The rise of Kickstarter and similar crowdfunding platforms in the last 15 years dramatically lowered barriers to entry for creative people looking to start a business. If you were working on something interesting, odds were good that you could find a dedicated audience to help you bring your ideas to life.
The problem, of course, is actually fulfilling crowdfunding campaigns. In 2012, CNN Business reported that 84% of Kickstarter’s top projects shipped late. It’s no surprise then, that fulfilling crowdfunding rewards is notoriously difficult to do right. For that reason, many crowdfunding creators choose to use third-party fulfillment services who can help them with the trickiest parts of fulfillment.
Outsourcing fulfillment is not something to do lightly, though! Fulfillment costs a lot of money, oftentimes more than manufacturing itself. That means it is absolutely vital to make sure you choose the right partner to help you fulfill your crowdfunding campaign. We’re going to talk about how you can do that in this post.
Kickstarter Fulfillment vs. Fulfillment
First, we want to take a moment to clarify an easy to miss point. Kickstarter fulfillment involves production, freight, and the process of sending rewards to backers. All three of these functions are referred to as “fulfillment.”
This is a little confusing because in a general supply chain management sense, fulfillment refers only to that last part: sending rewards to backers. We are going to spend the majority of this post talking about only fulfillment in the supply chain management sense of the word.
1. Freight Shipping Assistance
When you finish a crowdfunding campaign, there is a good chance that you will need to manufacture a lot of physical products. Those products will then need to be transferred by air, road, rail, or sea to a fulfillment warehouse where they will be packed and then distributed to backers.
Freight can become complicated quickly. This is particularly true if you have to ship internationally. For that reason, even though fulfillment warehouses do not directly deal with freight, they should at least be able to point you in the right direction. Good fulfillment companies will have the right connections to direct you to.
Fulfillment warehouses will receive your inventory along with a list of backers and their addresses. Individual orders then need to be packed and shipped to their recipients. This is a lot more complicated than it sounds and there is a lot of room for error and ambiguity. That’s why this whole industry has not been automated out of existence yet.
The only way you can guarantee that your crowdfunding campaign is handled well is by finding a company with good communication. You want a company who takes the time to answer complicated questions and who are very communicative through the whole process. Poor communication is a massive red flag that you should avoid a company entirely.
Before you choose to do business with a company, be sure to check sites such as Trustpilot and Google Reviews. A good crowdfunding fulfillment company should have a lot of reviews, most of which are positive. Look at both positive and negative reviews so that you can ascertain that the company you are seeking to work with is a good one.
4. Time to Fill Orders
One of the biggest bottlenecks with crowdfunding fulfillment is the time between shipments being received in the fulfillment warehouse and orders being sent out to backers. This is called time-to-fill and it needs to be as short as possible. There are companies where time-to-fill for crowdfunding exceeds two weeks. Ideally, orders should ship out no more than three days after they are received, even in massive quantities such as with successful crowdfunding campaigns.
5. Experience in Crowdfunding
Crowdfunding campaigns pose unique challenges for fulfillment warehouses. Creators are often inexperienced and have a lot of questions. Orders come in massive bulk. Not to mention, many backers are international and the fulfillment company needs to make sure that customs and VAT are handled properly.
For this reason, crowdfunding creators should actively seek out fulfillment companies that have handled crowdfunding campaigns before.
6. Customs & Value-Added Tax Policies
We’ve spilled a lot of ink on the subject of customs and value-added taxes (VAT) on the Fulfillrite blog. Suffice it to say, if you have a lot of international backers, you want to make sure they are not caught off guard by surprise customs bills.
With this in mind, there are three ways you can handle customs for a crowdfunding campaign. You, as a creator, need to pick the one that makes the most sense to you and find a warehouse that can support you.
- Ignore customs. International customers will simply pay them. In some cases, such as with very low value items or very small crowdfunding campaigns, this is acceptable.
- Split your inventory between different warehouses in different countries. This is complex and expensive, but avoids leaving customers with big bills since orders ship from within their own region.
- House your inventory in one warehouse and deliver with duties paid. This involves storing all your inventory in one location, and sending packages international “delivery duties paid.” Basically, it means you pay customs for your backers. This is the easiest and often the cheapest way to handle customs that doesn’t leave customers with bills.
Different approaches to customs and VAT work in different situations. What’s most important is finding a fulfillment company that works with your needs.
7. Contracts & Pricing
Fulfillment can often become very expensive. For that reason, you need to make sure that you are not locked into any long-term contracts and you need to make sure you are not being nickeled-and-dimed for every single expense. The best warehouses have straightforward pricing models. That way, you can just account for account fees, storage fees, pick-and-pack fees, and postage. Most companies now have online calculators, or, at a minimum, quote request forms to help you get started.
8. Software Experience
You will spend the vast majority of your interaction time with your chosen fulfillment company through their software. Either use a demo of the system or watch videos of it in use. You want to make sure that the software is easy to use, intuitive, and feature rich. Otherwise, your life will be way harder than it needs to be.
9. Handling Returns
A surprising amount of fulfillment companies don’t handle returns well. For this reason, you need to explicitly ask each fulfillment company you are considering what their return policy is. What do they do with inventory once it is back in their warehouse?
Lastly, companies will treat you like a king when they are trying to win your business. Similarly, online reviews can be misleading. Google searches can be packed with press releases. Ask a company to provide you with a few people you can reach out to as references. Make sure that real human beings are satisfied with the fulfillment company’s work.
A lot of factors go into making a decision about the best fulfillment company for your crowdfunding campaign. If you find a good one, though, it will make your life so much easier and you can often end up saving a ton of money, too. Do your homework and don’t be afraid to ask for help when you need it!
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