In the fall of 2015, backers of the Zano mini-drone were disappointed to learn that they wouldn’t be getting the drone under their Christmas trees.
The company behind the pocket-sized drone filed for bankruptcy and apologized to the public. This seemed odd as they had the record for one of the largest European Kickstarter campaigns in 2015, raising $3.4M in only two months.
Once again, another crowdfunded project had gone bust, trapping backer’s pledges for an indeterminate period of time.
Hindsight is always 20/20, right?
The warning, caveat emptor, assumes that buyers can weigh their options before purchasing a product. But on crowdfunding platforms, where only a prototype exists, this always proves difficult. Crowdfunding backers are ‘investing’ in a new idea; whether those ideas ever come to life is another story.
To curb the incidence of project creators disappearing with backers funds, the top crowdfunding platforms have had to refine their policies over and over to deal with problems on crowdfunding platforms.
But, to be fair, not every failed campaign is a scam–in fact, most just aren’t prepared with the realities of bringing a product to market.
Poor Planning & Preparation
Many project creators are more technical than business-minded:
This often leads to a massive underestimation of timelines and logistics that go into product creation on a large scale. Creators often shoot for an initial product run of around 1,000 items, a figure they estimate they can handle and fulfill within the promised delivery period.
But what happens when the project is funded 10x, 20x or even 100x; and you suddenly have over 5,000 orders to fulfill?
Everything changes as creators find all their initial numbers thrown out the window. Manufacturing costs will rise (assuming they find suppliers to match the desired quality), ditto for shipping costs.
Suddenly the projected delivery time of two months seems overly optimistic. These oversights usually lead to creators fulfilling the rewards at a loss or not fulfilling them at all.
The launch of a crowdfunding campaign is actually the penultimate step in bringing your ideas to life.
Entrepreneurs must do at least 3 months of pre-launch activities before even submitting a project to KickStarter.
Kickstarter pre-launch activities include:
- developing a viable business plan,
- securing IP,
- building a capable team,
- creating awareness
- …and more…
With so many steps to get right, it’s no wonder that a study by Wharton found that one in nine Kickstarter campaigns fails to deliver rewards.
As with any venture, failure is a possibility, but in crowdfunding, delayed delivery has almost become the norm.
In fact, the team behind a Kickstarter product, the Remee dream mask coined the term “Shipocalypse”; an apt description of the ‘chaos’ that can ensue when sending products off to thousands of buyers across the world.
An estimated 84% of big campaigns are delivered late, and up to 75% of smaller campaigns.
Avoiding the Status Quo
Remember one of the components of getting ready for your crowdfunding campaign was putting together a team of skilled individuals? How many of your team members have logistics expertise?
Your backers have been conditioned by retailers like Amazon to expect delivery pronto. Anything less will cause them to turn on you.
Getting to this point is no easy feat, but to successfully complete the fulfillment process, you should partner with a professional fulfillment service.
However, an ordinary order fulfillment service simply won’t do, we recommend finding a firm that specializes in crowdfunding fulfillment.
The Floship Certified Logistics Plan
At Floship, we’ve developed a crowdfunding logistics master-plan to help project creators ship their rewards within the given timeline. Our proprietary 7-point checklist covers cost projection, Customs duties, shipping costs; every eventuality your project may encounter in the fulfillment journey.
The review allows you and your team know the steps you need to cover, to guarantee that your team understands the details and challenges to consider to get your rewards delivered to your backers across the world.
In addition to guiding you through the fulfillment journey, we also give you a certification badge that you can use with your crowdfunding campaign.
A successful crowdfunding project can greatly amplify your business prospects, but remember it hinges on one thing; successful and timely delivery of rewards.
If you want to avoid being a statistic on one of the sites dedicated to failed crowdfunding projects, you must ensure your fulfillment is in order.
The Floship Certified Logistics Plan can mean the difference between satisfied, repeat customers and a disastrous crowdfunding campaign. For more information on our FCLP, contact us here today.