We have been getting some great press about the Kickstarter Fulfillment service that we offer out of the warehouse. Overall, it’s been quite fun to handle and we are glad to see some great games get out to Kickstarter backers. However, I do want to reassure our regular customers that it’s not something that is ever going to become a major part of the business (at least not in the sense of it taking over the retail side).
For one thing, most of our fulfillment happens during the warehouse ‘down-time’. As we hire part-time warehouse workers, for most fulfillment options we just increase the number of hours that our warehouse personnel work to full-time each day. Even working on our regular orders, we generally can complete about 200 additional games a day which is more than sufficient for most Kickstarter’s.
That’s another point worth mentioning or highlighting. For the vast majority of Kickstarter’s, we are told that Canada makes up 10% of all backers. In our experience, that generally works out to be between 100 – 200 backers at best for a very successful Kickstarter, around 40 – 50 for those that do well. Now, our rates are posted publicly (CAD$3.50 per order fulfilled) but those rates include boxes & packing materials which on average works out to be about CAD$1 in cost. That works out to be about CAD$2.50 before we have to pay staff for their time and of course, any mistakes we make comes out of the total as we pay for reshipments & returns. On top of that, for every Kickstarter quote that we do get, there are at least another 5 that we don’t get and end-up wasting time on. All that time has to be paid for somewhere.
As you can guess, the profitability of doing Kickstarter fulfillment really isn’t high. So why bother doing it?
- Industry relations – doing the Kickstarter fulfillment, we’ve been in touch with a wide range of publishers and backers, many of whom we’d never have talked to if we weren’t doing this. As such, it’s a good way of extending our network.
- Marginal profit – every little bit helps. If the warehouse isn’t being used at that time, it’s additional marginal use that we can make of it, so the marginal profitability is still worthwhile. Of course, there’s a certain level before this marginal business start’s being a main business, but in Canada, it would have to be a significant increase.