While thinking about shipping logistics isn't always the most fun part of the crowdfunding process, it's definitely something you shouldn't ignore if you're planning to create a product that requires shipping to your backers.
Failing to plan for fulfillment can be catastrophic for campaigns. At worse, the majority of funds raised end up going towards shipping costs, returns, taxes, and delay disputes, which can eat into your profits or even make you lose money.
At Easyship, we've crunched some numbers and if done right, shipping should take 10-15% of the funds that you raise, 20% max - depending on your item category.
It's very possible to achieve these numbers with proper planning. In this guide, we'll share with you what you need to consider pre-launch, how hiring a 3PL can help, handling international duties and taxes, the most efficient way to find couriers, and more.
Smart makers calculate fulfillment, shipping costs, duties, and taxes before launching a campaign. This can make the difference between being profitable and losing money. Here are some factors to consider:
Target Markets:
With 38% of backers living outside the United States, it's definitely worth planning to ship internationally. However, some countries are easier to ship to than others.
For example, India requires more personal documentation from the receiver than most countries, and if the receiver doesn't provide this information, your package will get returned. In Russia, when packages are sent to private individuals, customs can take anywhere from days to weeks to inspect them, and even after this, it isn't guaranteed they will release the package to the recipient.
Certain countries and zones are considered to be remote areas. Extra fees will apply when shipping there, so you must decide if you are willing to budget for this. Parts of New Zealand, China, and Russia would be a good example.
To give you an idea of how much shipping costs can vary per country, let's take a look at a sample quote for shipping a small item to Sydney, Australia vs Novosibirsk, Russia.
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Sydney is a major city along the coast that is easy to reach, versus Novosibirsk, a land-locked city in the middle of Russia.
Duties and taxes:
When you ship something to another country, you or your customer may be asked to pay additional duties and taxes before the shipment is delivered. Duties and taxes vary per country, which can make it challenging to figure out your shipping budget.
The good news is that there's no need to calculate these costs manually. Instead, consider using Easyship's crowdfunding calculator to get an estimate for your campaign. Shipping costs, in addition to duties and taxes will be shown for multiple countries, so you know exactly what to expect.
Start researching duty & tax rates by visiting our Countries page, where you can see detailed duty, tax, and customs information for every country you plan to ship to. To see how much duty and tax can vary per country, let's take a look at a sample quote for shipping a small fashion item to Singapore vs Argentina.
Singapore has a high duty and tax threshold with low tax rates, making it cheaper to ship to. Argentina applies duties and taxes to all imports and has higher tax rates, making it more expensive to ship to.
Learn more about duties & taxes
Packaging:
The art of packing boxes for shipping, in addition to reducing package size, is key to unlocking the cheapest way to ship.
If you're new to shipping, it's worth noting that express couriers measure both deadweight and dimensional (or volumetric) weight of a package, and charge the higher of the two. Dimensional weight is calculated by multiplying the length, width, and height of a package and dividing it by a cubic divisor.
A small reduction in packaging can save thousands of dollars.
For example, we had a client take 2 centimeters off their packaging, reducing the volumetric weight from 1.53 kg to 1.48 kg. This saved $3 off the shipping cost per package. With 3,000 orders to be shipped, this was a total cost savings of $9,000!
Lastly, efficient packaging allows you to secure your shipment from possible damage.
Learn how to save money through packaging.
Dangerous goods:
In the shipping world, dangerous goods can be anything that, if not handled with care, could cause harm to those handling them in transit.
Lithium ion batteries are the most common dangerous goods that are sent internationally. Specific labeling procedures are required to ensure a safe shipment via international air freight. Paperwork such as a Safety Data Sheet (SDS) and certain packaging instructions like IATA's (International Air Transport Association) PI965, PI966, and PI967 may also be required.
Learn more about shipping dangerous goods
Obtaining the right documents for dangerous goods in shipping is very important, as couriers can refuse to ship the product without them. Our staff has undergone Initial Dangerous Goods Regulations Training and obtained their Course Certificate, which allows them to assess your documents to see what's needed. (We provide this service for free!) We can also advise which couriers will accept your shipment, as not all couriers ship dangerous goods.
Shipping dangerous goods? Have our staff assess your documents and determine your courier needs.
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When you've run a successful crowdfunding campaign and thousands of backers are expecting to receive your product, you'll have to make a choice.
You can either:
There are many advantages to hiring a third party logistics (3PL) provider to handle your fulfillment, such as:
Learn more about order fulfillment
Here's what you should consider when you're looking to work with a 3PL:
Services. What are their Service Level Agreements (SLA) on receiving, fulfillment, and returns disposition? What kind of shipping solutions do they offer, and how many? What is their packing service like? Do they offer value-added services beyond standard warehouse activities?
Management. Can they handle bulk shipments? When it comes to volume, can they process large amounts of orders in a short amount of time?
