10 questions that could make the difference between making and losing money on shipping

You’re nearly there, after months of planning your Crowdfunding campaign:

• Campaign video demonstrating how your product can change your life – tick.
• Campaign page with kick-ass graphics and gifs that show your product in the best light – tick.
• Database of interested prospects who are eagerly waiting  for your campaign to launch – tick.
• List of awesome perks including an incredible early-bird offer – tick.

The only thing left is to set your shipping prices – just add in a few dollars for global shipping, maybe a bit more for some of the far off places, add a multiplier for those multiple buy perks and your campaign is good to go. Sounds easy, right? As a matter of fact, a vast number of crowdfunding campaigns launch with little or no knowledge about the real price of getting the long-awaited and much sweated-over product into the hands of backers – potentially delivering a killer blow to the ROI at the end of the campaign.. We’ve helped many campaigns navigate the complexity of fulfilment and cross-border shipping, and we’ve put together our top 10 questions that any Crowdfunder should ask BEFORE going live.

1. Where is the best place to ship from?

There can be a big difference in shipping and fulfilment costs depending on where your products are manufactured and the end destination. Bulk shipping to your HQ and then undertaking individual fulfilment and ground shipping locally can make sense, but once you factor in other costs like tax and duties, it rarely does.  International shipping rates from Hong Kong are amongst the lowest in the world, so if you manufacture from China, it may pay to consider outsourcing to an expert in logistics and international shipping based in Hong Kong.

2. Is your packaging eCommerce friendly?

Great product designers create designs with impact. Designing for a retail sale requires eye-catching materials, heavy plastics and maximized sizing to ensure stand-out. For eCommerce though, it’s quite the opposite. Designing packaging to minimize shipping weight whilst protecting your product from the rigours of international shipping is an art – and could end up saving thousands of dollars from your overall logistics costs.

3. Who pays the taxman?

Don’t make the mistake of overlooking import taxes and duties, in some cases these can add more than 50% to the cost of the product. By careful selection of the right customs code, and selecting the appropriate shipping option, there are ways to minimize this liability both for yourself and your backers.

4. Are you using shipping costs in bundles effectively?

Don’t assume that the shipping cost for 2 products is double that of just one. Often, there are significant savings for larger/heavier shipments, which can be passed on to your backers to make those higher value perks look even more attractive. This is particularly helpful for up-selling – “Already bought our early bird with shipping? Buy this accessory with free shipping”. With careful packaging design, the two products can be packaged together with no impact on your overall shipping cost and maximum impact on your campaign.

5. How long will it take to ship?
The answer of course, is that it depends. Successfully managing your backers expectations is the key to maintaining all of that lovely customer sentiment you had when the product was just an idea, and quite often this is hard to maintain when you’re dealing with production delays. Don’t let your shipping method add to your woes. An experienced logistics partner will help you choose the right shipping option for your product and the destination, avoiding the routes and carriers that are likely to cause delays.  Even before the shipment leaves the warehouse, choose a logistics partner with the capability and experience to fit your fulfilment to your production schedule and not just their warehouse capacity.

6. Can you really handle doing this in-house?

Handling the shipping yourself may seem like a cost-saving idea at the outset, but rarely delivers real value. Depending on your place of manufacture, using a third party specialist may reduce costs and almost certainly complexity, leaving you to focus your resources on the things that you’re good at.

7. What about shipping to wholesalers?

Crowdfunding can be a great way to recruit new distributors and resellers in countries where you don’t have existing arrangements, and these sales can often make a big dent in your funding goal if you service them through the campaign. Choose a shipping partner that is able to offer flexible bulk shipping options to help you service this important sector.

8. How about the other logistics costs?

Whilst actual shipping is a large part of your logistics cost, ensure that you have complete clarity on other elements your logistics partner will charge. Is packaging included (and is standard packaging sufficient to ensure your product arrives in good condition?) What about those personalized products, can you bundle more than one order together to save money? Are there any charges for customs clearance? In some cases these elements can significantly add to your cost per shipment so take the time to understand what they will be before you set your shipping rates.

9. Who is going to handle customer service?

Back to that customer sentiment again. If you have hundreds or thousands of products going to your backers, chances are that they will need follow-up –  the customer is never at home, customs clearance, missing information, incorrect data etc. Whether you are fulfilling your own orders or outsourcing to a logistics partner, aim to minimize these issues at the outset as much as possible, and prepare resources to provide timely and efficient follow-up to ensure you manage your way through these problems with a smile on your face.

10. And finally, does it make sense?  

It might seem obvious, but keep the campaign optics front of mind. When you add up all of the components of shipping and logistics, you may find that the real cost of shipping is way higher than you’ve anticipated. Even after taking into account all of the above, this can happen for particular products or countries – after all, few people will entertain $100 shipping cost on a product they’ve only paid $199 for. If you can’t optimize the cost, then think about incorporating some within your perk value – your customers will still have good value, and your conversion rate will remain unaffected.

Contact us at ESG to find out how we can help you to manage your international logistics costs without compromising your backers’ experience.