We live in the Startup Era where Silicon Valley has more cultural allure than Wall Street and rightfully so. The rise of giants such as Google, Facebook, Twitter, Instagram and others have brought an unprecedented amount of hope, opportunity and independence to my generation. This entrepreneurial spirit is embodied in platforms like Kickstarter which has been the subject of passionate debate in the watch community. Having spent the past few months researching and interacting with various Kickstarter projects, I have finally decided to chime in.
Kickstarter which was founded in 2009, is a global crowd-funding platform. As you all are aware, I have covered a number of promising watch projects that have emerged from Kickstarter over the past 6 months. From brands like Azula to Helgray, each of the projects I have covered has a unique flare and what I believe to be a value-add to the consumer and larger market. Sometimes I pick winners and other times projects simply flop. From all of my research and coverage of this specific platform I have come across a problem. Admittedly, I have only covered a fraction of the watch related projects on Kickstarter and for good reason. As with any business, it all starts with an idea but not all ideas can be turned into profitable businesses. I want to briefly explore the saturated Kickstarter watch market, the Kickstarter platform itself, as well as its value.
At any given point in time Kickstarter has thousands of projects being funded across all sectors. With the growing media attention around the Apple Watch and the recent "fashion watch" craze, I truly believe entrepreneurs have turned their sights to the watch market for new projects. We can argue about whether the Apple Watch is actually a "watch" but what cannot be argued is that this product is competing for space on your wrist. Competing against watches that comprise a large segment of the market, quartz (battery powered) watches. Of the twenty or so requests I have gotten to cover watch projects on the platform, only three have featured automatic movements. Sadly, the rush to flood the market with quartz watches that lack any discernible difference from the next quartz watch is oddly reminiscent of the Quartz Crisis of the 1970's-1980's. Let me say this, there is nothing wrong with quartz watches. Quartz watches certainly have a place in their market. Mid-range quartz analogue watches are the fastest growing watch category with 8% value growth as of 2013 according to according to Euromonitor International. While this category is growing faster than other categories, this particular sector of the market is dominated by a few players. Roughly 48% of the total sales (2013) of all watches are sold by 4 major companies who also produce quartz products -Fossil, Timex, Movado, and Swatch.
These brands have deep roots in the entry-level market and have firmly positioned themselves as experts in the manufacturing, marketing, and sale of quartz products. What I find alarming is that despite the tremendous amount of opportunity in this market, the projects on Kickstarter lack a certain depth and a general awareness of the market. In 2014, store-based retailing accounted for 79.7 % of the total watch sales by retail value. Only 15.9% of that market was as a result of Internet retailing. Without a doubt there are margins to be made but projects cannot expect to be successful if they replicate something that has already been done. At this very moment, there are numerous projects replicating the same brand identity, design, and movements of larger names such as LIV and Helgray. Using these brands as a measuring stick for other Kickstarter projects I can clearly see why their stories are successful.
Both LIV and Helgray have unique and inspiring brand identities, distinguishable design elements, and they are affordable. At the end of the day, these products have mass appeal to specific target demographics. What makes a product that looks and feels like a Michael Kors or Skagen sold at Macy's, any different? The small shop artisan feel? Bracelet options? Dial colors? Its simply not enough in the current market. Also not to mention that quartz projects over the $300 mark are competing against wearables such as the Apple Watch (base retail Apple Watch Sport $349). So where are these projects headed?
When it comes to Kickstarter, projects must differentiate themselves (driven by consumer demand). The very same consumers that fund watch projects have seen the same designs, features, and functions on other products. Change it up, don't copy what has been done, slap your logo on it and expect success- the consumer demands more from you. Sink or swim!
For more information on watch industry statistics check out the Passport- Euromonitor International Report (November 2014).