In building our pre-order specific shipping center, I learned a bit about how the shipping industry works, and what it costs. This is a post about how to choose your 3PL (third party logistics) vendor to handle your Kickstarter or crowdfunding campaign. Swish is often your best choice, but not always.
A bit of background: most fulfillment centers are optimized for someone who does ongoing commerce. This means that a number of orders trickle in every day, and the items have to be located in the warehouse, put into a box and shipped out to the customer. Crowdfunding is different, because all the orders are ready to ship at once (or maybe in several batches). Paying for a warehouse employee to “pick” your orders one by one can be expensive compared to a streamlined process.
Fulfillment vendors charge several different types of fees:
Pick-and-pack: Finding your items in the warehouse and placing them in the shipping box.
Packing materials: The envelope or box your item is shipped in as well as bubble wrap, etc. This can actually cost several dollars per package.
Postage: The actual money paid to USPS or another carrier to deliver the package.
Storage: Keeping your items in the warehouse until they are ready to be shipped.
What are your options? Let’s talk about Amazon, a retail and fulfillment giant, Shipwire, a fulfillment specialist, Whiplash, a new fulfillment startup, and Swish (that’s us).
Fulfillment By Amazon (amazon.com/fba)
While Amazon used to only fulfill items sold on Amazon.com, they now offer “multi-channel” fulfillment. The intent was that you would sell most of your items on Amazon, but they could ship orders placed on your website as well. Nothing specifically prohibits you from using it exclusively for existing pre-orders. Unfortunately, the prices are high. Minimum is $5.95 including packing materials and postage for a one-item package up to 1 lb. Extra items cost $0.75 additional. Their prices are the best for items over several pounds, though. There’s also a slew of other fees, like warehouse space, returns processing, and putting a required sticker on each product. It’s basically a big hassle. But if you want to ever sell on or through Amazon, you’re going to have to do this eventually, so you might as well bite the bullet and get set up now.
Pros: Experience, Long term relationship
Cons: Cost, Hassle
When to Use: Heavy items or planning to sell on Amazon
Source: http://www.amazon.com/gp/help/customer/display.html/?nodeId=201119430, click “Standard-Size Non-Media”
Shipwire offers “Enterprise logistics for everyone.” Basically it’s a standard fulfillment provider. Some of their best features unfortunately aren’t too helpful for you, like multiple US warehouses, same day shipping, etc. Your customers have waited 6 months, another 2 days won’t make them less angry that you’re late (and you will be late…). Their website is hard to navigate, and opaque about pricing, but pick-and-pack starts at $2.85 per package (unclear if this includes the packing materials). It drops to $2 or less if you ship over 1000 packages. Extra items are around $0.75 each. Warehouse space is again, a separate charge, but unlike Amazon, these prices don’t include postage. I couldn’t find any specific information, but I assume they have volume rates with all the major shippers. My favorite feature is the long list of shopping cart integrations (e.g. Shopify). If you’re planning to transition from Kickstarter to your own web store, you’ll need a partner like Shipwire in the future.
Pros: Shopping cart integration
Cons: Unhelpful website, Cost
When to Use: Planning to sell on your own web store
Source: http://www.shipwire.com/w/support/pricing-order-handling/, http://info.shipwire.com/rs/shipwire/images/Shipwire-Pricing-Overview.pdf
I like Whiplash because of their startup-y feel (damn, check out that bootstrap). They’re aiming to be “the Stripe of shipping,” with everything executed over an API. They have official PHP and Ruby libraries with community contributed Node.js and Java. Of course, they also have a functional website that you can run your operation from. I personally love supporting startups in the “growth phase” because the pricing and service is often exceptional. Whiplash charges $2.95 for pick-and-pack with extra items $0.85. This doesn’t include the packing materials and postage is actual UPS or USPS rates. They integrate with a few shopping carts, but not as many as Shipwire. Definitely the way to go if you want to ship packages automatically using HTTP requests.
Pros: Startup, API
When to Use: Want to ship by API
Source: https://www.whiplashmerch.com/pricing/Whiplash [*See edit 7/2 below.]
At Swish, we run a pre-order marketplace. Fulfillment isn’t our core business (you can’t even find it on our website) but it’s something we’ve had to get good at. We only do pre-orders, so we won’t store your product in our warehouse (or charge you for it). Most items are shipped out to the backer the same or next day after they arrive. Because we do your whole campaign in one sitting, it’s more like an assembly line. We don’t have an API, just email us the backer spreadsheet, ship us the product, and we’ll take care of everything. We charge $2.00 per backer (including materials) plus USPS postage. Extra picks are free — this is especially important if you ran a complicated multi-item campaign, or want to include a marketing insert. We also have some crowdfunding-specific services, like free address confirmation emails. If you’ve sent your backer survey months before you’re shipping, many of your backers will have moved — in one case, we found that 10% of backers had moved after 6 months. We’re happy to send out package tracking by email as well.
Pros: Ease, Price, Address confirmation
Cons: Pre-order only, high touch
When to Use: After crowdfunding
Here’s a handy quick reference on everyone’s fees:
Base w/ 1 pick | Extra picks | Postage | Materials | Storage FBA $5.95 | $0.75 | incl | incl | varies Shipwire $2.85 or less | ~$0.75 | actual | ??? | varies Whiplash $2.95 [*] | $0.85 | actual | not incl | varies Swish $2.00 | free | actual | incl | free
(All of us are experienced international shippers. I couldn’t quickly figure out what FBA or Shipwire’s price would be, but Whiplash and Swish ship internationally for no extra fee.)
Hopefully this post has given you some useful information about choosing a fulfillment partner. I think Swish is the easiest and cheapest option if you just want to get your campaign to the backers quickly, but if you’re ahead of schedule it can make sense to build a relationship with your future partner. In another post, I’ll discuss whether you should handle fulfillment in-house, and exactly how to do it.
Please email me at email@example.com if I’ve made a factual error.
[Edit 6/28: The creator also pays to ship the product to our facility. I believe this is true for all fulfillment centers. Many creators have the manufacturer ship directly to the fulfillment center to save money and time.]
[*Edit 7/2: James from Whiplash was kind enough to give our readers a discount: 2.66 for the Base w/ 1 pick. https://www.whiplashmerch.com/pricing/Swish]
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