24 June 2013
A complementary podcast to this post is live on Richard Bliss’ Funding the Dream. If you read the following post, you should also read the accompanying piece I wrote after shipping Euphoria.
By far the number one question I’ve been asked about my Euphoria Kickstarter campaign is, “How on earth did you provide free shipping worldwide?” Today I will answer that question in detail for those creators who are willing to put in the time and effort to provide their backers with the best possible shipping options available.
Let’s get something out of the way: No shipment is actually free. When we say “free shipping included” on Kickstarter, it means that shipping is included in the price of the reward level (freight + individual package). This is important to keep in mind no matter how you do shipping–if you’re including $10 of “free” shipping to backers in the US, you should include that same $10 in shipments anywhere in the world (and then add the difference on top of that).
Also, project creators, please keep in mind that shipping is a HUGE expense no matter how cost-effectively you do it, and you should price your reward levels accurately. Don’t assume that things will “even out” or that economies of scale will somehow kick in. They won’t. Not with shipping.
Last, this post is specifically for US-based board game creators who are manufacturing games in China (we use Panda Game Manufacturing). I know that’s a very specific niche in the Kickstarter economy, but a lot of what I’m going to talk about will apply to creators around the world who are making and shipping anything, regardless of where they’re manufacturing it.
Okay, let’s get to the details:
Why am I writing this? Isn’t this a competitive advantage for Stonemaier Games? Why wouldn’t we keep this a secret?
Well, nothing I’ll write below is a secret. All of this information is out there on the internet. I spend a LOT of time figuring all of this out, and despite this entry, setting up a worldwide shipping network will still take you a lot of time.
Really, I just want to help other project creators make better projects to give backers the best possible Kickstarter experience. There is no reason that backers in Canada and the EU need to pay $40 shipping and customs on top of that. Not only is that bad for the backers, but it’s bad for the creators, because they’re missing out on lots of potential backers.
Most of all, I’m sharing this because I wouldn’t be here if not for someone else who helped me. Back in the fall after the Viticulture Kickstarter campaign was over, I was struggling with the overall concept of international shipping (this is NOT something you want to figure out after a Kickstarter campaign). I had underestimated shipping by a lot, and I happened to mention the issue to a board member at my day job. I explained how I planned on using Amazon for fulfillment purposes in the US, but I couldn’t figure out a way to keep the cost per game down for international shipments from the US.
He thought about it for a second and said, “Why don’t you ship a few pallets of games to Amazon in Canada and the EU?”
In hindsight, it seems so obvious. But I really hadn’t thought of it at that point–maybe I was daunted by the idea of the logistics involved. But his idea had merit, and when I dug deeper, I discovered that it was a brilliant solution. I wouldn’t be here today without the sage advice of that board member.
I’m not here to tell you what you should do, and I can’t guarantee that the following will save you time or money. But my hope is that it will be a step in the right direction for you. Good luck!
When you’re composing your Kickstarter rewards and the overall composition of your game, you need to keep shipping in mind. I highly recommend limiting add-ons to (a) things that your manufacturer can include in the game box and (b) very limited rewards that you ship by hand.
A lot of what I’m going to talk about below has to do with using Amazon’s fulfillment services. Amazon will only accept products with bar codes, so unless you have a bar code for every add-on item, you’re going to be stuck shipping tons of add-ons by hand. You will regret that decision, not just in terms of time, but also in terms of cost. I shipped hundreds of add-ons for Viticulture by hand, and although the wine glasses, corkscrews, sleeving, and autographs were cool, they were not a good use of time or resources.
If you have a project that somehow hinges on tons of add-ons, be prepared with lots of boxes from Uline, because there are few fulfillment centers that can help you (especially if the add-ons aren’t bar coded).
If you stick with my advice and package everything at the manufacturing level in the game boxes, you’ll need several different UPC bar codes, one for each version of the game. You can buy them at a number of places–I use Buy a Bar Code because Hakeem Olajuwon endorses them (most random endorsement ever?)
