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Are you planning to build a hardware product that needs a battery? If so, don’t let the complexities of shipping these items impact the successful fulfillment of your crowdfunding campaign. You may be surprised to learn that many carriers consider batteries to be “dangerous goods.” These regulations are often carrier or country specific and require additional costs. Depending on the stage of your business and the consulting resources that you have on-hand, you may not be in a position to obtain the necessary certifications. These include Safety Data Sheet (SDS) or transportation tests for lithium batteries in particular.
If you’re not careful about your shipping strategy, you could risk exposing your company to fines. Shipping requirements for dangerous goods change often, as they are subject to country-specific laws. Here’s a partial snapshot of what could go wrong:
- You lose money due to fines and surcharges that you did not expect
- You need to cancel your shipments to your customers
- You’ll need to drop money to fix your mistake
Don’t let something as small as a battery put your company at risk of going out of business. Plan your strategy for shipping your batteries well in advance of your crowdfunding campaign. Here are some best practices to navigate:
If you have doubts and can’t find definitive answers, don’t ship the battery
If you’re planning to ship to countries in North America and Western Europe, local shipping and postal carriers can work with you to navigate this process. For instance, UPS has published this guide to packing and shipping batteries, and FedEx created this resource hub for shipping lithium batteries. You can see DHL’s guidelines here. These resources walks through guidelines from the following regulatory agencies:
- The International Air Transport Association (IATA), a global trade organization that develops commercial standards for the transport of dangerous goods
- The Pipeline and Hazardous Materials Safety Administration (PHMSA) of the United States Department of Transportation, which develops regulations for the transport of dangerous goods, domestically
Different types of batteries fall into different hazard classes and may be shipped under regulatory exceptions that do not require compliance with regulations. There are some batteries that are not regulated at all, such as conventional dry cell and alkaline batteries in consumer sizes.
The bottom line, from all of this information, is that you need to avoid taking chances. If you can’t find the answers that you need, for the exact countries in which you’re doing business, you may want to avoid shipping your product with batteries altogether. A wrong guess may hurt the success of your crowdfunding campaign.
Define the countries in which you’re shipping in advance of your crowdfunding campaign—and be prepared for regulations to change
Crowdfunding opens doors for entrepreneurs to reach customers around the world. Modern transit systems make it possible to ship goods anywhere. But is it worth it? The answer depends on the stage of your business, the consultants that are available to you as resources, the type of battery that you’re including, how to pack that battery, and the specific countries in which you’re shipping. If you do not have the resources to navigate this maze, your risk of experiencing a problem—and experiencing business losses as a result—is high.
Consider the case of the smart luggage industry. In late 2017, major airlines began requiring that batteries from suitcases be removable. This mandate immediately left several companies unable to keep operating. Product designs did not enable this functionality, and companies were unable to issue refunds or replacements on suitcases that ranged between $300-$500. When designing your product, it’s important to keep in mind that regulations are always changing. Some of these changes may be out of your control.
As another example of how quickly things may change, FedEx began requiring a new certification for two types of lithium batteries—UN 3090 and UN 3480—in January 2017, for businesses shipping batteries in Germany.
“Lithium batteries, both lithium ion and lithium metal, are fully regulated dangerous goods when prepared under Section IA IATA regulations,” according to FedEx. “These commodities must be correctly identified, classified, packaged, marked and labeled. Additionally, the package must have the Shipper’s Declaration for Dangerous Goods completed and signed by a trained shipper.”
In July 2017, FedEx began requiring a a United Nations (UN) mark on all lithium battery labels. New regulations come into effect in December 2018.
Campaigners need to be prepared for dangerous goods shipping regulations to change. Policies at the time of your campaign’s launch may be different from the laws that you need to follow at the time of fulfillment. A customs broker, along with your shipping and logistics partner, can help you identify the steps that you need to take. Defining your shipping destinations ahead of time will help you focus your time and attention. You can make sure that you’re getting the certifications that you need.
Be prepared for potential mistakes and shipping delays—ahead of time
While the worst case scenario, a shipment in violation of customs, may not happen, it’s important to be prepared. The last thing that you want, as an entrepreneur and campaigner, is to leave your backers unhappy.
Let’s consider the best case scenario for an Indiegogo campaigner: you run a successful crowdfunding campaign. What happens next? You need to deliver on your promises, to every single backer.
Let’s say that your product is a battery pack. After your campaign ends, you learn that legislation has changed in Europe, and you can no longer ship your product by air. At this stage, you may need to change your product design and entire manufacturing plan. As a result, there may be additional delays, cash flow problems, and confusion in communication. Backers aren’t entrepreneurs and may not understand your problems. They may become frustrated, no matter how transparent or accommodating your business is.
No matter how much you plan, you may encounter delays. You’ll be glad to have planned and budgeted for things to go wrong, ahead of time. With a financial buffer—and clear, transparent lines of communication with your customers—in place, your company will only stand to benefit. Planning in advance (and working with your shipping carrier) will also help you identify whether you need to incorporate a surcharge.
Depending on the size of your business, and the resources that you have, you may decide that it’s best to avoid shipping batteries altogether. In these situations, make sure to tell your customers why, along with instructions for them to obtain what they need. As your business scales and demand grows for your product, you can start investigating options for shipping and logistics providers.
If you do choose to open up shipping internationally off the bat, especially if the market demand for your product justifies doing so, make sure that you work with customs brokers, international trade lawyers, and shipping partners ahead of time. Consultants in these areas have deep familiarities with country-specific regulations—and also have insight as to whether those laws are likely to change over time.
While some companies try to cut corners by avoiding the customs and declarations process, this approach isn’t recommended. Government agencies will often choose items in shipments to inspect, at random. With just one misstep, you could receive a hefty fine. Imagine this small mistake scaling across your entire inventory.
The more you consider and plan for ahead of time, the less likely you’ll be to run into a roadblock. Maximize your chances of a successful crowdfunding campaign.
Ingram Micro and Indiegogo have teamed up to create educational resources for campaigners. Here are a few to get you started:
- The shipping and fulfillment guide, created by Indiegogo and Ingram Micro, to help you navigate the complexities of shipping and fulfillment
- The Shipping & Fulfillment 101 webinar recording, hosted by Indiegogo and Ingram Micro.
If you’re an entrepreneur interested in learning how to ship smarter and how to qualify for flash funding opportunities, connect with Ingram Micro today to receive a free consultation. Get information about our partnership with Ingram Micro Commerce & Lifecycle Services here.