Do trade wars affect your crowdfunding campaign?
The US and China trade war has made importing goods from China increasingly costly. But, how do these tariffs affect your crowdfunding campaign? This blog highlights the effects of a trade war on crowdfunding campaigns.
This is a guest post by Ramon den Hartog, Marketing Manager at Floship.
Floship is one of Asia’s leading order fulfillment providers based in Hong Kong. They specialize in crowdfunding fulfillment, subscription boxes fulfillment, and shipping e-commerce orders on-demand, worldwide. They will gladly help you set up a solid shipping strategy for your crowdfunding campaign and ship backer rewards internationally. Simply reach out and they’ll be in touch.
Since 2018, there’s been a lot of buzz about the ongoing trade war between the United States and China. Every few months, new tariffs are announced and importing goods from China has become increasingly costly. You may be wondering how exactly these tariffs affect your crowdfunding campaign. Here is what you should know.
The nature of traditional e-commerce fulfillment
Most e-commerce businesses import large batches of goods at once. Products manufactured in China are shipped to the United States and stored in a warehouse. Inventory sits there for a duration of time while the warehouse bills you for the daily storage space used. As orders come in, individual parcels are shipped from the US warehouse to US households or nearby countries. Such is the nature of traditional fulfillment.
Large batches are very likely subject to tariffs and therefore, costly. America currently has a daily $800 de minimis threshold in place. Any shipment with a declared value of above $800 USD is subject to duties. If you insist on importing a large batch into the US, you would have to raise your product prices to make up for the loss in revenue caused by these tariffs. This may, however, lead to a decline in incoming orders. Customers don’t like paying extra, after all.
The benefits of on-demand order fulfillment
Instead of sending large batches directly to the US and storing it there, you may be better off handling your fulfillment on-demand from Hong Kong. Having your fulfillment center close to your manufacturer in the special administrative region of Hong Kong has many benefits. For one, lead times are shorter. You can react faster to market changes and you do not need to order such large quantities from your manufacturer all at once. That way, you keep your storage costs low and avoid being stuck with inventory that may not sell.
Then, all you need to do is to ship parcels on-demand as orders come in from your shopping cart to your fulfillment provider. Individual parcels are unlikely to exceed the threshold of $800 USD and, therefore, are not subject to duties. Today’s couriers and fulfillment businesses are perfectly capable of delivering parcels across the world within days.
What about crowdfunding fulfillment?
Now you may be thinking, that is great, but what about my crowdfunding project? Running an e-commerce business is not exactly the same. You are right. The nature of crowdfunding fulfillment is quite different than that of an e-commerce business. Where an e-commerce business (hopefully) has ongoing daily orders and each parcel may consist out of vastly different types of products, crowdfunding campaigns are usually a one-off project that needs to be shipped within the same day or week. However, you are likely to have backers all over the world, and not just in the United States. Choosing a central location close to your manufacturer or supplier is the best way forward to dealing with these trade wars.
Order fulfillment straight from Hong Kong
Floship is an order fulfillment provider specialized in e-commerce fulfillment and crowdfunding fulfillment, offering over 70 different shipping methods to get your individual parcels from Hong Kong to the United States, and anywhere else in the world. Several methods can get your parcels to the customer within three days, while others may take a few more days but are, in general, cheaper. This is a trade-off you need to make.
The fulfillment provider individually picks and packs each parcel and ships them directly to your backers across the globe. As the parcels won’t pass through the United States Customs as one large batch, they are not subject to the infamous US-China trade wars duties as values would not surpass the $800 threshold. The parcels would therefore not experience delays and would generally pass through customs much faster than a large batch would. Products valued under $100 are usually cleared without any additional paperwork.
Traditionally, large batches may be stuck in customs for up to 10 days. Lead times are much longer. Knowing this, it is easy to see that shipping through Hong Kong may be both cheaper and faster.
So to answer the question, do trade wars tariffs affect your crowdfunding campaigns? No. Not if you ship through Hong Kong and stay clear of batch shipments from China directly to the US. Shipping individual parcels has many benefits. Reach out to Floship to discuss your specific project. They will help you find the best and most economic fulfillment solution for your campaign.