Recap of Last Week's Reddit AMA

Posted by Melissa Pillion on Wednesday 08 Jun 16

Kickfurther will be conducting bi weekly AMA (Ask Me Anything) sessions on our subreddit, getgrowing, every other weekend.  We are conducting these AMA's because we want to give every Kickfurther community member an opportunity to be heard by the Kickfurther staff.  The next AMA will be held 11 AM MST on June 19 on our subreddit, getgrowing.

Below you can find the answers to the top community questions from last week's AMA with our Kickfurther CEO, Sean.
 
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Sean:  

Hi Everyone,Here for our bi-weekly AMA. There's two major changes on the horizon I'd like to discuss today, packs and first out sales. 

Packs

Since we've launched we've adhered to a minimum of $20 to participate on Kickfurther. We wanted to make sure this opportunity was accessible to anyone and we thought that $20 was reasonable. The consequence of that system is that if the total purchase order is $1000 and you buy $100 of that purchase order, you essentially own 10% of each piece in that lot of inventory.

The key change incoming is that offers will now be packed into specific inventory lots and can only be purchased in whole packs.

For instance if a business that has a product with a $3 cost per piece, they would likely be organized into packs of 7 for $21/pack. So you can buy 1 pack with 7 pieces inside for $21, or two packs for 14 pieces total for $42, but you cannot buy $30 of inventory because that would split a pack up.

The downside is that the minimum of $20 can no longer be maintained. We should still see packs in the $20 range, but it's unlikely you'll see a flat $20 pack. Some businesses with more SKUs will have packs above $100/pack. We will work to make consignment opportunities as accessible as possible moving forward.

There are two functionalities we can offer with packs that weren't possible without them and we think it's worth the change.

1) First out sales - Major improvement to the store, see more below

2) Taking delivery in cancellations - So if you've received $20 of payouts on a $60 pack you could pay the $20 back and have the full $60 pack shipped to you.

In the next couple of weeks you'll see offers start to be organized into packs, and within a month you should no longer find any "unpacked" offers.

First Out Sales

A major improvement to the store. The way the store would previously function is if you made a sale you would earn a 5% commission immediately and the payout from your sale would be distributed to all the buyers proportionally.

Now with inventory sorted into packs, you earn an immediate payout if you sell the products you own. The example below will get a bit technical, but should provide clarity.

e.g.

  • Cost per pair of socks - $5
  • Profit offered - 10%
  • Consigned price - $5.50
  • Retail - $20
  • Revenue share - 50%
  • Revenue share price - $10
  • Pack - 5 pieces of the same SKU, $25/pack

You buy 1 pack for $25 and now own 5 pairs of socks. The business estimates a 6 month timeline. Fortunately you know people who need socks this month and you direct them to your store. One of your friends purchases a pair of your socks from your store. Since you originated the sale, you immediately earn the full consigned price on top of your 5% commission.

First sale - 4 pieces left

  • $5.50 consigned price immediately earned
  • $1.00 commission immediately earned
  • $4.50 distributed to all buyers
  • $9.00 paid to business partner

So you would see $6.50 (consigned price plus commission) immediately in your account, and then receive your portion of the $4.50 distribution, so you would end up with a bit more than $6.50. The business would see the $9.00 in their account when they log in.

Now lets say you sell the balance of your inventory that month.

Four more sales - 0 pieces of inventory left

  • $22.00 consigned price immediately earned
  • $4.00 commission earned
  • $18.00 distributed to all buyers
  • $36.00 paid to business partner

Now you've sold and no longer own any inventory. You've earned $27.50 from the consignment price (the total you were expected, $25*10%) and an additional $5.00 in sales commissions.

If you're feeling generous and continue to sell the product you will still earn the commission but will not earn the consigned profit or a share of the payout distribution. It would look like the below.

One more sale - No inventory remaining before sale

  • $0.00 consigned price earned
  • $1.00 commission earned immediately
  • $10.00 distributed to other buyers
  • $9.00 paid to business partner

The key takeaway is that you receive preferential payouts if you originate the sale. Selling 50% of the inventory you owned will get your inventory turned around in less than 1/2 the time it would take if you just waited for the business partner to sell through the inventory on their terms.

First out sales will only be available with packed offers and this functionality isn't live yet. We expect to release this in the next couple of weeks.

OK so those are the major changes on the horizon, AMA!

Community Question:  The First Out Sales concept is very interesting. It'll surely make generating sales on KF store much more rewarding.

I see the cancelled offers page is set up and the pages of removed cancelled offers have been restored. Thank you for being true to your words and making it happen.

Starting from what offer or what date in the future will it be mandatory for all businesses to put in sales numbers and pay out accordingly?

Sean: Thanks, I appreciate your patience while we got it spun up. I'm also very excited about the first out sales. It's going to really reward participation and everyone benefits from it.

All new business partners are being told that is the only system to use moving forward. That has been true since the feature was introduced a few weeks ago.

Current businesses are being transitioned to the new system. We hope within a couple of months and update cycles we can have everyone using the new system successfully.

Community Question:  By this you mean the legacy system won't be available to them to make payouts yes? New businesses going forward will have to make payouts no less than agreed revenue shares of sales numbers that are put in in the new system right?

