This guide covers:
- Delivering the rewards promised to your crowdfunding backers, those people to whom you have pledged money once you successfully completed your campaign.
- Crowdfunding, one of the four methods for getting stock from the factory to the customer, which is the most common order fulfillment method used with crowdfunding campaigns.
Cross-Docking
In cross-docking, your products are moved from your manufacturer directly to your third-party logistics provider’s warehouse shipping dock. Your products aren’t received in the warehouse as they are already pre-sold. Instead, they “cross” the shipping dock, and in a short time the individual shipments are sorted, screened to identify their end destinations, and loaded into trucks for delivery.
Cross-Docking Advantages
The benefits of using this order fulfillment method include:
- Higher efficiency, as products spend less time tied up in inventory and move more quickly from suppliers to end customers.
- Simplified inventory management, since products are not stored in a warehouse.
- Lower warehouse labor costs, as the goods don’t need to be stored or picked.
- Quicker delivery time and product turnover. Products usually spending less than 24 hours in transit on the dock.
- Less handling of your products end to end.
- Higher customer satisfaction due to faster delivery times.
Crowdfunding also works well in several other scenarios:
- Running an e-commerce flash sale,
- Inventory with a very stable level of demand,
- With perishable products, like flowers.
Cross-Docking Disadvantages
There are several challenges to using this method including:
- High startup costs.
- It requires a lot of management attention and planning to set it up effectively.
- By working to a tight timetable, there is more risk that the supplier, not having much room for fixing errors, may not deliver as required on time.
Crowdfunding Fulfillment Tips
1. Include Fulfillment In Your Budget
It’s easy to forget fulfillment costs in your funding goals when planning your crowdfunding campaign. If you don’t add an estimate for them, they will eat into your operations budget. Consider packaging costs, postage, etc.
Watch out for postage costs. It’s very common, even for experienced crowdfunders, that postage expenses surpass original estimates. There are often unexpected costs because of damage, lost packages, taxes, and more.
You should consider budgeting 20% of your total product cost to cover fulfillment.
2. Create A Buffer For Unforeseen Expenses
Expenses usually creep up, because things don’t always go exactly according to plan. Include a financial buffer in your budget to cover potential shifts in your major costs, like input materials, production costs, and shipping.
3. Simplify Your Rewards
It’s tempting to get creative by offering many varieties of rewards to backers. But, that comes at a cost, making the fulfillment process more complicated than it needs to be.
Here’s a typical example. Apparel campaigns sometimes offer a variety of apparel designs and colors as rewards. Combine these with a range of clothing sizes, and they’ve suddenly got many different items for manufacturing and shipping.
A smaller set of choices of rewards makes the production and fulfillment process much simpler and quicker.
4. Schedule Sufficient Time For Production, Packing, And Shipping
It’s not uncommon for production processes to experience bottlenecks. You don’t want these to delay delivery to your backers. The best way to make good on your promised delivery date is to bake in some additional time for production, packing, and shipping. As a rule of thumb, allow from six months up to a year from the end of your campaign to deliver to your backers.
5. Get Professional Help
You will need to work with one of the many 3PLs who offer cross-docking services. You may also consider working with a specialist crowdfunding fulfillment partner. They will look to simplify the process for you and otherwise help make sure that you deliver to your backers on time.
Contributed by Analisa Sande, Floship
