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Startups: Don’t forget about shipping and logistics

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Too much emphasis on product development and financing and not enough on fulfillment can backfire.

No matter what product you’re selling, unless you can deliver it to buyers in a timely fashion, you’re in trouble. Startup companies are particularly vulnerable because the people with the idea are immersed in getting the product right – which is essential. But sometimes logistics get short shrift.

Successful funding means you need to deliver.

That’s particularly true with crowdsourced startups, says Adam Sever, UPS small business segment marketing manager. “A lot of startups that use Kickstarter, Indiegogo or one of the many other crowdfunding sites out there don’t think about fulfilling all the orders until the last minute.”

Successful funding means you need to deliver.

“There’s a stat from CNN that says 84 percent of the most-funded crowdsourced campaigns have missed their delivery dates,” Sever says. “In some cases by extraordinary amounts of time – one smartwatch company took a year and a half to fulfill.”

To prevent customer backlash, Sever recommends taking these steps early:

1. Develop a well-thought-out plan. In a lot of cases, companies exceed their target and face filling many times the number of orders they expected.

“The solution is to have a plan from the get-go that allows you to focus on getting the product made, marketed and financed,” Sever says. “Shipping needs to be part of your initial planning, too, because you need to fulfill that first set of orders that comes in.”

Make sure you factor in production time frames and account for shipping/fulfillment costs. Be sure to communicate that information to customers.

2. Make it scalable. “It’s best to think of your fulfillment plan as more than just a one-time event,” Sever says. Shipping and logistics need to scale as the company grows. “You may need to scale up when the campaign works five times better than you anticipated, or it can mean that you can easily replicate a campaign and run it over and over again,” he says.

“Ideally, from there you would get to a turnkey solution that doesn’t require fulfillment cycles but becomes a supply chain you can control yourself without relying on outside vendors to help you,” Sever says.

A real-world example

Ficks used Indiegogo to raise 146 percent of its target funding and needed to get those products delivered. (It’s an all-natural, nonalcoholic cocktail fortifier that adds zing to your drink while taking away the morning-after effects.)

“They became a member of the UPS CONNECT program, and we conducted a virtual whiteboard session between our solution specialists and their staff,” Sever says.

UPS helped Ficks fulfill the initial orders and meet its initial deliverable deadlines.

“From there we’ve built a relationship with Ficks that includes LTL freight to some big customers, namely Nordstrom and Urban Outfitters, and we are now helping them distribute in the U.K. as well,” Sever says.

Small businesses: Sign up for a free virtual whiteboarding session with a UPS CONNECT specialist.

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