Today we’re proud to announce that we will be launching, Inventory Visibility, a new product for businesses and buyers interested in using the Kickfurther platform.
As you know, we have been focusing on Purchase Order and Accounts Receivable backed Co-Ops since early in 2017. The decision to do so was based on the idea that we needed to get better at tracking consignment inventory. With purchase orders, it’s significantly easier to track one shipment of product from a manufacturer, over the ocean, to a retailer. When businesses are selling direct to consumer, they are shipping the inventory to hundreds of end customers, making it significantly more difficult to monitor.
Inventory Visibility co-ops will be based on monitored inventory levels and payouts will occur based on those inventory levels as it is sold through multiple channels. In order to monitor direct to consumer businesses, we will form a relationship with their warehouse and get current inventory information directly from their storage and/or logistics solution. Businesses will be required to sign a power of attorney that says Kickfurther has the primary position on the inventory. We will invoice the business for any inventory that is no longer stored in the warehouse. If they don’t pay our invoice according to the consignment contract, we can put a stop shipment order on the inventory to ensure no more product goes out the door until we get paid.
We funded five internal Co-Op tests to build the processes necessary to launch this product. We will be launching the first Inventory Visibility (IV) Co-Ops in the coming days based on these tests.
The key differences between PO/AR backed Co-Ops and Inventory Visibility Co-Ops are in the two following areas:
- Sales channel – PO/AR backed Co-Ops have a purchase order associated with the inventory funded on the Co-Op that is greater than the total value of the Co-Op. IV Co-Ops do not have a purchase order to cover all the inventory on the Co-Op.
- Payment terms – With PO/AR backed Co-Ops we often get payment assigned to us, meaning, when the retailer pays, they pay Kickfurther directly and we distribute payments to the users and the business. With IV, we check on inventory levels and invoice the business. They have anywhere between 15 and 60 days to provide payment for the consignment inventory sold or transferred.
We believe Inventory Visibility is the best way for the crowd to support the growth of brands and products they love. Unlike equity crowdfunding, you’re not locked in with a business until exit. You might like the current designs of a product company, but who knows where they’re going. With an IV Co-Op, you can fund the current production run of products you believe in.
Unlike rewards-based crowdfunding, you’re not committing to buying a product from a brand you like. Even the earliest of early bird reward tiers have margin built in wherein the business is making 10-30% profit. So long as the company abided by the terms of the consignment agreement, the worst-case scenario with a Kickfurther IV Co-Op is you will end up getting the product at the cost the business paid, no margin. The best-case scenario is you end up earning 20-30% profit while helping a business you love grow.
We will describe which type of Co-Op you’re looking at in the Co-Op overview. All Co-Ops will still have their individual badges and rating system and the meaning of those are clear. If you have any questions or feedback, we would love to hear from you!
-Sean De Clercq