Crowdfunding Fulfilment Solutions – Part 3

Crowdfunding Fulfilment Solutions 3

Answers to More Crowdfunding Campaign Fulfilment Questions

This blog post is a continuation of two previous posts on crowdfunding fulfilment.

Blog post one

Blog Post two

Anthony Lovell de Souza continues with this in-depth interview where he asks crowdfunding fulfilment experts Richard Perriman and Tony Leach from Horizon International cargo to share many of the issues and solutions that project creators face when it comes to crowdfunding fulfilment.

Our Questions Continue:

Anthony: When it comes to a crowdfunding campaign, there are many rewards and these products come in different sizes, different shapes, different weights and all the rest of it.

Is there any way for a project creator to work out how much you should add to the sale price of your reward for fulfilment? Clearly it’s different for each product but is there some sort of guide to follow?

Richard: There is no ready reckoner where somebody can get a cost themselves. There are so many variables to take into account.

There Is No Easy Way For Customers To Get A Costing Themselves.

For us to build a solution ourselves we have a few ‘turn key’ experiences we can apply, but in order to do that we need a set of data from the client in terms of projections.

Data such as:
Where are their orders coming from?
What is the profile of their particular product?
What size is it?
What value is it?
What are the dimensions of it?
How many do they expect to sell in each market?
Where is it coming from?
What’s the client experience?
What kind of transit time do they need to achieve?

Do they want their client to have a fully pre-warned, pre-emailed, pre-text delivery service? Or is it compatible with a royal mail ‘turn up through the letterbox’ type service?

All of these elements can lead to very different prices.

We Constantly Refine The Solution So That Customers Get A ‘To The Penny’ Cost.

Our experience is that for crowdfunding campaigns coming out of the Far East, 50% of the orders will probably come from the USA, 35% from the UK and Europe, 15% from a mix of the rest of the world, and between 5 to 10% from Australia.

For those who have not embarked upon their first campaign yet, we would normally apply that top line ratio based on: what do their products look like and how many of them do they expect to sell.

We’ll then start to build a solution and give them some very clear numbers around the different methods. As their campaign progresses and they get more accurate data through, i.e. where the orders are coming from, we’ll constantly refine that so they get a ‘to the penny’ cost.

However, if you were to ask about the cost of shipping widgets out of China to the UK and “How much would that cost per widget?”

There is no one answer to that.

 

Warehousing

Ensure That Documentation Is Correct.

Anthony: You’ve mentioned that project creators could be subject to certain liabilities when it comes to fulfilment. What would those be?

Richard: Compliance is very important at the outset. Ensuring that you have the right registrations with customs and incorporations in local countries if you need them, usually for very big campaigns.

Ensuring that documentation is correct and whether you need to register with organisations like the FDA or other health organisations.

You’re liable to having your goods impounded by customs or even destroyed if you’re not compliant.

To ensure the successful entry through the customs agencies into the markets of delivery, it’s important to look at:
What are the components of the product?
Where are they manufactured?
Are there any dangerous goods included?

Other liabilities may be the insurance of goods.

In the global supply chain there is always the risk that stuff can go missing: unfortunately boats do sink.

Again, products do get lost, so insurance is absolutely critical.

It’s About Managing Risk.

You analyse that, you look at that, you manage that risk effectively.

Other liabilities are VAT, duties and sales tax.

Make sure that you classify your product correctly so that you pay the right duties and sales taxes in the country of destination. If you don’t, you could get fined and receive a nasty bill in the post if you have a customs audit a few years later.

It’s really about managing risk.

The real risk is ensuring that you personally get your product to market, that your product meets the right criteria and specifications for those markets, and that you’ve registered with the correct organisations.

Insurance Is Critical.

Anthony: Talking about insurance, are you in a position to organise that as well?

Richard: Yes we can.

We’re not an insurance company but we have relationships with brokers and can offer insurance.

We do encourage clients to seek insurance through their own broker.

The liability that a freight forwarder, a mail service, or a courier service offers is extremely low. This means that unless you can prove negligence, you won’t get a penny back on the loss of a unit that might, for example, weigh a quarter of a kilo but be worth $300.

Even if you can prove negligence, you’re likely to get less than $10 from a shipping line, an airline or a mail service. Weigh up the pros and cons of getting your product insured; it may be that your product is fairly low value and therefore the cost of insurance is not warranted.

You Are Responsible For The Product Until It Reaches Your Customer.

However, if you’re shipping a higher value product you must absolutely look for insurance, especially if your crowdfunding campaign means that you are liable for safe delivery of goods to your client’s hands through their letter box.

Until the point that the goods are received by your client, you are responsible.

Anything that happens to that product until it reaches your customer is down to you.

If the postman drops it and it smashes on his walk from his van to your client’s front door, it’s your responsibility, so bear that in mind.

Also, in the vast majority of cases we encourage project creators to take responsibility for the duties and tax to give their clients as hassle free an experience as possible.

