In the past 96 hours I’ve heard two interesting reports from successful Kickstarter project creators about the hazards and dangers that shipping present to the profitability – and potentially even the viability – of their projects.
Amanda Fucking Palmer addressed a session at SXSW (a podcast will supposedly be up at some point). She raised $1,192,793. After Kickstarter’s fees, Amazon’s fees, and bad pledges, let’s assume she netted $1M. Amanda stated that their shipping costs ate up $250K of the funds they raised. 25%. WOW! I was astonished. She spoke specifically about the AU and NZ folks (though she clearly bears them no ill will!) where shipping generally well exceeded what they pledged – never mind the COGS.
The second interaction was a private conversation that I’ve summarized as follows:
Shipping is the dirty secret of Kickstarter that no one talks about partly because you come off as petty and trying to justify how much you’ve raised. They make no allowances for anything other than domestic shipping, so you have to come up with a flat rate for the rest of the world. Then because of the development time between the end of your Kickstarter and the product release, the postage rates go up. In our case, they nearly doubled, absolutely killing us on hundreds of international packages. Some countries came to $80-90 to ship – where we up-charged a flat $30.
The flat-rate international thing seems like a real problem that Kickstarter needs to address. Canadians presumably end up pissed off because they grossly over-pay, and folks in Kinshasa and Sydney get an amazing deal. Fascinating problem!