Posted by Erik Dahlman on July 28, 2014
You’ve run your successfully funded Kickstarter campaign. All of the products have been created and shipped. But there is still something looming in the corner, quite literally. What do you do with all of that extra merchandise you ordered during the project?
A lot of Kickstarter creators are so focused on the project itself that they haven’t planned for what happens afterwards.
I have to admit that I’m guilty of this, or least I have been in the past. We tend to order higher inventory than we need for our Kickstarters to help drive some of the per unit costs down. One thing we didn’t do when we first started however, was figure out exactly how we were going to get rid of all of that extra stock.
There are a couple of options for how you order your product, each depends on what your end goal is.
The first option is pretty straight forward. You’ll want to order enough to cover your project with some additional surplus. You’ll need this for things like:
There are some sites out there that will take on extra Kickstarter inventory and sell it for you. I can’t recommend one because I haven’t used any of them, but a quick Google search should turn up some results if you’re interested in going that route. There is at least one Facebook group I know of that offers their members discounts on Kickstarter inventory overstock. Again, I’ve never used it, but it might be worth checking out.
This is your first project of many, or at least one that is big enough to help you bootstrap your new company so you can make some extra cash. There are SO many points to consider just in that topic alone, but I’m just going to cover inventory management right now.
1. Extra Inventory - When you order, you’ll want to maximize your economies of scale and find out what discounts you get at higher price points. For printed products, the main cost is in the setup. Printing larger print runs is usually a good idea since you'll incur this cost every time you have to go back to the printer. Similarly, many physical products need some type of molding which is typically a large portion of the setup cost. How much inventory is enough? How much is too much? This is something only you can answer, and even then it’s only a best guess.
Case in point: We have two products that we produced WAY more than we should have because we thought demand would be much higher. Consequently, we are running a huge blowout sale for these two items: The Name of the Wind and Dragon Whisperer.
Also be aware of how quickly you'll be able to replenish inventory once it's depleted. We lost profits for several months because we weren't able to obtain a popular selling product quickly enough after we ran out. So learn from my mistake and don't wait until you run out to reorder.
2. Storage Fees - Think about where you are going to store all of your extra inventory. Most places will charge you based on the total volume of your products. Some will charge by the pallet (so you can cram as much as possible on each one). If you plan to distribute through Amazon afterwards, be aware that the larger the item, the more it’s going to cost you to store in their warehouse if it doesn’t sell quickly (they charge by volume). And if you’re going to be shipping things out, don’t forget you’re going to need a place to store all of the shipping supplies as well.
I would not recommend your dining room.
3. Distribution - Are you going to put this on your website, sell it to a distributor, or both? Think about what your sales channels are going to be before you even begin your project and get started on them now, it could take months to get deals in place.
4. Marketing - You have the greatest product in the world and you already know people feel the same way because they funded your project, so they’ll probably come looking for your product once it’s available right? In fantasy land, yes. But here in the real world, you’ll need to dedicate time and advertising dollars to promote your product. Make sure you have a clear plan about how you’re going to help your non-Kickstarter customers find you. Just be careful who you choose to help you with this.
5. Pricing - Your backers helped you make a product that might never have existed, try to give them the best deal possible. Nothing sucks more than backing a project and then immediately afterwards finding it on a discount site for half of what you paid for it. If you want to have repeat customers, they should feel good about their purchase from you.
Now, if you read bullet number one and call bullshit, I don’t blame you. While #5 is my rule of thumb, the golden rule is to make sure that your company doesn’t go bankrupt. After all, you’re the only one that can make your amazing products right?
In our case, we ordered a ton of stock that is costing us hundreds of dollars in storage fees every month. Hopefully our backers understand that we waited as long as we could before resorting to price dropping on those and cutting our operating costs so that we can keep creating great stuff.
6. Charities - This was mentioned briefly in the One-and-Done section, but charities can be an excellent way to move excess inventory as well. We’ve donated free inventory to various charities like Worldbuilders and are currently working with Child’s Play and Operation Supply Drop to get them some games, but if you know of any others, please let us know.
Aside from just being an awesome thing to do if you can, you can also write off most charitable donations at the end of the year.
7. Prizes and Giveaways - This ties back to Marketing, but the idea of giving things away was completely foreign to me before. Why would you give away something that you could potentially sell?
The answer is that if you could sell it, you wouldn’t still have it. Putting your product in people’s hands and getting them to talk about it is the best way to sell more. And everyone likes to win things.
Before you get neck deep in boxes and storage fees, think about the following when starting a Kickstarter:
This list is by no means complete, but hopefully it gets you thinking about what you’re going to do with what you create on Kickstarter. Because, you don’t want everything all over your kitchen counters like this guy…
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