As we’ve said before, if the duty classification is not right, customs can retrospectively come after you. So make sure that is done correctly.

Another issue worth mentioning is that crowdfunding campaigns revolving around tech products are increasingly likely to include lithium batteries.

Transportation

Lithium Batteries Pose All Kinds of Hazards.

Lithium batteries are a hot topic with any kind of transportation company, be it by ocean, air or road.

Carriers don’t like them because they pose all kinds of hazards and have to be treated and documented in a certain way. It’s your responsibility to get the correct MSDS (Material Safety Data Sheets) confirming specifically what that product contains.

Now, out of China there are many companies that can issue these MSDS certificates, but only a handful are recognised by the Chinese authorities.

Again, always talk to us early in the process. Don’t simply buy a certificate ‘off the shelf’ because it probably will not work for you.

You could spend $1000 getting a certificate from a body that is not recognised by any airline nor the Chinese Civil Aviation Authority.

Speak to us, or our local offices in China, and they can guide you to the correct bodies. Don’t pay for that certificate and then find out you’ve got to pay for it all over again.

Anthony: The final question I want to ask you both has to do with your software and the ability of your software to integrate into other eCommerce platforms.

For example, once the campaign has ended, there are many project creators who would want to continue to sell their products through Shopify or WooCommerce.

Is there an element of integration, and if so, how would it work?

Tony: We do provide a post campaign and after sales service.

When we invested in our warehouse and our management system which handles the fulfilment, we pre-wired about 25 connections with the world’s most popular Webcart of eCommerce platforms including Shopify, Magento, WooCommerce and the likes: all names or systems that are commonly used by companies that sell via eCommerce.

Say our customer’s customer purchases from the internet and completes the transaction; within two minutes of that transaction being made, we receive the order into our warehouse and into our system for processing.

We Can Process And Dispatch Orders Locally or Globally In The After Sell.

If our customer wants to host their own eCommerce site on a platform such as Shopify or WooCommerce, we can very easily plug that into our Webcart and start processing and dispatching those orders globally.

All our warehouses around the world use the same centralised system so it’s very easy for us to switch on a hub in the USA, Hong Kong or Europe and be able to serve local markets in the after sell.

Another point to make is that we support B2B (business to business).

If, for instance, the product has been so successful that one of the major retailers around the world want to purchase and sell it on their shelves, we also link into all of them.

We are fully compliant in terms of labelling, bar coding, price tagging, and ensuring that we can deliver into those retail networks globally.

That’s a big investment because a lot of the major retailers around the world have very strict inbound processes and criteria in terms of:
Is the product correctly bar coded?
Can it be scanned at the till?
Can it be received into our distribution network and distributed to stores around the US or around Europe?

It’s a quick switch on, enabling our customer to have an after market and continue to sell their product.

Finally, there are other omni channels such as Amazon Market Place or eBay. We are able to link into those platforms as well.

So we really aim to give customers a scalable solution and every sales channel possible to support them from a logistics and distribution point of view.

Transitioning Into An Ongoing B2B Model Requires a Revised Supply Chain Solution.

Anthony: That sounds brilliant. I was going to ask about Amazon but you answered it for me.

Do you feel in your view that we’ve left out anything, before we conclude?

Richard: Transitioning from the crowdfunding campaign into an ongoing B2B model often requires a completely revised supply chain solution and we can support that too.

There are also all kinds of customs implications.

If you take as an example an order that is pre-sold in a crowdfunding campaign, you know that that particular product is going to ‘Mrs Johnson in Michigan’, so your customs entry can be very different to when you’re storing unsold inventory in, say, the USA. That requires a lot of regulation that a pre-sold order does not.

We have the expertise to hold our clients’ hands as they transition from the crowdfunding campaign intoa full B2B model, be it selling through retail or distribution, direct to customer.

We can manage that transition and give a complete scalable solution as a client evolves.

Anthony: For me, when it comes to crowdfunding, the work begins once the campaign concludes.

A lot of people think that the pre-launch is important and running the campaign is a lot of work, but judging by what you’ve just said, it’s the post campaign that involves the most work.

What you’ve shared with us today is extremely valuable for future project creators to ponder.

Clearly, you’ve both worked with crowdfunding campaigns in the past and understand your business inside out. You also operate on a global basis.

I’m so pleased to have met you both because there are a lot of project creators out there who need to make use of your expertise.

Where and how can people reach either of you online to take their fulfilment discussions further?

Tony: Our website is www.hicargo.com and you can contact our key offices there. Or email us at ecomm@hicargo.com which will go through to our eCommerce and supply chain teams.

Anthony: Would you be open to people contacting you directly?

Tony: Absolutely. Our emails are tony.leach@hicargo.com and richard.perriman@hicargo.com

Anthony: What a brilliant interview. Lots of crucial information there for all project creators to ponder before launching your campaigns. Thank you!

 

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.

Horizon International Cargo