Crowdfunding Fulfilment solutions – Part 1/3

Crowdfunding Fulfilment Solutions 1

Crowdfunding Fulfilment: How to Make it Work

“Getting your crowdfunded products to your backers safely and on time is crucial to your campaign success”

 

In this series of blog posts (x3) we focus on what fulfilment issues you need to take into account before and after your crowdfunding campaign.

We go over many factors of the fulfilment process which are often overlooked when planning a crowdfunding campaign.

Not knowing some of these can ruin the experience for all involved.

Richard Perriman and Tony Leach work for Horizon International Cargo, a global fulfilment company based in London, UK.

They are experts at fulfilment and have worked with many crowdfunding campaigns across the world to ensure the safe and efficient delivery of campaign products. They have travelled extensively and understand many of the pitfalls you might encounter as a project creator.

The following is a recent interview with Richard and Tony.

Grab a coffee and read what they have to say.

Anthony Lovell de Souza interviews Richard Perriman and Tony Leach from Horizon International Cargo.

Anthony: I’m very pleased to have you both with us today especially because it’s good to see a fulfilment company that understands crowdfunding. I am looking forward to hearing how you have helped crowdfunding creators get their products into the hands of the backers as quickly and as efficiently as possible.

How do you describe fulfilment in a crowdfunding context?

Tony: There are a number of different processes that have to be followed.

The Initial Launch is Critical

First of all, you have to look at the initial launch. 
That is critical in terms of:

What is the product profile?
What is the value of the product?
Where is the product being manufactured?

Are there any unique aspects of the product that need to be compliant, such as lithium batteries?

Do they need to be approved by any food or drug administration in their local country?

What is the commodity in terms of duties and taxations?

Product Launch Support

So we really need to analyse the product and the packaging, and how you’re going to launch and get that product to market.

With a crowdfunding campaign, we look at the data that we can generate from the launch in terms of addresses, where the key markets are, where the buying patterns are and where the pledges have been made.

Then it’s working with the project creator at the beginning of their campaign to really identify best routes to market, look at any risks to ensure we manage those, and then establish the most cost effective way to support the regions in which they’ve been most successful.

So the first part really is all about the launch, ensuring that we align the supply chain, align manufacturing to launch and that we can ultimately get the goods to the consumers’ hands from a fulfilment perspective.

Post Launch Support

The second part is to have a scalable solution post launch.

What markets do you want to go into post launch?
Do you want to have your own eCommerce website?
Do you want to go through omni channels such as Amazon or Business to Business retail?

We look at a long term structure and service to support the after campaign and enable our customers to continue trading their product in whatever market they are successful in.

Those are really the two areas that we focus on.

Anthony: Would you like to add anything to that, Richard?

Richard: The supply chain isn’t just something to start thinking about once you are ready to start delivering your finished product.

The supply chain has implications throughout the process, so we would always advocate speaking with us right from the get go; from the point that you are designing your product, deciding where you are going to manufacture and what elements to include within that product.

In the same way that you might want to speak to a hardware accelerator, it could be that there’s an element you are including in your product that might make it very, very difficult to get into foreign markets.

Had you foregone that feature or aspect it would have made your launch a lot more successful.

Our message is to speak to us as early in the process as you can, because it could be that one small decision you make right at the get go could cost you a huge amount further down the track.

And it could have been avoided had you spoken to us at an earlier stage.

Anthony: What would you say are the most common mistakes that project creators make now that you’ve worked with quite a few?

Richard: For us there are a range of mistakes.

One that Tony and I use to demonstrate the value of speaking to us early would be in terms of packaging.

Harbour containers

The More Packaging You Use, The More Air You’re Paying For.

It’s very common that people want to make something look as attractive as possible. They might want to apply very elaborate packaging.

Unfortunately, what they don’t consider is that the more packaging you use, the more air you’re paying for when you ship a product. Therefore, you could inadvertently double your cost of shipping simply by using packaging in the wrong way.

Consumers Want a Trouble Free Delivery, Generally Through a Letter Box.

Another factor to consider is the focus towards private consumers who are going to want a trouble free delivery, generally through a letter box.