Sean:  The legacy system is in a tab they could see if they looked for it. Essentially the new partners are being trained in the current system and not in the legacy system. Once we have everyone switched over we'll delete the legacy functionality. By the end of this summer I expect to have everyone on the new system.

Community Question:  In regards to the packs, does this apply to higher value products as well. For example, if Komodo Kamado tried to raise under the new system would the packs be $1k+? Or does this system only apply to products that are packaged in multiple quantities? 

Sean:  Unfortunately yes, this will apply to those products as well. We understand this limits access for a portion of our users and it's not something we take lightly, however we think the first out sales functionality is worth it. We're going to carefully evaluate how these changes shake out over the next few weeks.

Community Question:  What's your plan for making the KF store more user-friendly and customizable for us? Will you create a different sale-focused web portal? Allow us to customize the display, and/or allow us to embed the products directly on our own websites? Even though the incentives are good, the store is just too clunky and boring to even make it worth it to, say, buy some google ads.

Sean:  Hey Charles, we are interested in improving the stores and adding as much customization as possible. We definitely don't want it to be the case that every user store just looks like another user's store.

Right now you can edit the message people see when they get into the store. We'd like to add functionality as we go, but it's hard to know what will be the most impactful changes without feedback.

For myself, one of the biggest problems with the store is the lack of visibility. I don't want to have to post my store link every day on FB/Twitter for it to get traffic. To me that makes embedding a high priority feature.

Right now our store plugs into Shopify, eventually our store solution will be developed in house and that will create a lot of opportunities for customization.

In terms of customization I think one of the key features we're looking at is an "add content" functionality. So if you want to provide a personalized review of an item in your store, or a picture or video of the unboxing, that should be something you can do and display front and center.

What would be the minimum functionality you would want to start using the store? We need to get to an MVP that people are using so we can start improving it.

Community Question:  Right now pretty much every offer that gets posted on your website has inaccurate information for the offer terms. For instance, Logic Product group recently filled an offer that was listed as being 8 months/14% profit. However, due to the way the system allows companies to post these offers, we were charged almost a full month before the "start date" of the offer. Essentially this makes the offer 9 months/14%.  It seems crazy to me that companies can basically game the system and get our money before the offer starts by having an incredibly long period that the offer is open. I know you have posted in the past that you debit our accounts immediately once the offer is filled because of the time it takes for the money to go from our accounts, to kickfurther, and then back out to the companies. However, I believe that the amount of time that it takes should be irrelevant and be reflected inside of the offer terms. Even if it takes 2 months for the money to go from our accounts to the companies, all you have to do is list all offers as taking an extra two months. There is absolutely no logical reasoning for this to take place outside of the offer terms and companies should be told from the get go that they need to pad their start date by X number of weeks in order to ensure they get the funds before they are needed. So if they need the funds on November 14th and it takes 14 days for the funds to make it to them once we are charged, they should list the offer as starting on November 1st and we would be charged on November 1st even if it gets filled on October 1st. This will reflect evenly across all offers without punishing the companies and we as backers will have a better sense of what the true returns are from the beginning.

Sean:  Hi Jordan, essentially what I'm understanding is that you'd like for the businesses to take the transfer time onto their account. There are a few things to note here.

  • 1) We already do this - All businesses are told that they should expect to received funds on the end date or 10 business days after the inventory has been funded, whichever is later. So if they set the close date for Oct 1st, and it funds Oct 1st, they can expect to receive funds on Oct 15th. If that same offer funds on Sept 10th, they can expect to receive funds on Oct 1st. This means businesses have the expectation from the beginning that there may be transfer time that they're assuming responsibility for.

  • 2) Not all users would like this - We already get complaints sometimes that the charges sometimes come days after the purchase is made on Kickfurther. This would further extend the time between making a purchase and getting dinged on your account, which can cause problems for certain users.

  • 3) Gaming the system - Businesses set long periods because they want to get the most time possible to make funding more likely. They don't expect to and can't guarantee they're going to get funded in the first day so the idea they're doing this intentionally to try and game us or our users is simply not true.

The reality is that the nature of the beast is someone is going to end up holding the bag for the transfer times. Sometimes it's the business owner if they fund on the last day, sometimes it's the buyers if demand is high. Your proposed system would make it the business owner who is holding the bag every time, and that doesn't seem fair to me.

To be 100% transparent, we often push funds to the businesses as soon as possible and do not try to hold the funds until the end date. The policy is that even in the event that demand is high and it's funded early the business owner doesn't receive funds until the end date, however we are currently pushing funds as soon as possible.

Thank you for your feedback and you suggestion. It's a good one and I can see how that policy would be beneficial for KF buyers, but we're trying hard to create the fairest solution for all parties. If we make the contract or the terms too onerous we're only going to get the very bottom of the barrel companies. We are committed to continuing to improve the quality of the brands that we present to you, and to do so we need to keep an eye on what is fair for them as well

For more information, and to view any follow-up questions and answers, please follow this link to view the full AMA: 

https://www.reddit.com/r/getgrowing/comments/4miied/kickfurther_ama_6416_packs_and_first_out_sales/

Topics: Community, Updates

Posted by Melissa Pillion on Wednesday 08 Jun 16
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