You will also need an SMC code for your company, which you can get for $25 here (thanks to Eduardo Baraf for the update!):
HMA Administrative Assistant
SMC stands for “Standard Manufacturers Codes,” whereby the three letters by themselves are your SMC. SKU (stock keeping unit) is the code for each individual product. So, for Stonemaier Games, STM is our SMC and STM100 is the SKU for the retail version of Viticulture. You can learn more about this part of the product packaging by watching this video.
Last, when you’re deciding the size of your game box, if you choose a box that just barely fits into a standard USPS medium flat-rate box (there are two sizes), you can cut down on packaging costs by quite a bit. USPS boxes are free when ordered from their website. (Update 10/10/13: USPS just added a “board game box” that actually fits two board games [you could probably squeeze two 12×12 games into the box]. This definitely opens up the possibilities for box sizes.)
To dig deeper into product composition and the impact it has on shaping your Kickstarter campaign, Richard Bliss and I have a 20-minute podcast on the topic here.
Once you’ve determined what you’re putting in your game box, it’s time to determine how you will incorporate shipping into your reward pricing. The details of these logistics will be discussed later in this entry. I’ll break down this section by location.
United States, Canada, and the European Union: You’re going to be shipping pallets of games from your manufacturer to several different locations worldwide: Amazon.com in the US, Amazon.ca in Canada, Amazon.de in Germany, and maybe Amazon.co.uk in the United Kingdom. The freight shipping cost includes trucking the games from the factory to port, ocean freight, customs, fees, and taxes, and trucking to a fulfillment center based on the manufacturing cost per unit. The freight cost per unit will depend on a number of factors–size, weight, location, value, etc–so you’ll need to figure out those numbers for your project. If you’re making a board game similar to Viticulture (11×8.5×4 inches, ~5 pounds), each game will cost about $5 in freight shipping costs to get your game from the manufacturer to the front door of Amazon’s fulfillment center.
From there, your individual shipping cost from Amazon to each individual will be approximately as follows. You can click on the links to go to the fulfillment pricing guides for each location (you’re looking for “multi-channel fulfillment fees” for “standard size non-media items). These prices will vary based on current exchange rates.
DISCLAIMER: These are sample amounts based on shipping Viticulture, a 4-pound game, at a specific quantity (2500 games spread over the various areas) in early 2013. Please get exact quotes for your campaign from your manufacturer (trucking from the factory to port), freight shipping company (ocean freight, customs, import fees and taxes, and trucking from port to Amazon), and Amazon (multi-channel fulfillment, not “orders placed on Amazon”).
Thus your overall shipping costs (freight plus individual shipping) are as follows:
United States: $13
European Union (Western Europe): $21
European Union (Central Europe): $39
Germany (shipped from Amazon.de): $11
United Kingdom (shipped from Amazon.co.uk): $13
Now, you may be looking at those numbers and thinking, “They are not the same, so why did you include free shipping for all of those locations?” Well, for Central Europe, I probably should have excluded them from free shipping. That’s a big difference. But for Western Europe, it seemed cleaner to me to include it with the US and Canada, and it made for a great talking point. I think we attracted a lot of new backers to the project by doing that. But realistically we probably should have charged $8 extra for shipping to Western Europe and $27 extra for shipping to Central Europe–each of those backers got a good deal, and I took a small loss on the units sent to Central Europe.
There are other costs that go with these accounts. You will have to pay storage fees really won’t add up to much if you’re shipping most of your inventory as soon as it arrives at Amazon. Also, Amazon sometimes moves inventory around from one facility to another, pretty much at their whim (this is in the name of “optimization”). They charge you $0.50 per unit that is transferred to another facility. It doesn’t happen often. The overall key is to ship everything to backers as soon as it arrives at Amazon. (Note: If you intend to continue selling excess products through Amazon FBA after you’ve fulfilled your Kickstarter rewards and it takes a while to sell those products, you are subject to a larger storage fee for inventory that has been sitting at Amazon’s warehouse for over a year: $22.50 per cubic foot [credit to Dennis Consorte]).