Always consider that if your packaging exceeds the size of a letter box, it could potentially cause your recipients some difficulties to receive a delivery, thereby souring the taste of the whole experience.

The other issue concerns a product that has elements within it considered to be potentially dangerous goods or non compliant in other markets.

As Tony referred to earlier, anything that goes into the USA that will have any contact with human skin or the digestive system is likely to require FDA approval or registration.

This is a process that we can help with at a very early stage.

Having Your Entire Inventory Seized is Quite Realistic.

If you don’t discover this until the product actually lands in the USA, the potential of having your entire product stock or inventory seized, and therefore never making it into the hands of your end consumer is quite realistic and can completely kill your business.

So these are the aspects that we would consider and review at a very early stage in the discussion rather than try to fix them once it’s too late.

If you do that too late and you push incorrect data into a courier or postal network, you’re going to have a lot of product that doesn’t make it to the end consumer.

You will also have a lot of product returned to the hubs or to the warehouse.

This builds hidden costs into the supply chain and absolutely kills margin.

Data is Absolutely Critical for crowdfunding fulfilment.

Also, if there is an area in the world where this product has been a real success, we would look at what you need to ensure you have a successful customs clearance.

Start by building the correct documentation and looking at the best shipping method, then share the data with us. Let us analyse it and build that into an agile supply chain.

That is the way forward to prevent additional costs, but most importantly, to ensure that you’re delivering on your promises of getting your goods to market.

Fulfilment warehouse
Anthony: As you know, there are lots of crowdfunding campaigns out there. Some are small and some are large. I know that many crowdfunders will do the fulfilment themselves.

At what point should they get a company such as yourselves involved? Is there some sort of guide you can share with us?

Richard: In truth, any size campaign is better handled by a supply chain company, as opposed to doing it yourself.

The time and effort it takes you to manage the whole process really cuts into the time that would be much more valuably spent on promoting, marketing and developing your product.

In other words, the cost saving of doing it yourself would be nominal.

The bulk of the cost from any distribution programme is the final mile through a local postal or courier network.

That’s unavoidable. There is no way of avoiding that element.

So really, it would be a false economy to do it yourself.

Achieve a Smoother, Client Friendly Experience.

The expertise and the technology that a company like us provide will always achieve a much smoother, client friendly experience, and again, enables you to focus on what you do best, allowing us experts to do what we do.

Anthony: What would you consider a minimum order, then?

Richard: As soon as you get into three figures, it makes sense to turn it over to somebody like ourselves

Anthony: Anything over 100, for example?

Richard: I would say so. Over recent weeks we’ve demonstrated this to a number of start up clients.

A Painful Few Weeks Licking Stamps.

They’re holding product in their back bedroom, going to the post office every day, licking stamps, printing out labels.

After a very painful few weeks they realise this is something that they just don’t want to be doing.

We go to these people’s apartments or homes and collect their inventory.

It might only be a palette’s worth of product, but all they then need to do is send their order instructions to us through either a portal or an EDI (Electronic Data Interchange*) that we set up and they are alleviated from all of that rigmarole.

They can then focus on what they should be doing, which is promoting their product.

*Electronic Data Interchange (EDI) links systems. In our case, generally a client’s ERP or Webcart to our Warehouse Management System (WMS) to receive sales orders. Once EDI is set up, it removes the need for any manual intervention and orders will flow from a client’s system into ours.

Anthony: Tony, at what point should people start thinking about fulfilment – when should they start coming to you?

Tony: We have managed a number of campaigns and the ones that have been most successful from a logistics point of view have been when we have spoken with customers at the prototype and pre-launch stages.

Reason for that is that we can offer a huge amount of advice and technical knowledge.

So we would ask questions like:
What are the risks of building your product in this way? What are the components of the product? How is it packaged?

The earlier we can discuss, once that prototype and the concept of the product are available, the better.

The place and origin of manufacture also have a big impact on the supply chain, so we can advise on that information.

We can also make an introduction to hardware accelerators and crowdfunding experts like yourself, Anthony, who can also support.

