Kitting in eCommerce: What it is and How it Streamlines Fulfillment
‘Kitting’ or inventory kitting is where multiple products are collected and grouped together to sell and market a new product via your online store. To ensure hassle-free eCommerce fulfillment, kitted products will typically be assembled ahead of customer orders being placed, including any specialized packaging or inserts that the kit requires. This way, warehouse staff only need to collect a completed kit from its picking location and send it off to be packed and shipped.
How are ‘kitting’ and ‘bundling’ different?
Kitting is often equated with product bundling in eCommerce, as both involve grouping individual components and marketing them as a different product offering. However, kitting and bundling operate very differently on the operational side.
Product kitting involves grouping items and assigning them a new SKU or identifier with its own packing process and inventory management requirements. Depending on the nature of the kit, customers may not be able to purchase the components separately, such as in the case of subscription boxes or flat-packed furniture that requires assembly by the purchaser.
Product bundling, on the other hand, is more of a marketing ploy where two or more items are marketed together, often as part of a limited promotion. There is no need to create a new SKU as customers can buy the items present in a bundle separately, though the competitive pricing of the bundle should make it cheaper overall. Rather than assembling bundles ahead of time, warehouse staff will normally pick the items as normal whenever the bundle is ordered.
What are the steps of the product kitting process?
1. Planning your kit
First, you need to decide what items are being included in your product kit. If you sell a subscription box, the contents of the kit will change on a monthly or quarterly basis, usually according to the season or new products that have dropped since the prior box.
If you’ve released a new collection of merchandise, such as cosmetics, accessories, or apparel, you could decide to form a kit of all the color variations that make up the collection. If it’s being sold at a premium price point, you may want to consider enhancing your product kit with luxury touches, like custom packaging, freebies, or brand storytelling elements that increase customer satisfaction.
2. Checking inventory levels
If you’re going to start fulfilling orders for a product kit, you need to be certain you have enough units of inventory in the warehouse to assemble kits that meet the volume of orders you’re anticipating. Otherwise, you risk leaving a bunch of product kits half-finished, which takes up precious amounts of warehouse space. It’s always a good idea to have some overflow inventory available, especially if certain SKUs are part of a product kit and available for individual sale.
3. Organizing the picking and packing process
Whether a product kit is pre-assembled or the components are picked on demand, you need a streamlined picking and packing process that ensures a quick turnaround between processing an order and having it ready for shipping. Even if you plan to have all product kits pre-packed and ready to ship at a moment’s notice, delays to inventory arriving or an unexpected surge in customer demand may mean that your team has to pack orders on the fly. So, you want to make sure that the full warehouse kitting process can be completed quickly and involves enough checks to avoid order errors.
4. Assigning a SKU to your completed kit
Once a product kit is assembled, you need to assign it the appropriate SKU so that your inventory management system can track quantities, the speed of the kitting process, and identify sales trends. Otherwise, your kit will be composed of separate items on the backend of your system, making it nigh impossible to understand quantities or optimize warehouse space.
5. Market your new kit
Once your kit is ready to go, you need to make sure that your customers know it’s available. Strategies like email blasts, spotlighting your new kit on the home page of your eCommerce store, or setting it as a product suggestion while customers are shopping will help to drive interest and increase sales, especially if the kit comes with a discount or some kind of loyalty initiative.
The benefits of inventory kitting
Faster order fulfillment
Picking and packaging take up precious time in the order fulfillment process, especially if warehouse and fulfillment operations aren’t optimized for fast travel times between pick sites. Having all of your product kits ready to ship at a moment’s notice dramatically increases the pace at which businesses can fulfill orders and get them delivered.
Fewer order errors
Picking and packing hundreds if not thousands of unique customer orders can lead to fatigue and mistakes being made, such as the wrong SKU being picked or certain items not making it into the final package. Because product kits contain the same items and are packed following specific instructions, picking and packing errors in the assembly line are far less likely, resulting in fewer misshipments that need to be rectified.
Increase product offerings
Keeping up with changing tastes and preferences is one of the biggest challenges faced by eCommerce brands. One of the biggest benefits of kitting in a warehouse is that it allows businesses to quickly augment product lines by configuring existing products into entirely new offerings. This expands the range of available products and makes it easier to cater to diverse preferences, without increasing your SKU base or adding too much complexity to your inventory system.
Repurposing excess inventory and dead stock
If you’ve miscalculated inventory replenishment or demand forecasting hasn’t panned out as you expected, you can be left with surplus inventory that’s increasing your carrier costs. Inventory kitting projects can provide a clever way for an eCommerce business to repurpose excess inventory or dead stock and change its value proposition. Instead of being last season’s castoffs, kitted items can suddenly make a product a lot more appealing or relevant to customer needs, as well as maximizing revenue and freeing up precious storage space.
Lower packaging and shipping costs
When you design a product kit, the cost to pack and ship kits is an important consideration to avoid undermining profitability. Being able to pack multiple SKUs into a single package in a way that minimizes wasted space or excess packaging is one of the best ways to cut packaging use and minimize dimensional weight for lower overall shipping costs. These cost savings can be reinvested in your warehouse operation or order fulfillment process for better warehouse management.
Common use cases for kitting in eCommerce
So, what are some ways that eCommerce brands can take advantage of inventory kitting services at their business?
Subscription boxes
Subscription boxes are the most well-known examples of product kitting and kitting services at work. Subscription boxes can be either a business’s core product offering or an additional revenue stream used to spotlight popular products or repurpose excess inventory.
The complexity of the warehouse kitting process for a subscription box will depend on the type of subscription. Replenishment subscriptions, when a customer receives a specific product on a recurring basis, usually offer straightforward assembly. However, curated subscriptions, where each box to customized to the preferences of each customer, require a sophisticated on-demand kitting process that can respond quickly to fresh customer orders.
Product sets
When a popular product has a high number of SKU variations, such as multiple colors or flavors, inventory kitting offers many benefits. Sets of a particular product help to boost customer demand, Create a more premium version of that product range, or offer a gift-ready product just in time for the holiday season or Valentine’s Day.
For this type of kitting project, premium packaging and the way that products are assembled play a key role in the desirability of the kit; if customers can buy products individually, you need to make a compelling visual pitch for why they should stump up a little extra to buy them together.
DIY kits
Allowing customers to choose the contents of a product kit themselves – either from a pre-selected range of SKUs or based on monetary value – offers a lot more flexibility and convenience than choosing from existing product kits that may not fit their feeds.
How ShippingTree supports the kitting process
As a value-added fulfillment service, full kitting services are not supported by every 3PL. The kitting process requires a large labor force and granular inventory management capabilities, as some inventory kits will demand more complex packing processes than others. This means that smaller or less technology-enabled logistics companies struggle to implement full kitting processes effectively, resulting in poor customer satisfaction or missing out on valuable cost savings.
ShippingTree offers a full range of logistics kitting, and bundling services to eCommerce brands, from simple replenishment subscriptions to sophisticated gift boxes with custom packaging. No matter whether you’re shipping 500 or 5,000 orders per month, ShippingTree’s scalable fulfillment network can manage fluctuating order volumes and ensure that you are delivering a memorable customer experience that gives you a competitive advantage.
