How you package your products can impact online sales, delivery costs, and more. Kitting and assembly is one area of your e-commerce fulfillment strategy that can save you time and money and improve your speed of delivery to customers when done correctly. In this article, we explain kitting, what the process entails, and how kitting helps you optimize delivery and reduce costs while giving you merchandising flexibility.
What Is Kitting?
You might already have guessed that kitting involves packaging two or more things in the same container. However, kitting involves more than consolidating two or more products. Kitting, as an inventory management strategy, can take the form of gift sets, subscription boxes, or ready-to-assemble (RTA) items. The purpose of offering a group of products together as a single offering streamlines your fulfillment and can help you move slower products that complement faster-moving products. Your fulfillment partner can assemble kits ahead of time to reduce the number of multi-item orders that need to be picked and packaged to create kits, expediting shipping and delivery times. More than that, kits are assigned unique SKUs that require the assembly of all items to create a finished kit.
How Is This Different From Bundling?
Kitting differs from bundling in that all items that come together are assigned a single SKU. Monthly subscription boxes, gift sets, or custom curated subscription boxes are examples of kits. Skincare, cosmetics and fragrances, along with gourmet snacks and candy make great candidates for these types of kits. RTA products, such as furniture that requires some assembly, must contain all of the pieces and hardware necessary to complete the assembly before being shipped as a kit.
Bundling, on the other hand, doesn’t require a SKU to be assigned. In fact, bundles don’t usually get preassembled and the items in a bundle can be placed into any shipping box.
Bundling products together is often offered as a promotion – the more the customer purchases at a time, the more they save. Bundled products can be purchased on their own separately, whereas the items in kits cannot.
How Does Kitting Work?
When a customer places an order for one of your product kits on your website or through one of your outlets, this kit might be a one-time deal or a subscription box that ships at a specific interval, such as once a month. After the warehouse receives the order, pre-assembled kits are located and retrieved from the warehouse. If the kit requires on-demand assembly, a picker will locate all of the items and pack them according to a packing plan. Then, kits are scanned and shipping labels are printed with their own unique SKUs. Finally, your kit is shipped to your customer.
What Kinds Of Products Make Good Kits?
During the pandemic and since, subscription boxes are popular with online shoppers. Consumers enjoy receiving gifts and appreciate the replenishment of items, without needing to remember to order them. Other kits are strategically curated to provide customers the opportunity to discover new products. Here are a few examples:
Glossy Box, Birchbox, and FabFitFun curate high-end monthly boxes that offer subscribers some premium products to try. Dollar Shave Club and Stop Aging Now offer subscribers replenishment opportunities at a discounted price. While on-demand subscription boxes may take more planning and execution, e-commerce businesses can offer more premium kitting options to their customers. Allowing customers to select products from a list for each month’s box gives convenience-focused consumers more flexibility and choice for their boxes.
A good way to boost your Average Order Values lies in creating gift sets – especially if your company deals with many variations for a single product. Kylie Jenner’s lip kits kicked off her cosmetics brand. Consumers shopping for lipstick are more likely to purchase several shades of lipstick at a competitive price rather than just one shade. These kit offerings make great gifts for the holidays.
RTA brands require closely tracking inventory levels to ensure all parts are packed correctly and every part in the manifest is accounted for.
How Can Your Business Benefit From Kitting?
You have already seen how kitting can offer more convenience to your customers, as well as a way to introduce consumers to new products. With cosmetics and apparel, you can offer items that people frequently purchase together as a kit. Sundresses paired with accessories such as earrings or sandals make for an enticing summer kit. Shoppers purchasing razors will likely also purchase replacement blades, as well, so they won’t need to think about restocking their blades. Kitting complementary items together saves customers time and also increases the chance of impulse purchases.
Increased Product Listings Lead To More Sales
Product kits, created from existing SKUs, provide an excellent way of increasing your offerings. With more products to sell, especially on third-party marketplaces (such as Amazon or Etsy), and more product listings, your chances of showing up in searches increase. This is where high-intent shoppers begin shopping. Also, with fierce competition on online marketplaces, well-thought-out kits can prove more of a bargain to consumers.
Keeping Your Inventory Healthy
Avoiding excess stock is a challenge that most e-commerce companies deal with on an ongoing basis. No matter how much you plan for demand, some items in your inventory will not move as fast as others. Especially, during peak seasons, it’s difficult to predict how much inventory to keep on hand to avoid stockout situations in your busiest cycle. Kitting slow-moving products in your inventory with more popular items will help you to keep your inventory lean, creating new value propositions for underperforming SKUs, no matter whether the excess stock is due to supply chain issues or inaccurate demand forecasting.
Saving On Shipping And Packaging Costs
The reason that packaging and shipping costs can get out of control in e-commerce shipping deals with the challenge of standardizing fulfillment costs. The variations for packaging multi-item orders for most e-commerce companies are limitless if your company product catalog’s numbers are in the thousands. With so many variations, warehouses cannot plan for every packaging situation that arises. Offering kits allows warehouses to design a plan for each kit that can be shipped in a single box, to minimize costs and maximize efficiency.
Faster Fulfillment With More Accuracy
Whenever possible, pre-kitting in the warehouse before your customer orders your kits can considerably speed up fulfillment times. Assembling kits ahead of time, when goods are received from the manufacturer or supplier, can help improve accuracy ratings, as well. Receiving an order for your kits, warehouse personnel can retrieve the pre-assembled kit and send it directly to the shipping area for labeling, eliminating lengthy delays that can occur in the picking and packing process. Automating the picking and packing process helps to get your orders delivered faster with more accuracy for happier customers.
Enhancing The Post-Purchase Process
Often created as gifts or limited-time collections to drive buyer interest and urgency to purchase, your customers will be expecting something a cut above the average order. Devising a packing plan that includes samples, branded packing materials, coupons, and promotional offerings all comprise important elements that help differentiate your product from others, by creating a memorable unboxing experience for your customer. Impressing your customer with your unboxing experience enhances the customer experience that leads to brand loyalty, which leads to more sales and referrals.
Phase V Can Help With Your Kitting Plans
Partnering with Phase V 3PL Fulfillment can benefit your e-commerce business in several ways to help you save money as you grow, not the least of which involves kitting products. We can help you decide which products to include in your kitting plans and how to best pack your kits for a better customer experience. You can leverage our advanced data-powered technology and experienced fulfillment personnel to handle your kitting fast and accurately. Phase V can help you save money and time while you focus on the business of your business – contact us today!