Despite all that, the great thing about shipping from within those territories is that backers don’t have to pay customs fees. You pay customs fees, and you pay them in bulk based on the manufacturing cost per unit, and it’s built into the freight cost I mentioned above. This is a GREAT service you can provide for your backers.
Asia, Australia/New Zealand, Central and South America, Non-EU Europe (Norway and Switzerland), Russia, and Africa: See this blog entry for information about shipping to these regions.
However, if you ship 2 games to one of those locations, the price doesn’t change much at all (about $10 extra). Consider that when structuring your rewards. On Euphoria, I focused on coordinating group buys so that the price per unit for each backer would be the same as any other shipment. Hence the “free” shipping worldwide.
Freight Shipment Preparation
As soon as you send the final files to your manufacturer, you need to start making freight shipment preparations as follows:
Amazon: Sign up for all necessary Amazon seller accounts and input the information for each different version of your product (on Amazon.de, change the language to English at the very bottom left of the home page). If you make a mistake, you can change any listing by clicking on it and choosing “relist” (a term that seems counterintuitive, but really it just means “edit”). All products you enter on Amazon will be available for sale on Amazon unless you choose release dates well in the future (at which point you’ll have already delivered the items to Kickstarter backers). Amazon may decide to review your listings for approval, so don’t wait until the last minute to enter the items there.
Make sure your Amazon shipment settings are such that you’ll send all items to one Amazon warehouse, not split between multiple warehouses. You can change your settings using these instructions (thanks to David Chott for sharing that!). The more separate shipping freight routes your products take, the more you’re going to pay.
Once your products are approved, you need to create shipments for each of them. This will take some collaboration with your manufacturer, as you will need to know the exact weight per game, the exact number of games per carton, and the exact number of games per pallet. Once you have that information, you can tell Amazon what you expect each shipment to be (this is an automated, step-by-step shipment creation process), and Amazon will provide you with the delivery address. That is the only way you can get the delivery address. From my experience, even that address will be inadequate for shipping purposes (it’ll be the name of the warehouse and the city, but not the street address), so you’ll need to follow up with customer service to find the true address.
Amazon will also give you PDF labels for each carton of games and each pallet of games. Send those PDFs to your manufacturer along with detailed instructions about the pallets themselves, which must be 1200 x 800mm wooden pallets.
Here’s a checklist of all of those steps as compiled by fellow creator Loren Cunningham:
- Sign up for Amazon seller account (one for each country’s version of Amazon. You’ll need a different e-mail account for each seller account, so you might need to create some new e-mail accounts elsewhere)
- Input the information for each product (each SKU). Note: On Amazon.ca, make sure to enter the “Manufacturer” value, even though it doesn’t appear to be a required piece of info.
- Change shipment settings so that all items are sent to one Amazon warehouse
- Create Shipments
4A – Find out exact weight per game, exact # of games per carton, exact # of games per pallet from the manufacturer
4B – Enter that information into Amazon
4C – Get freight delivery address, reference ID, and shipment ID from Amazon and give it to your shipping company and manufacturer
- Get PDF labels from Amazon for cartons and pallets and e-mail them to the manufacturer along with detailed instructions about the pallets
- When the shipment leaves your manufacturer, tell Amazon (there’s a button to click on the shipment page) that the shipment is on the way
For questions about Amazon.de, I would recommend contacting Kathrin Freundl at kduschin AT amazon.de. She can help guide you through the process, and she can provide you with the booking form your shipping company will need to fill out well before your shipment is set to arrive in Germany.
VAT: You will need to find an importer of record in the EU to handle your value-added tax (VAT) accounting. I thought that I needed to find someone in Germany since we sent Viticulture to Amazon.de, but that may not actually be the case–you might just need someone in the EU.
