Deadly Fredly’s post yesterday around Why International Shipping Doesn’t Work For A Kickstarter brought to the forefront some very real growing pains of Kickstarting a business. As makers, shippers, and general behind-the-scenes logistics sherpas for some wildly successful Kickstarter clients ourselves, we’ve seen many of these issues first hand.
Perspective is everything, though. When you evaluate a single Kickstarter campaign in isolation of the rest of your current and future business, the dollars dwindled away to international shipping premiums can seem enormous, but is that the only way to look at this issue?
To Deadly Fredly’s insights, we would respond:
1. Each member of your backer community delivers lifetime value beyond one campaign.
International shipping costs can eat up some of the revenue of the pledge. This does not render the contribution moot at all.
- First, this isn’t a zero-sum game. Backers whose contributions end up closer to breakeven, particularly if you are able to limit these to minority tiers, are still extremely cheap customers to acquire. You may not profit from them on this particular campaign, but they are now customers. You can market to them in the future!
- Second, Kickstarter is a powerful, still-evolving social layer unto itself. For example, it enables people automatically to learn about projects backed by their friends. Its template, targets, stretch goals, backer updates, and other tools produce network effects that can help you build your community and grow your project and business. Involving international backers expands the possible community who can participate, and such networks become more valuable as each person joins.
2. Kickstarter is not simply a transaction engine. Patronage is also at work here.
Passionate people who are invested in your community and your success will pay a bit more for shipping to get something of high perceived value to them. How much more? More than you might think. International customers are used to paying higher shipping rates across the board.
You can also reward international backers with special freebies. If you choose to charge significantly more for international shipments, what about offering those backers an exclusive (but cheap to produce) incentive? A cool bookmark? A badge? Something that might add <$1 in cost to you can still add a ton in perceived recognition and value to the international customer. In the end, no one backing a crowdfunded campaign is expecting Walmart-level pricing on products. They’re often already paying MORE for the chance to be a patron. So why not recognize their heroism in a low cost but meaningful (high reward) way?
There is also a lot more to fulfilling a Kickstarter campaign than just the reward items. Backer updates and other open communication are a big part of the value to the backer and have no shipping costs at all.
3. Kickstarter Creators should take a broader view of margin.
Fred advocated analyzing margin (pledge dollars minus product and shipping costs) at each tier. Amen. Understanding the numbers is fundamental and critical.
- Rather than seeking the same percentage margin goal for all tiers, allow margin goals to vary by tier and/or for domestic versus international backers.
Your Margins May Vary. And that’s a GOOD thing.
For example, movie theaters don’t make as much on tickets as they do on concessions. Distributors may make more money off the same product selling to one customer than they do to another. It’s common practice, and while it doesn’t mean that you should get into the practice of dismissing international tiers as loss leaders, it does mean you should feel free to consider international tiers a product that will likely yield lower margins. That’s perfectly normal.
Look for creative ways to offset international expenses. If you feel your international shipping rates are far too high to be fair, consider looking at your domestic tiers, to see if an across-the-board price lift might offset the international premiums. What if you had even $0.25 or $0.50 cents extra for each domestic backer? And if you offer a digital download anywhere in the mix, those backers bring zero shipping costs. (For example, Zach Braff’s Kickstarter captured $386,670 for purely digital rewards, which represents more than 10% of the $3,105,473 he raised.)
$91,330… for a PDF! Nice.
Lastly, also appreciate volume discounts for production. While international backers may bring additional shipping expense, they also bring unit demand that could help you achieve deeper volume discounts in production, which benefits the economics of domestic and international backers alike. Bonus!
4. An expert partner can add tremendous value.
Several times, Deadly Fredly talked about weighing the monetary cost of every decision vs. the impact it will have on his time. For example, he stated that only launching one international tier priced at $150.00 would yield the best margin return, but would cost him in time responding to the hundreds of complaints for offering so few international options.
In the comments, he even addressed the potential value of using a third-party vendor to handle customer service and fulfillment, but quickly dismissed the idea due to his hesitation to work with an unproven vendor. He’s completely correct on this one: never trust your brand, your products, and your reputation to a company or consultant that has not earned that right.
There are companies who deserve your consideration, though, our own being among them. If Kickstarter is a big part of your business model and your campaigns are wildly successful, you need a strategic partner to free your time and maximize your return on contributions.
Consider just a few of the ways a proven vendor could help you:
- Reliability at scale. Domestic and international fulfillment can be significantly faster when you work with an expert in warehouse and order management who can ship tens of thousands of shipments in a shift.
- Dedicated customer service to you and your backers. Can’t handle all the questions, order-status inquiries, etc.? We can, following guidelines you set. Amplifier does this around the clock for some really amazing companies who are very serious about their communities.
- Integrated production. We also make many items popular as Kickstarter rewards. Having production handled inside the fulfillment warehouse saves significant time.
- More time for your community. With a reliable operation powering your making, fulfilling, and support, you can focus more time on backer updates and communication, which will help this project and beyond.
- The knowledge and infrastructure behind some of the most successful Kickstarter campaigns and for what comes next. The right partner can help you deliver on a Kickstarter success and also as you move into the future. Leading Kickstarter consultants and massive Internet communities such as Reddit, Breadpig, MailChimp, Glennz Tees, Rooster Teeth Productions, and Achewood utilize Amplifier as the merchandise-logistics backend for some of their enormously successful Kickstarter campaigns, ecommerce shops, and more.
Thanks again to Deadly Fredly for the thought-provoking post. We pay close attention to the unique challenges that professional Kickstarters encounter, and we relentlessly chip away at them one by one.
Stay tuned, and please hit us up with your campaigns, questions, and general Kickstarter rabblerousing.