Could the era of crowdfunding for watch projects be coming to an end? The mere fact that I can pose that question means something has changed in the market. Consumers have more information at their disposal than ever before which has led expectations on quality and design to change.
In a niché as small as the watch industry, it comes as no surprise that some scrutiny is being placed on new brands, the products they offer and ultimately how they bring those products to market. With the increasing availability of capital and other human resources in the design process, more ideas can now transition from being sketches in a notepad to scalable businesses. This shift did not occur overnight. I have covered the extensive growth of the crowdfunding space a number of times with a specific focus on projects that I thought would be viable in the long term. The dust has settled and now I have the opportunity to offer an honest assessment of my judgement in the past, I can clearly see how some my enthusiasm was misplaced. The questions I hope to address in this brief observational analysis (musings) are 1) why my enthusiasm was misplaced and 2) how did the market get to this state.
A Euromonitor study completed in October of 2015 shows what all of us already knew, quartz analogue watches accounted for nearly two-thirds of volume share for sold watches in the U.S. This trend remained relatively constant across the world, volume of quartz watches vastly outpacing other segments of the market by volume share not by value share. I encourage anyone with the faintest interest in the business side of the watch industry to look at the reports published by Euromonitor and Deloitte on the state of the watch industry in 2015 (links below). With the growth of this one sector in mind, watch brands have been increasingly aware of demand for cheaper watches and price inflation. Across the board major brands are trying to reduce prices, this trend has been the catalyst for affordable brands to enter the market.
New entrants in the market are coming into the quartz analog space at the sub-$500 USD price point offering “value” and attractive styling. Within this space the market is bifurcated. On one end, there are companies that have the capital to fund themselves and bring ideas to market and on the other end, there are new entrants that rely upon crowdfunding think Helgray, Liv and others. Regardless of what you think about crowdfunding you have to acknowledge that the new access to capital via crowdfunding platforms has allowed these businesses to grow and succeed but sometimes at a price to the consumer. Because of the immense success of the first few participants there was a cascade effect, the floodgates opened and new watch projects were emerging daily. At this point, the consumer suffered because of production dilution. Designs were duplicated and new entrants were white labeling the brand identity of successful projects from the past but the market has naturally corrected itself. The vast majority of these projects failed to bring viable products to market but nonetheless many are still hopeful because of the demand for quartz watches on the macro-level has yet to truly wane.
We have arrived at our current state as a result of two major factors, one begets the other. First, as I have said before the new access to pools of capital (crowdfunding platforms) has shortened the product life cycle from conception to production. This has naturally spurred the growth of ideas and inspired many to become involved. The second factor has been the success of certain projects which is in part a byproduct of these new platforms. The successful projects have given all of us hope which is why I remain optimistic that a few brands can shift the tide and use these platforms artfully. My initial enthusiasm was misplaced because I bought into the promise of the new platform and the compelling narrative of early projects. Sadly in present, some of the current players involved are not advancing horology, design or fashion but merely selling false hope with diluted products.
All is not lost, I believe there is a viable solution that can counterbalance these negative trends. The solution comes from microbrands that self-fund. I have spoken to one such brand, Moto Koure. I am impressed to say the least that a brand is image-conscious enough to recognize that crowdfunding can have an adverse effect on brand identity in the long term. I don’t want to suggest that nothing good comes from crowdfunded platforms in fact just the opposite is true.
Crowdfunding offers designers and entrepreneurs to take risks and react to market shifts faster than bigger companies. As a consumer I want that. What I am suggesting is that we hold all brands crowdfunded and otherwise to higher standards specifically related to quality, design and affordability. More than anything else, I want to see creativity win the day. Sound ideas with great execution at affordable prices. Please feel free to share your thoughts!