Basically, the importer of record lets you use their VAT number so that you don’t need to register as a business in the EU. I looked into registering a business in Germany via a very helpful accountant by the name of Erwin Herzing (erwin.herzing AT kleeberg.de), and it not only costs about $1,000 up front, but you also have to pay for an accountant to process your VAT fees every quarter for about $250/quarter. That adds up fast and isn’t cost-effective at all if you’re dealing with the vast majority of shipments all at once.
So how do you find an importer of record? I messaged all of my German backers and asked if any of them owned a business and would be willing to be my importer of record (I recommend you find your importer of record the same way). They handle the accounting along with their quarterly accounting, and I pay the VAT plus a small fee to them for the service. I also sent them extra games as a token of appreciation.
UPDATE: In a comment on this post, Loren at Wibai Games offers some great insights about registering for VAT: ” found out during this process that you cannot register your US business in the UK without a physical UK address (so don’t try!). However, you can register for a VAT number (they will take your money!). Also, along with a VAT number you need to register for an EORI number also through HMRC. With my VAT number, EORI number, and working with Dimerco, that was all I needed.”
Canadian Registration: You’ll need to register as a business in Canada if you’re shipping to Amazon.ca. This is a very easy and free process (thanks Canada, for being awesome!). Here’s the form you need.
Manufacturer: You’re sending pallets of games to a number of different locations around the world, so you’ll need to tell your manufacturer exactly how many of each version of the game to include on each pallet. Your manufacturer will prefer for each pallet to remain uniform, but your numbers may require some mixing and matching. Make sure to send extra copies of each version of the game to all Amazon destinations, as you will likely need extras at some point for damaged/missing/review copies of the game.
Panda Game Manufacturing offers the very generous option of shipping to up to 10 destinations directly from Panda. Your freight company is one of those “destinations,” but the others can be group buys in Asia or Australia/New Zealand.
Shipping Company: Your manufacturer may recommend a few shipping companies. I used RIM Logistics (Saba at sabasolomon AT rimlogistics.com) to ship a few pallets to Amazon.de and Dimerco (Justin at Justin_Bergeron AT dimerco.com) to ship the majority of the games to the US [Update from the future: I now work only with Dimerco–it’s easier to work with just one company). Both companies are very helpful for startups that may need some extra guidance with the forms. I don’t get a referral fee or anything like that, but if you contact them, I would appreciate if you tell them I sent you.
Two small tidbit to keep in mind about ports: When your game arrives at port in China, it will not ship right away. These companies keep costs down by consolidating shipments within the same containers (see The Wire, Season 2). So don’t be surprised if your pallets sit on the boat for a few weeks. Also, when they arrive at port in the US, allow for about a week for the games to pass customs. Sometimes it’ll happen much faster than that, but prepare for the worst.
Individual Shipment Preparation
So all of the games have arrived at Amazon and have been processed–what’s next?
You can enter each address one by one, but that will take forever if you have hundreds of backers. Rather, what you want to do is upload bulk shipment spreadsheets. I’ve uploaded the templates here for your convenience. Follow the instructions on each one, and when you’re done, save the document as a tab-delineated text file for upload.
A few tips about filling in these spreadsheets:
- Only include the information you need. If something is optional, don’t include it, because you might enter it incorrectly and mess up the whole order.
- If there is any delay between creating the spreadsheet and uploading it, make sure you update the date.
- On the inventory page on Amazon.de and Amazon.co.uk, make sure you’ve enabled exports so that you can ship to the rest of the EU.
- You’ll need to use country codes for European shipments. Here’s a list of all codes here. Note that the United Kingdom’s official abbreviation for shipping is GB (Great Britain).
- Zip codes must be properly formatted. Be specific about what you want on your backer survey. Here’s what I put there: “If your US postal code starts with a 0, please enter the full 10-digit postal code (correct format: 01234-5678). If your international postal code has letters in it, please capitalized them. Canadian backers, please use a single space in your postal code and capital letters—no hyphen (correct format: T5T 5G7).” Despite those instructions, you’ll still need to review every zip code.
- Cross-check addresses to make sure you’re not off by one line on all cities, for example.
