Good, Fast, Cheap Crowdfunding Fulfillment

kickstarter fulfillment

GOOD, CHEAP, FAST GLOBAL CROWDFUNDING FULFILLMENT

We all know that Kickstarter is global; but there is a huge fault line between US and non-US backers. The name of that fault line, especially when it comes to games, is ‘fulfillment’, and it’s holding everything back; in a huge way.

Kickstarter backers universally want 3 things;

  1. A thing gets made and they get a piece of it.
  2. Value for money
  3. To give creators more money for their thing than they give postage or fulfillment companies.

As the majority of board game kickstarters originate in the US, Non-US backers often choke on that third desire because of excessively high international shipping costs, and for many in the EU; VAT. These two things limit the success of Kickstarter projects everywhere by throttling backer numbers and project momentum.

Yet as any Kickstarter creator will tell you, one of the biggest headaches is how to get your thing to everyone everywhere, and keep them happy, without losing money .. or your sanity. Global fulfillment is a logistical nightmare!

As it happens, there is a way to do good, cheap, fast and simple global kickstarter fulfillment, especially for small to medium weight games under US$23 or$24 in value.  If you do it right you can attract more backers and increase your total backer numbers by 20 – 30%, keep ALL your backers happy AND your sanity intact.  Doesn’t that sound fantastic?

Just  how big is the ‘international’ kickstarter audience? About 40 – 50% of the English speaking table top game market is outside of the US. That is a massive number! By taking a look at Kickstarter projects where the costs for non-US backers are about the same as in the US  we to see that natural global backer / market figures can look something like this:

  • USA                       57%
  • Europe                  26%
    • UK             7.2%
    • Germany   6.7%
    • Others     12.1%
  • Canada                   9%
  • Australia                 3%
  • Others                     5%

Of course, most Kickstarter projects with high international shipping charges get far lower proportions of non-US backers than 50%. Some are in single digit percentages; this means missing out on large numbers of non-US backers, their money and the momentum that larger numbers bring to projects that succeed early. Many creators assume this reflects market realities but this isn’t a reflection of market share, it’s a reflection of market barriers. Ideally you should end up with a spread of backers something close to those above. If you don’t, you might have missed out on backers.

THE RISKS OF NON-US FULFILLMENT

Most creators make a good effort to fulfill as cheaply as possible to their US and non-US audiences. Some US creators simply use USPS to fulfill outside the US, like they do for domestic backers. The problem with this method is that USPS international prices are exceedingly high, and will throttle non-US backing, or kill your project outright if you didn’t account for them. Other creatoros try more affordable fulfillment methods, but some US creators fear these methods because of;

  1. their funding levels being artificially inflated by high postage costs.
  2. the logistical complexity of managing multiple fulfillment processes across different regions
  3. the risk of getting something wrong and losing enough money to threaten the viability of this project, and their next

These issues are all very real and frightening. They represent risks so significant that simply give up on their potential non-US kickstarter audiences, assuming they will ‘pick it up in retail later’, while they double down on the US market. If you want your project to reach its maximum theoretical number of backers, you want to access them wherever they are, at little or no extra cost to everyone.

With the high costs of international postage from the USA, or the complexity of multi-part global fulfillment, that has been hard to achieve. Let’s look at why.

THE SUPPLY CHAIN

The majority of Kickstarter game projects are developed in the US, and the vast majority are, for better or worse, manufactured in China.

The supply chain often looks something like this:

  1. Manufacture in china
  2. Road freight to port (Shenzhen)
  3. Ship on container ships to US port
  4. Freight to one or more places in the US
    1. fulfillment centre
    2. distributor
    3. game company/someones garage or basement
  5. At a US fulfillment centre, or someone’s garage, it is picked and packed and mailed to backers within the US. Then around the planet at great expense to non-US backers,

All of this can take between 2 months for a simple project and 6+ months for large & complex fulfillment job. Then there is extra time and backtracking in that supply chain, some of which leads to high non-US postage costs and delays that can turn your advocates into adversaries.

THE PSYCHOLOGY OF SHIPPING

Nobody likes paying for shipping. This psychology is so important that most US backers expect ‘free shipping’ because for some time it’s been common practice for creators to hide their US domestic fulfillment costs in pledge levels and just call it ‘Free shipping’. So ‘free’ delivery becomes a part of the value – whether backers really understand the hidden cost or not. It all makes sense and it works beautifully for Americans who get a cool new game to their door at less than MSRP.

It’s arguably a double-edged sword though, because US backers often undervalue the deal they get on Kickstarter projects. This may be changing as some US creators are starting to separate out postage costs from pledge levels.

However, for the other half of the Kickstarter market, those outside of the US, high international postage charges are a major barrier to backing, one that’s psychologically amplified by the appearance of US backers getting their pledge rewards delivered ‘free’.

Market reach & international fulfillment – perception is everything

From a market reach perspective, the key issue is that from the US, costs to fulfill backer rewards outside the US are high – resulting in shipping costs that often doubles the cost to back the actual product, scaring away potential non-US backers.

US Backers

A prospective backer unconsciously values a project when they first skim it. This is typically a combination of components (number & quality) and creative awesomeness (art and graphic design and cool mechanics or theme). Then the US backer checks to see that the base pledge price fits in with their expectations.

Nice and simple – nothing in this setup itself will turn off a backer except the pledge level seeming too expensive, or perhaps being suspiciously low. If it’s all good the prospective backer proceeds to back / seek more info / remind me.

Non-US backers

When a non-US backer (40 – 50% of your audience) visits a Kickstarter page, they will intensely focus on the shipping cost because they know that all is not always as it seems at first glance.

