Why Do Famous Brands Use Kickstarter?
Kickstarter and similar crowdfunding platforms have generally been seen as a place where startups can get enough capital to pursue projects. Although Kickstarter has never stated it explicitly, most people believe that the platform is for businesses or ideas that are just getting started. However, I have recently noticed several well-established smart technology companies using this platform to launch products. All of these companies, especially Eufy , Aqara and Switchbot , already have a library of traditionally launched successful projects, a healthy customer base and name recognition. This got me thinking about the reason for this trend and whether it has implications for brands or consumers.
Crowdfunding platforms generally pose equal risks to companies and consumers.
Kickstarter campaigns follow a certain formula: a well-designed video, attractive graphics, and bonuses. In the case of consumer goods, the benefit is the product. Companies set a funding goal, and if backers meet the goal, the project moves forward. If it fails, everyone gets their money back. Everyone has risks – it is obvious that the company may not achieve the goal, and even if it does, it will now have to comply with the benefits. Producing one concept gadget is different from producing 5,000 gadgets, and very different from producing 500,000. For the sponsor, there is a chance that they will not receive the product at all – the company may never be able to bring the concept product to full production. The product may also be very different from what was promised in the campaign, may take longer to arrive, or may simply not live up to expectations. There are no consumer protections here – if you support a project, the creator is only expected to bring the matter to ” satisfactory completion”, which may not include implementation. The platform claims to actively combat fraud , but the only possible consequence for a creator who fails a campaign is suspension from the platform —Kickstarter does not offer refunds . There have been many cases in the past where backers didn’t receive products they supported or didn’t receive refunds – just sad explanations of how companies interfered with their plans.
Established companies have fewer risks and more opportunities for growth.
Established companies have different stakes: they already have a user base, they already have capital, and therefore they have more responsibility and risk. They know how to create, produce, launch and support a product. How does Kickstarter benefit them? According to Switchbot and Eufy, using Kickstarter provides a long period of direct feedback from consumers. Kickstarter users, whether they support them or not, can view campaign materials and respond either in comments directly to the company or in the public domain—all while the company listens and adjusts. According to Switchbot Marketing Manager Anna Huang, “We like to get user feedback on a niche product like this at a very early stage, which is why Kickstarter is a good platform for us to reach our target users as early as possible.” Eric Villains, head of global communications at Eufy’s parent company Anker, says working with crowdfunding platforms means respecting the consumer’s voice. “This allows us to innovate together with the customer – we receive feedback in real time. We had products that we released, and based on the comments, what we thought was cool wasn’t being seen, so we can tailor the marketing in real time.”
These backers are the first to experience a new product, which has its own benefits and risks—they can’t help but become a test market. Villines acknowledges that the hardware or software itself may be modified before being released for sale, based on responses from backers. “By the time we get to the end consumer, we have a product that has been thought out a little better; we were able to fix the original batch of sponsors.”
For an established company, Kickstarter success isn’t an anxiety-inducing race to figure out how to scale; Companies such as Eufy and Aqara already have such systems. In fact, in most cases, the campaign “concept” is already close enough to production and supply chains are already in place. Crowdfunding campaigns pose less risk than a traditional launch or startup campaign since they now simply need to produce products based on demand and raise the capital to do so. Kickstarter can actually help you save money—Villins explains that these campaigns “eliminate supply chain risks, reduce costs and reduce time. We end up not producing more than we need. If you look at how companies innovate, it’s a slow process. Crowdfunding allows us to bring our biggest, craziest ideas to life faster, and if we fail, we fail fast and move on. “
Crowdfunding also attracts companies thanks to the backers themselves. “Compared to regular consumers on a larger scale, local Kickstarter users consist of a large number of geeks,” Huang says. “They are relatively more open to discovering new technologies and are more willing to provide feedback and have discussions at a technical level.” this greatly helps us improve our products so that they are more than ready for regular consumers.”
Sponsors face less risk (but not no risk) when using well-known brands.
An established company that has produced products before has a much better chance of getting the final product. This reduces the risk for the sponsor as a whole. But these groups of early adopters still receive the first version of the product, which will be improved based on their experience. The trade-off here is that they get it at a lower price than the final retail price (usually). However, waiting for the retail version may mean getting a product with fewer glitches.
Unlike most other Kickstarter campaigns, campaigns from companies like Eufy, Aqara, and Switchbot have already established customer service channels to support the product, including the ability to return it. You don’t have to worry about the company having the capital to pay back the funds.
Crowdfunding is a marketing method that can have benefits for consumers.
Early adopters will be a test market no matter how the product launches, and for many, that’s part of the thrill. That companies offer a more direct way to participate and provide feedback is likely an advantage for consumers. For companies like Eufy, Aqara and Switchbot, crowdfunding is not about raising capital to bring a new idea to life, but rather a marketing method to support a product launch. Even though Switchbot and Eufy indicated to me that they were crowdfunding for new vertical or niche products, they have both made robot vacuum cleaners before, so the products they are funding now are not new verticals. And none of these items can be considered “niche.” However, compared to most Kickstarter campaigns, consumers could potentially get a less expensive version of the product they’ve been craving. The likelihood that they will receive the product is very high, and it will most likely be close to what is presented in the marketing materials. And if they don’t, or if there’s a problem with the product, there’s a reputable company behind it.