How does the logistics behind a Kickstarter project work?
You launched a Kickstarter project for a board game and have enough pledges to fulfil your dream and their orders. A factory in China is churning out the games which are then neatly packed in a plastic sleeve and a sturdy cardboard box. These games are ready to be distributed to your pledges in order to bring them countless hours of fun. Now how do you arrange your Kickstarter logistics to get the games to your pledges so they can enjoy them? You will need to select the right logistic partner who can not only take care of fulfilment, but other things like VAT administration and reverse logistics. Some other questions you will run into along the way of your Kickstarter fulfilment and for which you need to be prepared will be:
1. How do I get my goods from the factory to my pledges?
2. What logistic process is most efficient to fulfil my pledges’ orders?
3. Who will pay the VAT and when?
4. How can you declare VAT within the European Union?
5. What do you do with returns/reverse logistics?
6. Does my product require a CE marking and how do I obtain and retain one?
1. Freight forwarding
The first step in the process of your Kickstarter fulfilment is through freight forwarding. This is where Freightways can start commanding your supply chain in order to unburden you. Freight forwarding was the first service offered by Freightways so we have over 35 years of experience doing this. Through international agents we broker a good price for ocean freight to get containers filled with your game from China to Europe. A container is loaded at the factory, transported to the nearest port and placed on an ocean vessel headed to the famous Port of Rotterdam. This port is then only an hour’s drive away to Freightways’ warehouse. We are off to a good start!
At Freightways we have had the pleasure these past two years to help a major player/market leader on the Kickstarter boardgame-market distribute their games to their pledges. Of course this started with some hiccups, as it always does. Though before long there was a smooth process in place and the boardgames were flying out the door by trailer-loads through cross-dock activities.
What is cross-docking you might wonder? This is the answer to the question “what logistic process is most efficient to fulfil my pledges’ orders?” Simply put, cross-docking is unloading and loading simultaneously. The shipping container full of your board games will be on bay 1 while an empty trailer will be on bay 2. Your games will be unloaded and put on a type of conveyer belt. Along the way to the empty trailer they will be scanned and a shipping label will be attached of your courier of choice (UPS, DHL, GLS or other). It is of course vital that you provide your logistic partner with all the right address information of your backers in order for this process to work.
The parcel, now equipped with a shipping label, is loaded onto the trailer of a, preferably local, transport company. This forwarder will take it to the courier’s depot from which further distribution will take place. Freightways has long-term contracts in place with many couriers and transport companies to ensure availability at all times. In our experience this is an extremely smooth and efficient way to take care of your Kickstarter fulfilment.
Then there is the matter of VAT, which is the cause of headache for many entrepreneurs. Although it does not need to be. The Netherlands, where Freightways is located, is one of few countries that has a reverse-charge mechanism for VAT called article 23. This mechanism is only available to foreign entrepreneurs if they engage a local tax representative. This fiscal representation is part of Freightways’ service package so they can take care of this on your behalf. As your representative Freightways will declare your VAT and deduct it as import tax so you are not required to pay the VAT.
4. One Stop Shop
Before July 2021 it was still required to report your sales and declare VAT for each individual EU country. Since then, One Stop Shop was introduced (OSS) in order to simplify things greatly. As an e-commerce seller you will now be able to declare all your pan-EU sales in 1 single EU country. This is quite easy as it is and will be made even easier if your fiscal representative takes care of this for you.
More information on fiscal representation, OSS and article 23 can be found here.
5. Reverse logistics
Reverse logistics is something a lot of companies seem to forget about. Being so focussed on sales, processes and arranging the entire supply chain. One might assume the final step of the process, the last mile delivery, would be the easiest of all. However this is exactly where many supply chain issues take place. Wrong
addresses, a pledge that moved residence, pledges that cancel their order last moment, recipients not being home at time of delivery, parcels not collected from a pickup point or a courier simply not being able to make the final delivery. There are many reasons why the last mile delivery can go wrong and the parcel is returned to sender. This may not be the most exhilarating part of your Kickstarter fulfilment, though it is vital and important to be prepared for.
It is imperative that you take this in consideration and make arrangements with your Kickstarter fulfilment partner so that a process is in place ahead of time for all these returned parcels. Often times the parcel can be reshipped, though your pledge may have to accept the shipping charges first. If your pledge does decide to cancel and ask for a refund, your logistic partner can store the items and use them for spares.
Even though couriers are overall trustworthy, nobody has a success rate of 100%. A small percentage of parcels will always get lost or badly damaged in transit. While you claim the loss with the courier you can instruct your logistic partner to take a spare box from stock and ship that to your pledge instead. This way you do have to pay some storage costs, which you normally don’t thanks to the quick cross-docking, but that is a small price to pay to be prepared for damages and losses.
Should this stock grow to an unwanted amount you might want to consider giving them a second life and put them on sale. It would be a shame to leave them to gather dust in a warehouse.
6. Authorized Representation
Does your board game perhaps have any small electronic parts as part of its set? You may need to apply for a CE marking in order to legally sell it on the EU market. The CE stands for “Conformité Européenne” and indicates that your product meets the EU standards for quality, health, safety and environment. In order to obtain this marking a manufacturer would have to do the following:
– Find out which requirements apply
– Applying the requirements to the product design
– Prove CE compliance
– Document evidence of CE compliance
– Maintain CE compliance
As you can imagine this can be a quite laborious process. Therefor Freightways has partnered up with an entity which helps manufacturers both obtain and maintain their CE marking. This service is called “authorized representation” and is part of Freightways’ service package, be it through an external company. More information on authorized representation can be found here.
If you need a partner for your Kickstarter fulfilment; please consider Freightways. We have all the necessary people, materials and processes in place and have been working with the market leader in board games for several years now to great satisfaction of both parties. Of course this also applies to campaigns launched using Gamefound or Indiegogo. Inquiries can be done through email at firstname.lastname@example.org or by calling (+31)71 40 90 706. Our commercial team Jimmy and Peter will be happy to hear you out, answer any questions you may have and offer you a quote for our services which can be limited to just distribution or encompass the whole package to fully unburden you from A to Z.