Product Sampling on Reward-based Crowdfunding Platforms

Abstract

On reward-based crowdfunding platforms, uncertainty in investment outcome severely hinders transactions between online backers and fundraisers. The industry is dedicated to alleviating these dilemmas through campaign design and platform function design. In recent years, online product sampling has been introduced as a promising promotion instrument for fundraisers. Using a unique dataset of 4,027 campaign-level observations collected from China's highly influential JD Crowdfunding website z.jd.com, this study discusses whether and to what extent a product sampling strategy is beneficial to crowdfunding campaigns. Differences in the strategy's effectiveness across product types are also examined. Empirical results suggest that adopting online product sampling is helpful to crowdfunding performance because it increases the total number of backers, the total fundraising amounts, the average amount of funds raised per backer, the fundraising percentage, and the possibility of campaign success. The strength of product sampling, however, decreases along the search-experience product continuum.