Technology. Is their warehouse management system (WMS) up to date? How automated and efficient are they in fulfilling orders?
Location. Warehouse locations can impact shipping costs. Is the warehouse in close proximity to your suppliers and clients?
Global fulfillment is when you store your product in an overseas warehouse, making it easier to reach your international customers. This method can cut costs in a variety of ways:
Here are more reasons why you should consider global fulfillment.
With Easyship, you can fulfill from over 50 warehouses around the world. Contact our fulfillment experts.
Making an effort to find great couriers is beneficial for your campaign because:
Postal services (such as USPS) are normally operated by national governments. Pricing-wise, they are simple and relatively affordable: you mostly pay for the shipping costs. But, this usually means that delivery times are longer, and depending on which country you're in, subpar service quality.
Express couriers provide fast and reliable delivery services. Companies like FedEx, UPS, and DHL have courier networks around the world and operate globally. Their pricing is more complex and can include additional costs such as fuel surcharges, remote area surcharges, and parcel-handling fees.
Still, these pricier offerings can provide a lot of value. You should consider if it's worth paying to ensure that your product is handled correctly and gets where it needs to be in the given timeframe.
Learn more about postal and express couriers.
When choosing couriers, think about your shipping goals and what you expect from them (such as speed, cost, service quality, and tracking).
It's also good to understand which shipping solutions are better for certain countries, which couriers can import certain products, and who can process “DDP” (Delivered Duty Paid) and “DDU” (Delivered Duty Unpaid).
If you're looking to save on international shipping costs, the best strategy is to work with multiple couriers, as some companies have better rates to certain regions around the world.
Regional couriers can provide faster delivery times with pricing in between postal and express couriers, making them a more affordable and reliable option.
Examples of regional couriers include Aramex for the Middle East, SF Express for mainland China, and DPEX for southeast Asian destinations. While you may not be familiar with them, backers living in these areas will be!
With hundreds of shipping companies around the world, comparing multiple couriers can be an overwhelming and manual process.
Luckily, it doesn't have to be. When you sign up for Easyship, you'll have access to our Get A Quote feature, which will allow you to view all available solutions for your destination country, sorted by the cheapest, fastest, and best value for money options.
You can also see details such as tracking service, customer ratings, and taxes and duties.
This helps you avoid going to every courier's website, entering the same information repeatedly, and setting up a spreadsheet to compare prices.
If you're looking for ways to cut shipping costs on your campaign, consider direct injection. This form of consolidated shipping is a good solution for bulk shipments (minimum 250 orders) and can help you take advantage of exceptions for import taxes and duties, saving you money.
With direct injection, packages are packed at the origin point with the customs paperwork filed, and then destination label applied. It's then sent to a consolidation point to be group with other packages sent to the same destination. From there, the shipments are flown by air as bulk cargo. When they arrive at the destination, the shipment clears customs electronically, and then each individual packages is handed over to a local courier for delivery.
By bypassing a local warehouse for distribution, merchants can save on additional fulfillment and re-distribution costs. This method is best for campaigns with bulk products like crowdfunding requiring less express shipment requirements.
Direct injection with air cargo is faster than ocean shipping, and cheaper than regular courier services. Easyship has extensive experience creating custom direct injection solutions for crowdfunding campaigns.
Here's how Easyship can make your fulfillment easy, automated, and affordable:
If duty and tax apply to your shipment, you will have the opportunity to pre-pay them (DDP) or pay them when it arrives in customs (DDU).
Many express couriers are qualified customs brokers and can process duty and tax payments for an additional fee.
If you're really into cutting costs, it is possible to choose a DDU shipping option and have your backer be responsible for paying duty and tax on their own.
However, choosing DDU will cause shipments to be delayed, as customs will need to contact the backer and wait for them to settle payment before it can be released. It's possible for backers to not realize this and be surprised that these fees apply.
In our experience, using a DDP option provides a smoother shipping experience. It reduces the chances of shipping delays, which could cost you more money and affect backer satisfaction.
Learn more about Easyship's crowdfunding solutions
This feature allows Easyship to contact all of your backers to collect and settle duty and tax payments before they arrive at customs. Benefits include:
Learn more about Easyship Collect.
There are many reasons why a shipment might be stuck at customs. The reasons can differ in severity from high (your goods are prohibited for import) to low (having the incorrect paperwork).
To help your shipments get through customs faster, we suggest the following:
Learn what else you can do if your shipment is stuck in customs.
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All the terms you need to know to get a handle on crowdfunding fulfillment!
3PL: Third party logistics.
Dangerous goods: In shipping, these are components that, if not handled with care, could cause harm to those handling them in transit. Examples include liquids and lithium ion batteries.
Dimensional weight: Also known as “volumetric weight”, usually calculated by multiplying the length, width, and height of your package, then dividing this number by a cubic divisor. Express couriers measure both deadweight and dimensional weight of a package, and charge the higher of the two.
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