Why is International Shipping so Expensive?

Paul's picture

On every Kickstarter campaign or preorder we run, we get questions about the cost of international shipping. To many people, $29 worth of shipping to Europe on an $80 game (the amount we charged for delivery of Fate of the Elder Gods) seems quite high. However, it actually significantly underrepresents our actual shipping costs. Here is a breakdown of why, as well as the analysis that goes into shipping to Europe via various methods. First, the basics:

Fate of the Elder Gods was sold on Kickstarter for $59, and came with both the base game as well as some promos and a free expansion, due to the stretch goals we unlocked. All told, a standard parcel of backer rewards weighed in at a bit over 7lbs once packing materials were accounted for. Popping over to the USPS website, we see that the lowest price for such a parcel is around $60 for Priority International.

But wait! There’s more! Most EU backers expect “EU Friendly” shipping, which means that they don’t pay any VAT or customs duties on delivery. For goods over $20 or so, the EU charges a VAT of 19-21%, depending on the country. VAT alone on this shipment comes to at least $11.21. In addition, customs in a given country can choose to charge additional fees and import duties, which can be as high as $30 additional dollars per shipment for a parcel of this size and value. All in, a shipment of this size to Europea is going to cost in the range of $62 - $92.

There are several options to attempt to get around this issue.

  1. Ship via USPS (or another service that delivers directly to a European mail service), and refund any backer customs fees. The advantage is that we can get the delivery price to drop about $10 by leveraging the fact that we do a lot of shipping. That still leaves us in the $52-$82 range, unfortunately. The other advantage is that a lot of local customs offices don’t wind up charging VAT or customs duties for whatever reason, so our charges might be lower depending on how lucky we are in that regard.

  2. Ship everything to the EU in bulk, pay the VAT charges once, and then have the games distributed from there. This has the advantage of avoiding the vast majority of miscellaneous customs fees and import duties, since we are importing a lot of product in bulk. It also means that EU backers are in no danger of seeing a VAT bill. The down side is that it is not actually much cheaper, and requires a lot more logistical work. Any European fulfillment house is going to (quite reasonably) charge their actual shipping rate plus materials plus labor. Since everyone who packs Kickstarter parcels at GTG is salaried (and our salaries are already priced into our cash flow), this means that the additional labor of a European fulfillment house is a significant addition to our costs, whereas packing the parcels ourselves is not. Beyond that, we have the issue of import shipments. Our sale price for games assumes that we import them from China in a 40’ cargo container via ocean freight. This is by far the most cost effective way to ship large volumes of freight, as I discussed way back in 2013 on this very blog! Unfortunately, because our inventory storage warehouse is in the US, we never want to ship anywhere near a full container of games to the EU. This means that any shipment to an EU fulfillment house is going to be much more expensive, per game, than the same shipment to our warehouse in the US. All told, this option is basically the same price as shipping directly from the US, and is only worthwhile if we have a huge number of EU backers (and therefore can’t afford the time necessary to pack and ship EU shipments).

  3. Commit customs fraud. Third and finally, we could lie about the sale price of our product, or claim that it is a gift. That is definitely illegal, however, and we’re not into that.

So, if the above is true, why is it that so many board game companies offer shipping to Europe that is so much less than the actual cost to ship games? There are a few reasons:

  1. They don’t realize the actual cost.

  2. They are wholly or partially based in Europe, and have a good reason to store a notable volume of product in Europe.

  3. They value the online feedback and marketing buzz generated by EU customers, and have accepted breaking even or taking a slight loss on those shipments.

At GTG, we definitely fall into category 3. We’ve strongly considered only shipping our products in North America, but we don’t want to make it impossible for our European fans to pick up our games. We are constantly working to optimize our shipping, but at this point we’ve gotten the pricing model to be pretty accurate. Who knows, perhaps one day we’ll open a GTG branch in Europe and bring our shipping costs way down!