Secret Base Blog
Good, cheap, fast global Kickstarter fulfillment - Part 1: Why?
- Created: Sunday, 22 February 2015
- Written by Kim
For games, Kickstarter is global.
But there is a fault line between US and non-US backers. Its name is 'fulfillment', and it's holding everything back.
Kickstarter backers universally want 3 things;
- A cool thing gets made and they get a piece of it.
- Value for money for that cool thing.
- To give creators more money for their cool thing than they give to postage or fulfillment companies.
However, non-US backers often choke on the third thing – because of high ‘international shipping’ costs, and for many in the EU; VAT. These limit the success of Kickstarter projects everywhere by throttling backer numbers and project momentum.
Yet as any Kickstarter creator will tell you, one of the biggest headaches is how to get your cool thing to everyone everywhere, and keep them happy, without losing money or sanity.
Global fulfillment is a logistical nightmare. But bit by bit, I think we need to keep trying to beat it.
This is the good, cheap, fast global Kickstarter fulfillment - Part 1: Why?
As it happens, there is a way to do good, cheap, fast and simple global kickstarter fulfillment, specially for small to medium weight games under US$23 or$24 in value. If you do it right you can attract more non-US backers and increase your total backer numbers by 20 - 30%, keep ALL your backers happy AND your sanity intact.
We cover all that in good, cheap, fast global Kickstarter fulfillment Part 2 - How.
I also show how well this process works by talking with a project creator who has used it in good, cheap, fast global Kickstarter fulfillment Part 3 - Proof; the Grail Games Interview.
So how big is the 'international' kickstarter audience?
About 40 - 50% of the English speaking table top game market is outside the US.
Web analytics for Board Game Geek in 2013 show that only 47% of BGG web traffic is from the USA. If we have a look at Kickstarted projects where the costs for non-US backers are about the same as in the US (eg Jamey Stegmaier’s Tuscany campaign) we start to see that natural global backer / market figures can look something like this:
- USA 57%
- Europe 26%
- UK 7.2%
- Germany 6.7%
- Others 12.1%
- Canada 9%
- Australia 3%
- Others 5%
I suspect the proportion of potential US / non-US backers is actually closer to 50/50.
Of course, most Kickstarter projects with high international postage charges get far lower proportions of non-US backers than 50%. Some are in single digit percentages; this means missing out on large numbers of non-US backers, their money and the buzz momentum larger numbers bring to projects that succeed early.
Many creators assume this reflects market realities. But this isn't a reflection of market share, it's a reflection of market barriers.
Ideally you should end up with a spread of backers something close to those above. If you don't, you might have missed out on backers.
The risks of non-US fulfillment
Most creators make a good effort to fulfill as cheaply as possible to their US and non-US audiences.
Some US creators simply use USPS to fulfill outside the US, like they do for domestic backers. But USPS international prices are crazy high, and will throttle non-US backing to a wheezing husk, or kill your project if you didn't account for them.
Others try more affordable fulfillment methods. But some US creators fear these methods because of;
- their funding levels being artificially inflated by those high postage costs.
- the logistical complexity of managing multiple fulfillment processes across different regions
- the risk of getting something wrong and losing enough money to threaten the viability of this project, and their next
These issues are real and they scare me too. They represent risks so significant that I see a few people in game designer circles openly giving up on their potential non-US kickstarter audiences, assuming they will 'pick it up in retail', while they double down on the US market.
But if you want your thing to reach its maximum theoretical number of backers, you want to access them wherever they are, at little or no extra cost to everyone. Right?
With the high costs of international postage from the USA, or the complexity of multi-part global fulfillment, that has been hard to achieve. Let's look at why.
The supply chain
The majority of Kickstarter game projects are developed in the US, and the vast majority are manufactured in China.
The supply chain often looks something like this:
- Manufacture in china
- Road freight to port (Shenzhen)
- Ship on container ships to US port
- Freight to one or more places in the US, eg
- game company / garage
- fulfillment centre
- At a US fulfillment centre, or someone’s garage, it is picked and packed and mailed to backers within the US. Then around the planet at great expense to non-US backers,
All up this can take between 2 months for a simple project and 6+ months for large & complex fulfillment job. There’s extra time and backtracking in that supply chain. Some of which leads to high non-US postage costs and delays that can turn advocates into adversaries.
The psychology of shipping
Nobody likes paying for shipping. This psychology is so important that most US backers expect ‘free shipping’ because for some time it’s been common practice for creators to hide US domestic fulfillment costs in pledge levels and call it ‘Free shipping’. So ‘free’ delivery is part of the value proposition – whether backers really understand the hidden cost or not. It all makes sense and it works beautifully for Americans who get a cool new thing to their door at less than MSRP, and early too.
It’s arguably a double-edged sword though, because US backers perhaps undervalue the deal they get on Kickstarter projects. This may be changing as some US creators are starting to separate out postage costs from pledge levels. Thank you Tiny Epic Galaxies for proving the sky won’t fall in with separated postage charges.
But for the other half of the Kickstarter market outside the US, high international postage charges are a major barrier to backing, one that’s psychologically amplified by the appearance of US backers getting cool stuff delivered ‘free’.
Market reach & international fulfillment – perception is everything
From a market reach perspective, the key issue here is that from the US, costs to fulfill backer rewards outside the US are notoriously high – resulting in shipping costs that often doubles the cost to back the core thing, scaring away potential non-US backers.
