One of the biggest challenges for very successful crowdfunded projects, as I mentioned in my last piece on crowdfunding, is how to deal with sending out all those rewards. Distributing digital rewards is quite simple, but physical items can be more problematic, especially if you get significantly more supporters than you had anticipated.
If you only need to send out a few hundred items, it’s easy enough to get a few friends round, ply them with food and booze, and do your packaging by hand. In the UK you can buy and print out your postage online, and then you only need to schlep everything to the Post Office. However there comes a point when it’s worth looking into professional fulfilment services not just to save you time, but also money.
I spoke to a couple of fulfilment companies here in the UK to get the lay of the land. Both companies chose to remain anonymous — fulfilment turns out to be a secretive industry as many of their clients like to pretend they send out their own stuff — but you’ll find plenty of options in Google. Neither person that I spoke to had heard of crowdfunding or Kickstarter so I had to explain what it was and how it works but, ultimately, it’s not that different to the kind of thing they do every day.
Fulfilment companies prefer a lot of orders for a small number of product types than a few orders across a lot of lines. Most crowdfunding projects have a limited number of rewards, so from that point of view there shouldn’t be a problem in finding a fulfilment company willing to take you on. Both companies I spoke to said they usually like to have ongoing relationships with companies, but will consider working on a project basis.
You’ll also need to think about where your tipping point is. How many backers is too many for you to do on your own? The first company I spoke to said that they have a minimum spend of £1,500. They will take your project details and give you a break even figure so that you know how many packages you would need to send out in order to get your money’s worth. But you also have to think about how much it would cost you to do it yourself.
I worked out that my average P&P costs for a small book would be about £5.50, which means that if I had more than 273 orders it would be cost effective to use a fulfilment company. That doesn’t take my time into account, of course, and it might be that it’s worth paying a bit extra just to get things done more quickly and keep backers happy.
Fulfilment companies can also save you money on packaging and postage costs. If you saved 50p on every order in the above scenario, you’d save £137, not an insignificant sum. And there’s certainly room to save more: one company said that they could probably get the price down to £3.50 to £4, including picking, packing and shipping.
You should talk to a few companies and get a clear idea of minimum costs and break even points so that you can work those figures into your budget. You might have to pay a deposit up front as well, especially if you don’t have your own company with a credit history, so you should be ready for that.
You’ll also have to think hard about to handle personalised rewards, such as signed books, as it’s unlikely that you’ll be able to just nip into the warehouse to sign them. Having them shipped to you first for signing and then shipping them on to the warehouse will increase your costs, which will set your break even point higher. One way around that might be to offer signed bookplates instead, as they are both easier to sign and cheaper to ship.
High-end packaging will also add costs. If your more expensive rewards have luxury packaging, it might be easier to split those off and do them yourself, leaving the standard packaging to be done by your fulfilment company. Such rewards should be limited in number so that you don’t end up either spending a fortune on P&P and vast quantities of time on wrapping and primping.
This means thinking about your reward levels and how they might affect fulfilment before your project goes live. Which items can be easily and cheaply picked and packed? What combinations of rewards are you offering and how might that complicate fulfilment? Which rewards need some sort of human intervention, either signing or special packaging? If you find that most of your rewards need some sort of personal touch, you might want to simplify them a bit.
Whilst fulfilment companies are used to processing spreadsheets or CSV files full of order and address data, you’ll have to make sure that your file is structured to their specifications, otherwise they won’t be able to feed it into their software. The chances are that your crowdfunding platform won’t produce a spreadsheet with the right structure, so you may have to do a bit of wrangling in software such as Excel. Again, you should check on these sorts of details before you make any decisions on fulfilment.
All this preparation may take extra time, but it will stop you making decisions early on in your project that could later either rule out a fulfilment service all together, or make it very expensive. After all once you’ve got all your items finalised, ordered and delivered, you’ll want them out the door as soon as possible, rather than hanging around your office or home waiting to be sent.
[Source: Suw Charman-Anderson, a Forbes contributor]