In a previous blog post, I wrote that the cost of shipping is not something a creator can escape. The reality is that shipping is expensive, but it must be paid because the product must arrive in the hands of the customer. Shipping charges aren’t negotiable either. The post office charges what it charges. Unfortunately for creators, another part of reality is that people want to pay as little as possible for shipping. They may even expect shipping to be free, perhaps in part, because they have been conditioned to expect that from Amazon.com. Amazon Prime members get free two-day shipping on anything they order, so anyone who runs a Kickstarter campaign can do that too, right? Wrong. And, if you are a creator, don’t think that because Amazon ships free you will be shipping free too. Shipping costs money, and you must manage those costs. Here are five tips to help you.
1. Know what your shipping costs are. Shipping is very expensive. By having your project 95% complete before you launch, you will know the weight and size of your product so you can accurately calculate what it will cost to ship. Underestimating shipping costs is a major point of failure for Kickstarter campaigns. Make sure you have all the information you need.
2. If you are ready to take the step, collaborate with international fulfillment partners. This is one of the only ways a Kickstarter creator can actually lower shipping costs. It costs less to ship someone’s package from closer to them than from farther away. There are companies who will receive freight shipments of your product on your behalf, pack up your boxes, and send them to your customers. Currently, we work with fulfillment partners in Australia, Europe, and Canada. This allows us to ship to those regions much less expensively than if we were shipping everything from the United States. By lowering the shipping costs to a region, you will also attract more customers from that area. About half of the backers of the RAINN Studios projects are in Europe. This is in large part because we ship rewards from within Europe and so can offer less expensive shipping charges. In contrast, we do not have a fulfillment partner in South America and so shipping RAINN Studios products there is expensive. The U.S. Post Office’s large flat-rate board game box (the kind we ship War of Kings in) costs $59.95 to ship internationally. Consequently, we have almost no South American customers. In order to get them, we will have to actively work to “open” the South American market by finding a partner there to warehouse products, freighting pallets of products to the warehouse, and then having a reliable fulfillment service there when orders come in.
3. Don’t feel bad if you can’t reduce shipping costs. It isn’t realistic to expect many Kickstarter creators to have a global fulfillment infrastructure in place, especially on their first project. We did not when we launched the War of Kings campaign. That grew with time. If it cost you a certain amount to send your Kickstarter rewards to a place on the other side of the world, you should charge that, even if the charge is high. Sure, you run the small risk of someone in that area seeing your campaign and then potentially complaining about how high the shipping charge is, but don’t let that bother you. You do not need to lose what could potentially be a lot of money on a project by offering discounted shipping around the world when you have to make up the difference yourself. Focus on the backers you can serve at a reasonable cost and then grow your fulfillment network over time.
4. Don’t try to reduce shipping costs by cutting corners. I mentioned that customers want to pay as little as possible for shipping, but that doesn’t mean they want “cheap” shipping. Customers won’t tolerate their item being shipped in a flimsy box without packaging material and in a way that takes two weeks to get to them without a tracking number—and they shouldn’t. We ship all of our rewards in the United States by Priority Mail. This means that the package will be on the backer’s doorstep just two or three days after it leaves us and each package will have a tracking number. If packages arrive damaged or destroyed, you have to spend time and effort to send out new ones. It is far better for everyone involved to pay a little more and get it right the first time.
5. Potentially build shipping charges into the cost of the product. This does not reduce the cost of shipping, but it does manage it in the minds of your potential backers. Shipping a box of TerraTiles to any address in the United States costs about $14.00 in a USPS Priority Mail medium flat rate box. You can “lower” the shipping charge by raising the cost of the product. If you are shipping something similar, the shipping charge can be reduced by $10.00 by raising the price of the product by $10.00. Shipping could even be “free” if the cost of the product is raised by $14.00. Do you think more people would be willing to pay $49.00 + $14.00 shipping or $59.00 + $4.00 shipping? It probably depends on what your product is and what the expectations of your backers are. I was interested to know what people thought about this, so I set up a Twitter poll:
Assuming the same total, do you prefer a Kickstarter to have a higher pledge level & “free” shipping or a lower pledge w/shipping charged?
— Heath Robinson (@EHeathRobinson) October 7, 2016
My brother and I have been back and forth about whether or not shipping should be built into the cost of the product, and if so how much. We made a decision only about a week and a half before the launch of the Incantris Kickstarter campaign to have a higher shipping charge, but reduce the pledge levels by the same amount. This meant it was going to be exactly the same amount of money either way. We decided that we wanted the pledge level to more accurately reflect the cost of the game, and for the shipping charge to more accurately reflect the cost of shipping. We thought this transparency was a good thing.
In conclusion, creators must confront the reality of shipping charges. There is not much we can do to change them, so we have to manage them. I think greater transparency about the actual cost of shipping around the world is a good thing, but I could be wrong. What do you think? Is there anything else a creator can do to manage shipping costs?