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The Almighty Buck

Indiegogo 'Guaranteed Shipping' Will Ensure Refunds If Campaigns Fail (engadget.com) 45

Indiegogo will start offering "guaranteed shipping" on some crowdfunding campaigns through a pilot program starting next year. Creators who choose to partake in the pilot will promise to users that their product will be delivered. If they fail to fulfill that promise, supporters will get their money back. Engadget reports: Details on how the guaranteed shipping process will work are still pretty sparse, as Indiegogo plans to experiment with it. Creators will have to opt-in to the program. When they do, they will be given a "guaranteed shipping" badge or icon that will appear on their page to inform potential backers of the pledge. Per Indiegogo, in certain cases, some funds may be withheld from the creator until they can confirm that they will be able to ship their products on time. The guaranteed shipping option will likely be most viable for existing companies using Indiegogo's enterprise platform to test out new products.
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Indiegogo 'Guaranteed Shipping' Will Ensure Refunds If Campaigns Fail

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  • by SuperKendall ( 25149 ) on Wednesday November 14, 2018 @06:25PM (#57645926)

    While the idea I could see help to see some campaigns get more money, I wonder where this money would come from.

    There have been a number of examples of Kickstarter/Indiegogo projects where the money was all burnt through just trying to get something workable out - and failing. So in that case where all the money has been burnt, where are those refunds from? Is Indiegogo really going to be able to cover that?

    I still like Kickstarters system where they just get money above a certain amount, leading to a reasonable chance of success if they estimated well, and the collective mind evaluated the estimation well.

    • One could do some insurance like scheme for this fairly easily. Thus, e.g. if projects fail with probability x, then for each dollar the campaign would put x dollars aside in case it fails. This way, you would, on average have enough money to cover it.

      • That seemingly punishes good actors more than bad actors though. The outright scammers don't give a damn when their campaign inevitably fails, since there was no intent to deliver anyways. Meanwhile, anyone legitimately trying to make something (whether they can or not is another matter) now really needs to raise even more to cover the insurance for everything that fails.

        I'd rather just take the risk that I get nothing if something doesn't work out, rather than have the cost to sponsor projects that I li
      • by AmiMoJo ( 196126 )

        Some lawyers will get very rich trying to determine if a product actually shipped and the insurance should pay out. What if the product that ships doesn't meet the promised spec? That's happened a lot.

    • My first assumption would be an escrow account, where the money would not be released to the creator until something was shipped.

      • by suutar ( 1860506 )

        Yeah, if they can get any form of credit an escrow account should be very manageable if they actually have something functional and just need to ramp up production. If they don't have something functional, they probably won't qualify for this program.

        • Even if they had something functional and ready to ramp up production I think it would be pretty hard to find lenders to take that risk.

          Even if you did, then you would be paying some kind of fairly large fee to bank against that escrow account, so now you need to factor in load fees on top of other (probably already unrealistic) production costs.

          Then there are the sticky edge cases, like what happens if they deliver a product but the end result kind of sucks and now a bunch of people are very unhappy. Does

      • That would turn it into a pre-sale scheme that would only be open to companies that don't actually need the help, and could just advertise their new product normally, and sell or pre-sell it normally.

        The whole point of crowdfunding, the part that makes it different than "shopping" is that the money is given in advance to fund the making of the product.

        • Most probably true.

          That said, if (say) I had a business idea and it was going to take £50K to get it into proper production because the minimum order was 1000 units, and when packed up they were 1m3 each, then I for one would feel very nervous about getting a loan on the house or whatever to get it started. I might get the loan, make the order and then have to stack those boxes in every last corner of my house and half a dozen friends houses for months until I sold them.

          However, if I knew I was going

          • I agree, it only 99% benefits large business, there is a small window for a small business to benefit too.

      • My first assumption would be an escrow account, where the money would not be released to the creator until something was shipped.

        The point of the funding is to pay for the development and manufacturing of the product. If they don't get the money till after the product ships, then that completely defeats the purpose.

        • by AmiMoJo ( 196126 )

          The point of the funding is to pay for the development and manufacturing of the product. If they don't get the money till after the product ships, then that completely defeats the purpose.

          Guaranteed sales and proof of demand may generate other investment. Few successful projects are purely crowd funded.

    • The person or company doing the Kickstarter/Indiegogo project doesn't get all the promised money. Kickstarter/Indiegogo take a percentage. Indiegogo is taking on the role of insurance company, and (based on their statistics for the success of past projects) are betting that they can pay for refunding failed projects out of their percentage cut, and still stay in the black.

      It's pretty risky because unlike (say) cars, the liability for any individual project can vary by a huge amount. One big failed pro
      • I figured for a project to be able to earn this mark they would also be charged a higher percentage from IndieGogo, as you say so that IG can have enough of a pool to pay out failures.

        The risky aspect I see though, is that while they may have stats on failed projects the stats will not really matter much since the projects that apply for this special mark are essentially a random sub-selection of projects they have had before, so the failure rate will be pretty unknown.

        That combined with (as you said) the l

  • They singularly failed to do anything, despite a lot of hot air, about the Retro Computers Limited scandal.

    £250k of investment, about 10 prototype units to show for it, and IndieGoGo promised / threatened lawsuits and all kinds and did literally NOTHING about it. They now just close queries from backers of it, and don't issue public statements on it.

    If you want to fix yourself, IGG, fix that campaign and go through with your promises. Or you should have shut up and said "You're on your own" to

  • "Per Indiegogo, in certain cases, some funds may be withheld from the creator until they can confirm that they will be able to ship their products on time"

    So how is that actually going to work? I mean if the funds are not withheld in all cases then obviously the money don't exists to refund. So where does that money come from? Will Indiegogo pay out of their own pocket? I seriously doubt that, so obviously the only conclusion that you can come to is that the "guaranteed shipping" is actullay not guaranteed.

  • In other words, as a scammer, you just have to ask for more money to compensate for the loss you have to cut.

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