- Search the spreadsheet for “,com” “.con”, and “. com” to find e-mail addresses where people accidentally used a comma instead of a period. Every one of these will show up as an error on Amazon. (Bonus: If you run your e-mail list through Mailchimp, they’ll send you all of your e-mail address errors in a handy list.)
- To mitigate errors, upload spreadsheets in small chunks. Don’t do 500 at once–do 5 uploads of 100 addresses each. This will help you narrow down addresses in error.
It is with these bulk shipments that you will encounter Amazon’s greatest fault: It’s really hard to search for specific packages on Amazon, and even harder to find addresses on the bulk shipment that are marked “error” (any shipment marked “error” does not go through and will need to be re-entered correctly). Amazon doesn’t tell you the order number for addresses in error for some reason (I’ve asked them to fix this). Instead, you have to cross reference every address that went through with the original spreadsheet until you find the missing addresses to resubmit. That’s why getting the bulk spreadsheet correct the first time can make a huge difference.
You might be wondering about the quality of Amazon as a shipping company. Overall I’ve been very pleased with their speed, and fairly pleased with their packaging. There have been a handful of games that weren’t packed very well, resulting in dents to the box, but I send replacement parts out and everyone is happy. Whenever you hear from a backer who has a damaged box, make sure you get them to send you a photo of the game in the box with the original packaging so you have something to share with Amazon for reimbursement.
Amazon customer service has been fairly good. It’s a massive company, and most of their customer service is built around e-mail communication. Usually it takes a day to hear from them. The only segment of Amazon whose customer service seems lacking is Amazon.co.uk. I’ve messaged them several times and have never gotten a response. [Update: All levels of service are much better when you contact Amazon through your seller account.]
For all the individual shipments to non-US, non-Canada, non-EU locations, I’d recommend using USPS. FedEx and UPS cause trouble for some backers, particularly in South America. Backers will ask you to write that the game is a gift on the customs forms, but legally you cannot do that. You can, however, select “other” and write that it’s a Kickstarter reward. It’s somewhere in between a gift and an order.
After your games arrive at Amazon, they will take between 3-7 days to be processed and entered in the system. After that, you can start submitting addresses. Amazon usually takes 1-3 days to ship to those addresses, and your backers will get a notification from Amazon at that point.
Shipping to Retailers/Distributors
We’ve covered all of the ways you’ll get your products to Kickstarter backers, but what about retailers and distributors?
There are lots of options here, but I’ll mention what we’ve done at Stonemaier Games. We work with Aldo Ghiozzi at Impressions ADV, which is a distribution broker. Aldo sells games to retailers and distributors so you don’t have to contact each of them individually (if you’re a small indie publisher, you may not hear anything back from them, but Aldo will). [Update: We now work with Greater Than Games for their distribution brokerage service.]
Regardless of whether you go through Aldo or directly to a distributor, the distributor will receive a 60% discount off MSRP. Of your remaining 40%, if you work with Impressions, they will get 18% of that 40% as their fee. So if the MSRP on your game is $100, Impressions will receive $7.20 and you will receive $32.80.
How many retail copies of your game should you order? That’s up to you. If you listen to Aldo’s interview on the Funding the Dream podcast, you’ll hear him recommend that new publishers with new games order no more than 500 retail copies of the game. I think that’s a safe recommendation. With Viticulture, we allocated 650 copies to traditional distribution, and within a few days, distributors had placed 1,000 orders for the game. So we underestimated demand. It’s really hard to predict how well your game will do, so err on the side of caution.
Obviously there’s a lot going on here. Although this is a comprehensive guide, it’s still going to take some research on your part to get everything set up properly for your product. You’ll have to figure that out on your own. If there are any overarching questions that can benefit everyone, please ask them in the comments and I’ll add the answers to this post.
Update: You can see final shipping costs and stats for Euphoria here. You should also read the accompanying piece I wrote after shipping Euphoria, as well as this: 5 Shipping Partners in the EU for Kickstarter Reward Fulfillment
A complementary podcast to this post is live on Richard Bliss’ Funding the Dream.