The impact of retail backers on individual crowdfunders

There is a small subset of backers that are retailers, and the presence of retailers impacts how I, as an individual backer, understand and interact with the crowdfunding project.

Key takeaways

  • By offering retailer rewards, the project creator seems to be thinking commercially, which lessens the risk of failed delivery for backers.
  • Some backers react negatively to projects if retailer rewards are offered, because it may dilute the crowdfunding experience.

Retail backers

As an individual backer, seeing the retailer reward level has a psychological effect and a push factor as to whether or not I will back a project. Whether the retailer rewards are picked up, is also influential in my decision. The psychological push is three-fold:

  1. the project creator seems to be thinking longer term, and has a commercial mindset;
  2. the product has gone through various levels of beta testing, and the project creator is confident that it is ready for market;
  3. the product moves from the idea stage to pre-order stage and there is a perceived reduction in risk and time to manufacture and ship the product.

But, seeing a retailer reward implies two risks for me as an individual backer:

i) whether or not my copy of the product / service remains exclusive, in that the retailer copies are not identical to mine. This exclusivity is part of the implied contract between the crowdfunder and project creator: I will back you, you give me something special in return, for example a customised game card or my caricature in your graphic novel.  If the retailer’s copy is the same as mine, what is my incentive for supporting the crowdfunding project? I can simply wait for my local retailer to stock it; my waiting period until the retailer stocks the product is offset by the retailer assuming the risk in the crowdfunding transaction.

ii) whether the retailer sells the product at a lower price compared to the crowdfunded price. The recommended retail price is only sometimes clearly stated on the project page and backers may have an implied understanding that the crowdfunded price is a special deal. There are some instances where the product was first available to retailers and sold at a lower price, jeopardising and angering the crowdfunding backers. Part of the crowdfunding rewards for backers is the reduced price for the rewards, and by taking this benefit away, the risk / reward profile of the crowdfunding transaction tilts.

I am in two minds about the project creator offering the retail reward level.

On the one hand, the product is ready for market, and I have greater confidence that it would actually get manufactured and delivered within the estimated timeframe.

On the other hand, it takes a little bit away from the crowdfunding experience, making the transaction a bit more commercial and making me more of a consumer instead of innovator and early adopter.

Somewhere there is a balance, and given the projects I have backed, I welcome the presence of the retailer reward level.