Looking at the equivalent Kickstarter base pledge levels + international postage, quite often they will find that their cost for the pledge rewards will suddenly be double that of the US Backers. What happens then? International shipping rage quit. And many non-US backers parse Kickstarter pages like this within 5 seconds of arriving. It’s a top tier checklist item.

Of course it’s not always this bad, and non-US backers do have variable thresholds for International shipping costs. There seems to be a sliding scale where the higher the proportion international shipping is to the base pledge level, the fewer non-US backers you get. But when shipping costs are close to or over the core thing’s value, you will hemorrhage international backers.

FLYING UNDER THE VAT RADAR

European gamers face the additional hurdle of having to pay European VAT surcharges (between 15 and 25%), plus handling fees for stuff generally over EU22 / US$24. These can significantly increase cost again. So for a US $30 game with +$15 for international shipping, the total amount paid by you backer including the VAT and handling fees might be US$65 for a game with a true value of US$25. Are you still wondering why your last project got so few EU backers?

To avoid VAT you need to:

  1. fulfill to your Euro backers from inside the EU

or…

  1. Ensure your thing’s basic value, excluding postage, is under the VAT minimum threshold (UK = GBP15 / US$23, most other EU countries = EURO22 / US$24.50, France and Greece no minimum threshold). And have that value clearly marked on the postage label.

The vast majority of such packages sail right under the VAT radar in most countries. Saving your backer a bunch of money and making your thing far more appealing to back. If you want a decent number of backers from Fortress Europe, you must use one of these options.

Stonemaier Games paves the way

The pioneering Jamey Stegmaier of Stonemaier Games has addressed these problems using Amazon’s Multi-Channel fulfillment method in the US and Canada mixed with regional fulfillment services in Europe, Australia and elsewhere. With this method he has been offering almost equal prices to US and non-US backers alike.

This method is most viable and feasible to creators when their projects have one or more of the following attributes;

  • thousands of items to fulfill
  • large or heavy items.
  • a base pledge value over GBP 15 / EU22 or US$23

And it can work for any of them.  However, for small scale game creators this method is somewhat daunting because of;

  1. Logistical complexity; you have to ship to 4 or 5 locations by sea and all that goes with it.
  2. Higher per unit sea shipping costs; you lose economies of scale when splitting sea shipping into 4 or 5 shipments.
  3. Costs still being somewhat variable for backers in different regions
  4. Postage bloat; bundled postage costs into variable backing levels still make it hard to calculate how much money your project is really bringing in compared to how much you will just be handing to shipping and fulfillment companies.
  5. Time; product on ships has to leave port, cross oceans, dock, clear customs, get road freighted to fulfillment companies, get stored, then picked and packed and sent to backers. Think 7 – 10 weeks minimum. And it takes the creator more time to manage multiple fulfillment processes.

This is even more acute for already overwhelmed first time creators who are learning the ropes and yearn for simplicity. Wouldn’t it just be easier if you could just deal with all backer fulfillment through one system in one hit?

GLOBAL FULFILLMENT DIRECT FROM CHINA

Assuming you have manufactured your product in China, it is possible to ship your product to ALL of your backers directly from China by airmail using one of a number of Chinese fulfillment companies. This is particularly cost effective for small to medium box, light weight games. If you can keep the value of your game under EU22 / US$23/$24 then you will also generally fly under the VAT radar set up around Europe too, maximizing the number of backers to build momentum and amplify your success.

Here’s the process:

  1. Manufacture your product in China,
  2. Fulfill all or just non-US backer orders by airmail via a Chinese (Shenzhen/Hong Kong) based fulfillment company
  3. Backers receive their items in about 2 weeks.
  4. Send regular distribution shipments from China to the USA, Europe, AU or wherever for regional retail markets for ongoing sales. Try to bundle these with other games going to the same distributor to minimize shipping charges.

The frontrunner for Direct from China fulfillment seems to be sendfromchina.com (SFC). SFC have fluent bilingual customer service and easy to use English software.

More Markets = More Backers

This airmail direct to US backers through a Chinese fulfillment company is competitive with ship by sea, road / rail freight, picking and packing for a send via Amazon to US backers, and it beats all other fulfillment methods on price, speed and simplicity.

As with everything, there are pros and cons.

Pros:

  • Simplicity – 1 fulfillment management point for planet Earth with a useable English interface and fluent bilingual support staff. Just signup and upload backer data.
  • Cost – it’s on par with other options, even for domestic US shipping, and way cheaper than most.
  • Speed – because you skip sea freight and ports, games are delivered between 1 – 4 weeks after they are received at the fulfillment warehouse, compared to 2+ months via regular fulfillment.
  • Low risks
  • Ongoing supply – You can warehouse your product there and continue to fulfill online orders or replace damaged or lost items. Storage is competitive.

Cons:

  • Packaging – bubble wrap envelopes only, unless you have a big box game.
  • Weight – because SFC use discounted Airmail the price differential with US domestic shipping increases with weight. Watch those stretch goals!
  • Pick and pack – it’s still cheap but there is uncertainty over how well SFC can handle large volumes of complex pick and pack requirements.

Recommendations

If you have a light game around or under 500g / 1.25lbs AND you manufacture in China, you should seriously investigate doing full global fulfillment with Send From China or another similar fulfillment company.

If you have a medium box game domestic US fulfillment might be cheaper via USPS or Amazon. It’s worth comparing, but you can still offer significantly reduced non-US shipping via SFC to get more non-US backers.

If you have a large box, heavy game, then Send From China may not be the best global solution for you, but they may help you more affordably fulfill into some regions.

There is a grey area around the lkg / 2.5lb weight range where you could go either way between the Send From China method and the Amazon fulfillment method. As a project gets heavier the Amazon method really comes into its own.