Again, we like to engage at the earliest opportunity because our focus is to ensure a successful launch where the end customer is happy with the delivery and there are no bumps in the road.

As important, of course, is protecting our customers, the project creators, making sure they are aligned with compliance and that they meet the correct documentation requirements at the beginning.

We also look at margin management, because if you’re going to run a successful campaign and build a successful business you need to know how much it costs to get your product to the end consumer.

Air freight fulfilment

Know The True Cost of Getting Your Product to Customers.

We can give our customer a matrix which looks at pretty much every country in the world that can accept deliveries through general couriers.

The sooner we can sit down, the sooner our customers know the true cost of manufacture.

Not just to manufacture their product, not just to market and build their business, but the true cost to get a product into a consumer’s hands; be it in the USA, Japan, Germany or whatever corner of the world.

Anthony: Basically what you’re describing there is that you can help that route to market. Tony, you told me you were going to China?

 

Tony: Yes. I go to China about four times a year, always around logistics planning.

We have what we call a fulfilment hub in Hong Kong and Shanghai.

These are set up to process eCommerce or crowdfunding business, so for example, products that need to be split and sent to multiple markets.

Anthony: You’re focused in on products as opposed to service businesses, is that correct?

Richard: Absolutely. For us to add value it does involve moving a physical product.

I’m sure there are elements of what we do that would be of value to a service industry but our services really cover moving physical product in and out of global markets.

Anthony: When it comes to the best route to market, how would you describe that to someone looking at your services?

Richard: That really depends.

There Are Several Options For the Best Route to Market.

We may work on the market in which they’ve been successful. From the moment they launch we start analysing that data.

There are several options that we can look at.

If the USA turns out to be by far the most prominent market and they’ve had real success across the country, we may look at bulk shipping into the USA. We may use an ocean freight service or an air freight service that aligns with timings and manufacturing windows.

We may ensure that they are compliant and able to import goods into the USA through their customs and duty processes. Then we would hub out from our Los Angeles hub across the USA.

That would offer a very cost effective way of doing it, if that market was one of their key markets.

Alternatively we may look at an option where we just ‘spoke’ out globally from Hong Kong through a small packaging courier network.

We may bulk shift into Europe if they are a European company, incorporating Europe, and then spoke into Europe or into the world.

Because we are a global company with facilities in Europe, USA and ASIA, we look at the profile of their orders.

We look at where the campaign has had most success and generated the most amount of orders.

Then we look at service levels:
What is required in terms of speed to market? How is it presented to the customer in terms of visibility tools, track and trace and signature on glass?

Can we push it through a standard kind of mail network like Singapore Post, Hong Kong Post or United States postal service? Or through similar kinds of companies which maybe don’t offer so much technology visibility, but because of the margins and the cost of the product don’t require that level of service?

We analyse four or five different routes to market. We give the customer those options and the costs.

Then we recommend what we feel would be their optimum route to market based on their product, margin and the insurance coverage they require.

Container shipping

The Optimum Route to Market is Based on Speed and Cost.

When we’re working out a route to market level or looking at a different route it is usually based on speed and cost.

At that stage, we know what the product is. We know the weight and dimensions, as well as the category and classification of that product.

We will also have completed all the paperwork ensuring their compliance to trade in different markets and deliver to different market places.

Then it’s looking at the options of what would be the best route based on whether it’s bulk shipping and then hubbing locally, or whether it’s sending through small package networks from origin.

 

Finally:

Part two of three follows in another blog post where Richard and Tony start off by answering the question about transit times to market – just how long will it take to get your order delivered.

 

Richard Perriman

Richard Perriman is the UK Supply Chain Manager for Horizon International Cargo (HiCargo).

His role is to help startups and crowdfunding campaigns bring their products to market, involving crossing borders, sourcing product, ensuring compliance and looking at the best methods to fulfil orders with the most appropriate and cost effective approach.

Tony Leach

Tony Leach is Supply Chain Product Director Globally for Horizon International Cargo. His role is to work with project creators and startups from a global perspective. He has teams in Asia, the USA and Europe.

They build solutions that enable them to effectively support a successful crowdfunding campaign and get the product to market anywhere in the world.