Crowdfunding projects encounter a variety of challenges beyond finding backers. For many, shipping rewards to crowdfunding backers is a time-consuming challenge. It can either ensure backers end up happily receiving their reward on time, or it can create headaches and bad press when not handled well. Just like every other step of a successful Kickstarter or Indiegogo project, shipping requires planning well in advance so the shipping costs and geographic limitations are clear from the start.
A cautionary tale on crowdfunding order fulfillment and adequate planning involves one of the most highly-funded Kickstarter campaigns – The Coolest Cooler. The 2014 campaign raised more than $13 million in pledges for a sizeable ice chest featuring a built-in blender, a Bluetooth speaker, USB charging ports and other features. Production costs ran higher than the original pledge amounts, and backers were asked for an additional $97 to receive their coolers first. This might be an extreme example, but the internet is full of stories of fulfillment problems, generally because of poor planning.
Here are five tips for making sure your Kickstarter or Indiegogo campaign does not encounter fulfillment problems, particularly if you choose to ship outside the U.S.:
1. Decide which countries to include.
Thoroughly research and plan your project, including all aspects of shipping. Looking at similar projects will help you gauge where potential backers are typically located. Then you can decide whether or not it makes sense to limit distribution to the U.S., add less expensive non-U.S. shipping locations like Canada and Europe or tackle worldwide shipping to more expensive areas. Campaign owners can add shipping rates for each country or costs for specific regions, but will need to plan accordingly before launching their project.
2. Keep in mind that weight, size and packaging matters.
If you are pre-production or have yet to finalize rewards, try to keep items to dimensions and weights that will ship for less money to keep costs down. FedEx, UPS and USPS all have weight restrictions and oversize penalties you will want to avoid. If your rewards are small enough, they will fit in standard envelopes, which will help keep costs down and avoid custom issues. If rewards are potentially fragile, you need to use bubble mailers or other appropriate packaging to keep things from breaking in transit. Those costs should be incorporated in the shipping costs along with postage. To test your packaging and avoid complaints, send a sample package to yourself or a friend before finalizing it.
3. Consider bulk or freight shipping to cut international costs.
Depending on the quantity, look into bulk shipping abroad, then using the local postal service. One way is to freight ship a large quantity of your items to a region (e.g., to someone you partner with in Germany). Then, the items packed inside are mailed locally. Another option is FedEx International Mail Service. FedEx air ships items packaged together to another country or region. The local FedEx office then sorts and passes the items on to the local postal authorities to deliver. This is an economical way to get items to Europe or other areas without having to arrange for someone to handle the items for you.
4. Decide how to deal with customs issues.
If you want your packages to arrive to recipients in other countries, you need to deal with the customs clearance process. This involves declaring information about the package’s contents, so customs can determine the duty (if any) to be paid. Shipping via Stamps.com or USPS.com offers e-declarations to simplify things and avoid the paperwork. Historically, some have declared rewards as gifts, but this is not accurate. The EU decided in 2015 that crowdfunded products are not gifts; backers gave funds in exchange for an item. There are basically six methods to determine valuation: transactional value, value of identical goods, value of similar goods, a deductive method, a computer method and a fall-back one. The best advice is to keep it as simple as possible, but base the declared value on the reward’s cost, regardless of how much a backer gave (i.e., if the backer gave $500 for a $10 reward, state $10 as the value).
5. Do not get overwhelmed, get help.
Accruing hundreds or thousands of backers is a good problem to have. However, it can be overwhelming to deal with. Consider working with a fulfillment center or company that has expertise in supporting crowdfunding projects. They can handle inventory storage, packing, shipping, email shipment notifications and delivery monitoring, and they can expertly address those any customs issues. They can also get a volume discount on shipping to save you money (which can help defer the cost of hiring them). When shopping for a fulfillment partner, look at reviews, turnaround time and their customer support processes.
To learn even more about launching and managing a successful Kickstarter or Indiegogo campaign, or for help deciding if a crowdfunding campaign is the right way to launch your product, check out our weekly podcast and subscribe to our newsletter.
