Why Amazon has a big opportunity in product crowdfunding

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GigaOM by Ross Rubin | January 31, 2015

Photo: Andrew Harrer/Bloomberg News

Photo: Andrew Harrer/Bloomberg News

Crowdfunding has helped to bring us some of the most avant garde devices of the past few years. Some, such as the Oculus RiftPebble smartwatch and Hidden Radio, have helped to jumpstart whole new categories. And more categories may be pioneered by products such as the Narrative Clip (formerly Memoto), Dash smart headphones, Melon brain-training headband, Ubi home intelligent agent, Romo smartphone-driven robot, Canary security system, and Galileo remote conferencing accessory.

But this method of bringing products to market has been fraught with challenges. Not surprisingly for those who have navigated the rough waters of device development, many products listed above — such as the Pebble, Clip, Ubi and Galileo — missed their estimated original shipping windows. Indeed, many high-profile crowdfunded tech gadgets — such as the AGENT smartwatch (over a million dollars raised in June 2013), the ultra-thin CST-01 e-paper watch (over a million dollars raised in February 2013), and the Jorno folding keyboard (over $100,000 raised in October 2012), have still not shipped (although its otherwise non-communicative inventor last updated the shipping date to March 2015). Delays such as those of the Jorno have been so profound that what once seemed like an innovative product has been overtaken by crowdfunded competitors and radical new designs.

Related: 8 Things About Hardware Crowdfunding We Learned From 20 Campaigns

The Kickstarter manifesto that it is not a store has led to a number of companies seeking to offer more assurance to those who preorder devices. Christie Street, an early effort by Ring inventor Jamie Siminoff, has been dormant since failing to achieve critical mass. Crowd Supply, which sells products after they’ve been funded, has has a number of wins related to open source projects such as the chunky Novena laptop. Prelaunch.com seeks to capitalize on the buzz crowdfunding generates, but with more established companies. More recently, Crowded Rocket launched with a handful of cool tech products and the support of a number of online personalities with large followings, including Robert Scoble.

Related: Kickstarter dumps Amazon Payments in favor of Stripe

But these companies have all been startups, and have struggled to compete with the large traffic flow and audiences of Kickstarter and Indiegogo. What if, though, a company that was a store stepped in at the intersection of crowdfunding and product development and that company was unabashedly a store? Amazon.com, which has long been the primary payments provider used by Kickstarter, would be well-equipped to be that company.

Here’s why:

  • Like other tech retailers, Amazon.com sources its own branded goods. More so than any other tech retailer, though, Amazon has been engineering its own products for a decade and is well-acquainted with what it takes to bring products to market.
  • The company has exactly the kind of distribution that device makers are looking for after they receive funding and could retain valuable exclusives by tapping into the product innovation pipeline.
  • The company has already been experimenting with crowd feedback to determine which of its original pilots should move forward into production.
  • Amazon has a stellar customer service reputation, a dramatic contrast to the lack of accountability on crowdfunding networks.
  • Amazon has the Web’s most mature affiliate model— a no-brainer that is surprisingly ignored by the big crowdfunding sites — that would be a natural fit for driving preorders via the social links that crowdfunders utilize.

Related: Product versus Equity Crowdfunding (pros and cons)

Amazon may be finally waking up its potential as a leading source for crowdfunded or products that are offered for preorder while in development. As reported by Hacked.com, the company has a job listing for a senior manager of product management to “build the world’s best end-to-end platform for startups.” The company seeks those “inspired by inventors who develop and launch new products” and “see the opportunity to connect these entrepreneurs with Amazon’s hundreds of millions of customers.”

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