Fulfillment Overhaul Progress Report & Compensation Proposal
MetaFactory has moved fulfillment from a third party logistics provider (ShipBob) to a dedicated in-house fulfillment process based in the Brooklyn Navy Yards space.
The goal of this proposal is to define a fair compensation program for contributors so that fulfillment can continue smoothly while also saving considerable overall costs for MetaFactory DAO.
Not only is the Navy Yards space a vastly cheaper solution for fulfillment, but it also allows us to utilize the HaLo chips, and seamlessly add customized stickers pertaining to relevant drops, etc. (a.k.a. “kitting”).
ShipBob Summary
Below is an export of summary data from ShipBob, documenting the monthly costs of their services.
In total, MetaFactory spent $49,167 on ShipBob invoices, during 7 months of active shipping and 1,318 shipments [for an extremly high average price per shipment of $37.30, of which was broken out into $27.45 for raw fulfillment costs and $9.86 in other fees, per shipment.]
Below is a summary of the Shipbob expenses, contrasted where relevant with the NYC based fulfillment expenses, which currently consist only of the raw cost of purchasing shipping labels (USPS, FedEx, UPS, DHL).
This comparison demonstrates that there is ample runway to ensure that contributors receive adequate compensation while still recognizing large savings for MetaFactory as a whole.
At first glance, it’s clear that ShipBob has many different types of charges broken out, including storage fees, receiving fees, pick fees and many other additional charges. But there are also hidden costs baked into their Fulfillment Expense line item. In my analysis, I found that the fulfillment expense invoiced by ShipBob was consistently and significantly greater than generating labels on our own.
Example ShipBob Invoice
In this example, Shipbob invoiced us for $118.33 in fulfillment expense. We were actually billed for the dimensions of an uneccesarily oversized 18" x 16" x 8" box. In our system, this order for a Woofy tracksuit would ship in a flat poly mailer, reducing cost to $57.34. Even with the oversized dimensions used in this ShipBob example, the cost would be $76.92.
Shipbob’s invoice
$76.92 cost of FedEx at 18" x 16" x 8"
$57.34 - cost of FedEx at actual package specs 18" x 16" x 1"
Additionally, the cost of shipping an 10oz flat package containing a tee shirt with ShipBob is $7.68, where a USPS shipping label for the same costs around $4.20 on average.
$7.68 - ShipBob cost of 10oz tee shirt shipment in USA
$4.34 - Our cost for the same shipment
ShipStation
ShipStation is a e-commerce shipping solution that MetaFactory is currently using to generate shipping labels and fulfill orders.
Shipstation’s rate browser allows us to easily select the lowest cost shipping option.
Shipstation’s pricing tiers allow us to easily upgrade & downgrade service level as needed. We’re able to add users and generate labels from the Berlin Werkstatt as well, so that compensation can be streamed to the correct individuals based on which user created each label.
FedEx
After bringing MetaFactory’s FedEx account up to date, we have acheived a cost effective option for international deliveries that is signifcantly faster and more reliable than USPS. Currently, for packages being sent to Canada and any package over 4 pounds that is international, it is typically the cheapest option.
Shipping From Berlin
It’s possible to create shipping labels from Berlin using ShipStation. In order to do this, all we need to do is connect the DHL account that MetaFactory / Berlin has been using to our account. It’s also possible to add FedEx, but would require the creation of a new Germany-based FedEx account owned by MetaFactory’s LLC.
Updates to Customer Facing Delivery Costs & Options on Shopify
I have updated the Shopify checkout so that shipping cost for customers is calculated based on the acutal shipping costs that are going to be using our shipping accounts. I’ve also added a small handling charge to each order, (slightly higher for international), to offset the payouts to contributors for fulfillment related work.
During the ShipBob era, the shipping prices paid by customers was often way less than the actual expense incurred by MetaFactory. Referencing the Woofy Tracksuit order above, even though MetaFactory was billed $118.33 by ShipBob, the customer was only charged $39.69 for shipping.
I’m recommending that for customer services purposes, we remove the option for USPS first class package international in checkout. Our cost of FedEx is typically near parity for packages over 4 lbs, and for packages under that, it is only a $5-10 increase in shipping cost that will be absorbed by the customer. In exchange for this, customer wait times are reduced from around 4-6 weeks in many cases to 5-7 days. The tracking experience is better, and we will actually get contacted by FedEx if there are any customs problems whereas USPS would either abandon the package or send it back.
Compensation Request & Reasoning
The goal of the compensation system is to be scalable and keep contributors satisfied. What we want to avoid is “netting” together the physical labor aspect of fulfillment work together with any other work that we do as members of the DAO. Many of us are excited about web3, the open metaverse, and everything that MetaFactory is working on. I think it’s safe to say that none of us joined MetaFactory because we were excited to ship packages. If this work isn’t specifically compensated, in a way that is responsive to the actual volume of shipments going out, it will rapidly lead to contributor burnout and feelings of resentment.
Fulfillment is the backbone of any e-commerce business and there are heavy costs to externalizing this process, as demonstrated by our experience with ShipBob.
Note that this compensation should account for the backlog of orders that were shipped during the months of June and July, before any compensation system was officially proposed.
Per Shipment: $4
Per Kong Chip Scan: $1
Oversized boxes, special cases: $TBD
Per shipment payments to be split evenly between contributors for now as it’s only me and Jay & we’ve had a pretty even split of workload & good working relationship. If anything changes or we bring someone else on, we can transition to having individual accounts in ShipStation and tracking who’s responsible for each shipment that way.
Stipend for contributors: $1,000 / month
- Expectation: go to workspace often to ship packages. Packages shouldn’t have more than a 3 day delay between the time when it is ordered and the time when it is shipped. Keep space well organized in a good working condition. Fulfill incoming orders as well as customer service requests.
Dework One-off Tasks: These are meant to be few & far between, but at the discretion of the fulfillment team, we will add projects to Dework to reflect projects that are above and beyond the normal duties. An Example of this would be making a dework task for setting up the storage racks & disposing of all the recycling/garbage created by that. For a project like that, we would request a payment based on the time taken to do the task, and an hourly rate of $20/hour per person who worked on it. For reference, the storage racks task took about 4 hours for myself and jay (not including the time when we were stuck in the freight evlevator), which would be a grand total to the DAO of $160. This cost compares favorably to any sort of Taskrabbit, fiverr, etc.
Compensation payout schedule: Ideally payment would be sent to contributors at the end of every month. A report can be uploaded to dework showing the volume of packages
One Time Bonus to @milfdad: 250 ROBOT
For onboarding other team members to shipstation & ensuring that everyone knows the optimal shipping methods for every situation, redefining our Shopify checkout to more accurately pass fulfillment costs along to customers (rather than being heavily subsidized by the DAO) and acheiving substantial long term cost savings for the DAO through communication with FedEx and renegoiation of shipping rates.
Copying proposed distribution schedule of ROBOT here - arguably fulfillment is the most tangible item that falls under Ops / Gov.
Previous Gov. Proposals on NYC Space for reference:
Proposal: Brooklyn Full Circle Fulfillment - #2 by Pab [Passed]
Proposal: MetaFactory Logistics Budget - #5 by CPTNskeletor [Rejected]
