions without disrupting the browsing experience of customers
Webhook – A Webhook API allows sellers to generate a unique URLs for each individual purchase. Its various uses are: One-time fee for signing up for a web app, selling in-game credits and currency, generating unique QR codes for an event, custom thank you notes for donations, etc.
Embed – This feature brings in Gumroad products onto your site, facilitating inline transactions without disrupting the browsing experience of customers
Ping – A simple alert that notifies in real time whenever one of the products is purchased
Gumroad recently announced a new feature to encash on a big source of income — pre-orders. This, instead of uploading a file will enable creators just to enter a release date. Fans can purchase the product via credit cards, then on the release date, all those pre-order cards would be charged, the content would be delivered to the customers, and the listing will be turned into a regular Gumroad product listing. Creators can also send messages to customers who placed orders before the release date, just as they can send afterwards.
Gumroad’s competitors include – PayLoadz, Sellbox, Ribbon, Instamojo, etc. Another interesting company we came across is Sellfy which is a platform that allows users to sell their personal digital content. The platform sells a wide range of items including e-books, software, video files like lesson tutorials, phone graphics, music, and various audio files. Sellfy doesn’t charge up-front costs or subscription fees, only 5% per transaction is charged – slightly less than Gumroad’s 5%+$0.25. Nevertheless, Gumroad claims to have improved on its features which now includes improved analytics and enhanced anti-piracy measures.
LTP View: Gumroad when compared to eBay as a platform for sellers may be more economical. Where Gumroad charges $ 0.25 + 5% per transaction eBay charges $ 0.10-$ 2 + 9% of the total amount, and Apple and Amazon both charge 30%. With Facebook and Twitter looking like the future marketplace, Gumroad may have the potential to encash on the opportunity in this space. In the process Gumroad may also disrupt the traditional and current online distribution systems with its simple platform. Simple is great, however, from a payment platform perspective, it may mean more fraud. With no Paypal-like verified payers or address fields, the risk can be significant.