Don’t believe me? Say hello to my user experience maps:
A prospective backer unconsciously values a project when they first skim it. This is typically a combination of components (eg number & quality) and creative awesomeness (eg art and graphic design and cool mechanics or theme). Then the US backer checks the base pledge price accords with their value expectations.
Nice and simple – nothing in this setup itself will turn off a backer except the pledge level seeming too expensive, or perhaps being suspiciously low. If it's all good the prospective backer proceeds to back / seek more info / remind me.
When a non-US backer (40 – 50% of your audience) visits a Kickstarter page, we intensely focus on the shipping for the core thing – because we know that all is not as it seems on the interwebs. Some of us are even equipped with ‘They Live’ sunglasses:
...which enable us to see right through illusions to the real picture just like this:
Very handy sunglasses hey? And they work brilliantly on Kickstarter pages too.
Looking at the equivalent Kickstarter base pledge levels + international postage through our BS filtering sunglasses, here is what we see and how we react:
Yep, it's the international shipping rage quit. And many non-US backers parse Kickstarter pages like this within 5 seconds of arriving. It's a top tier checklist item.
Of course it's not always this bad, and non-US backers do have variable pain thresholds for International shipping costs. I think there is a sliding scale where the higher the proportion international shipping is to the base pledge level, the fewer non-US backers you get. But when shipping costs are close to or over the core thing’s value, you will hemorrhage international backers.
If you found out something you were doing was reducing your market share by 30 - 40%, would you fix it if you could?
Fortress Europe - flying under the VAT radar.
European gamers (up to 30% of your potential market) face the additional hurdle of having to pay European VAT surcharges (between 15 and 25%), plus handling fees for stuff generally over EU22 / US$24. These can significantly increase cost again. So for a US $30 game with +$15 for international shipping, the total amount paid by you backer including the VAT and handling fees might be US$65 for a game with a true value of US$25.
Still wondering why your last project got so few EU backers?
To avoid VAT you need to:
1. fulfill to your Euro backers from inside the EU (as per the Stonemaier method below) and plaster that EU Friendly Shipping logo over everything,
2. Ensure your thing's declared value, excluding all shipping or freight costs, is under the VAT minimum threshold (UK GBP15, most other European countries Euro 22 / US$23). And have that value clearly marked on the postage label. Such packages are exempt from VAT in most EU countries, except France, Sweden and Greece which have no minimum VAT threshold. This saves you and your backers a bunch of money in VAT payment being avoided and makes your thing far more appealing to back.
If you want a decent number of backers from Fortress Europe, you must use one of these options.
But over reliance on the EU Friendly shipping label / method means many EU backers are still quite skeptical about the VAT free method. I've seen a few misunderstandings about how it works out there.
One short term solution is too offer free global shipping as standard PLUS an "EU friendly shipping" pledge tier, where you have the choice to back the game at that tier if you are risk averse with the whole VAT free threshold rules. Or if you are in France, Sweden or Greece and want to get the item VAT free. Such a tier might require a few extra dollars because bulk importing games to the EU will incur VAT charges that would have otherwise been avoided through the use of the VAT free threshold. Creators would need to pass those costs on to backers or make a loss on those items. The extra sea and road freight shipping costs compared to direct airmail from China may result in extra costs too. And the item would take the usual 8 weeks to ship and arrive to backers rather than the average 2 weeks by airmail from China. But hey, whatever it takes to make all backers happy if it adds no risk to my project.
Stonemaier Games paves the way
The pioneering Jamey Stegmaier of Stonemaier Games has addressed these problems using Amazon’s Multi-Channel fulfillment method in the US and Canada mixed with regional fulfillment services in Europe, Australia and elsewhere. With this method he has been offering almost equal prices to US and non-US backers alike.
As a consequence Stonemaier Games has seen;
- A significant growth in the proportion of backers from outside the US
- Dramatic growth in backer numbers for their projects in overall.
- Tremendous Kickstarter success and continuing expansion of their games into other markets
- Great customer loyalty
These methods are pioneering – but are mainly just good business sense. Here’s how it his supply chain looks;
This is a great method and you should always investigate using it if you want more backers.
I think this method is most viable and feasible to creators when their projects have one or more of the following attributes;
- thousands of items to fulfill
- large or heavy items.
- a base pledge value over GBP 15 / EU22 or US$23
And it can work for any of them.
However, for small scale game creators this method is somewhat daunting because of;
- Logistical complexity; you have to ship to 4 or 5 locations by sea and all that goes with it.
- Higher per unit sea shipping costs; you lose economies of scale when splitting sea shipping into 4 or 5 shipments.
- Costs still being somewhat variable for backers in different regions; i.e. barriers, while much lower, still remain.
- Postage bloat; bundled postage costs into variable backing levels still make it hard to calculate how much money your project is really bringing in compared to how much you will just be handing to shipping and fulfillment companies.
- Time; product on ships has to leave port, cross oceans, dock, clear customs, get road freighted to fulfillment companies, get stored, then picked and packed and sent to backers. Think 7 - 10 weeks minimum. And it takes the creator more time to manage multiple fulfillment processes.
I see Kickstarter creators wrestle with these issues daily in designer forums. And its even more acute for already overwhelmed first time creators who are learning the ropes and yearn for simplicity.
Wouldn't it just be easier if you could just deal with all backer fulfillment through one system in one hit?
I explore how in Good, cheap, fast global Kickstarter fulfillment - Part 2: How. I'll also show you how this method has been used to fulfill Grail Games' One Zero One globally, and how I plan to use it for my upcoming game MONSTROUS.
- I really love the John Carpenter classic "They Live". Sorry.