Many ecommerce products are paired with accessories, complimentary products, or other SKUs before being shipped out to customers. The fulfillment process of putting multiple individual items together into one box is called kitting and it can be done in multiple ways.
There are benefits and disadvantages to how you set up your kitting strategy:
- Pre-kit packaged: put all items together months or weeks in advance of offering the bundled goods together, stock and code the pre-kit bundle as a single unit
- Virtual bundling: kit items in small batches and stock as a single unit, monitor and build more kits as needed via advanced order management software
- Pick and pack: stock all items separately, but within a designated pack station, to have them picked, scanned, and packed as needed
Choosing the right one for your needs will be determined by your product type, your warehouse set up, your customer needs, and your overall business (capital, cash flow, and flexibility). Here is an outline of each kitting strategy and the benefits and disadvantages to each.
Why is a Kitting Process Used in Ecommerce Fulfillment?
In simple terms, kitting involves adding two or more SKUs (stock keeping units) to a single customer package. Reasoning for combining multiple units into one box vary tremendously—product bundling, gift or add-on with purchase, accessory parts that naturally contribute to the main product, or promotional deals that include a partner product or complimentary addition.
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The benefits of kitting may include:
- Product bundles can increase average order value, naturally increasing revenue
- Kitting may improve fulfillment times through warehouse efficiencies
- Bundles can help sell slow-moving or low selling items
- Simplify shipping services and reduce shipping costs by incorporating more items into fewer packages
- Lower packaging costs by eliminating overpack in multiple packages
- Streamline operational efficiency and costs
No matter how you set up your kitting configuration, by giving customers the option to put multiple units into a single shipped package, you’ll be able to improve overall customer experience with your brand.
Kitting Services: Pre-Kit Bundles, Virtual Bundling, and Line Stocking
There really is no definitive answer because a case can be made for either depending on your product mix, overall business, and customer need.
Customer expectations continue to grow, as does demand for shorter delivery times. Because of this making a case for the traditional pick-and-pack process is becoming more challenging.
Pre-Kitting
Assembling your bundled products into kits before orders are live is known as pre-kitting. This means your pre-assembled kits will be stocked as a bundle. Sometimes they may even be tracked as a single SKU or have each individual SKU linked together within your order fulfillment system. It’s important to understand how exactly your bundles will be tracked through your inventory management process.
Pre-kitting is helpful for a few reasons:
New SKU Launch: If your brand will release a bundle of products and you want to be sure you have the lowest possible fulfillment times to get the kits out. This might be for a new product launch.
Quicker Order Picking: Alternatively if you have any complicated assembly or fulfillment work that will take place, pre-kitting bundles can save your warehouse team time during an order rush (like a promotion or peak season).
Bulk Product Kitting: Pre-assembled kits are also a great plan if you know you’ll need to fulfill many at once. This may be the case for subscription boxes or retailers.
The drawback to pre-kitted goods is that if they aren’t sold within a certain timeframe, the individual products may not be sellable. If your order volume forecast was over by a lot you’ll be left with deadstock, which means lost capital.
Virtual Bundling
If you are looking to sell products in bundles but want to keep your inventory flexible to also be sold individually, virtual bundles are a great option. By using an advanced order fulfillment system, virtual bundles allow a seller to create, change, and edit product bundles so that they are kitting on the fly.
With virtual bundling, often the kitting is still done before an order is placed, but only in small batches. The number of kits to be made in advance can be determined by the seller in the same way they might forecast for a promotional sale weekend.
Virtual bundles allow flexibility to change or A/B test different bundle types. This gives the customer more choice, which means happier, more satisfied customers, and higher sales.
The key here is that virtual bundles require a fulfillment software system that gives the seller this kind of control and flexibility. Not all fulfillment providers offer this.
Pick and Pack
If you need inventory to remain flexible, you’ll want to postpone the kitting until a bundle is ordered. You’ll have warehouse workers assemble the bundle of products on their packing station. Sometimes this is called line stocking.
Within the order fulfillment process, each designated packing station will be stocked with all of the SKUs needed to kit your products together. Items will be assembled together when a customer orders the bundle. The only pre-work is the warehouse management of sourcing all packaging materials and SKUs to be bundled, and ensuring they are well-stocked. The person picking items may also be responsible for other aspects of the packing process, like applying any customization or shipping labels.
Pick and pack is a great kitting solution for brands looking for inventory flexibility or a simpler workflow to track order accuracy.
How a 3PL Supports Your Order Fulfillment Pack Process
Kitting and assembly work are considered value-added servicesbund from most 3PLs and fulfillment providers. But it’s important to note that not all 3PLs provide kitting services in the same way—they may not have the infrastructure to support various kitting strategies.
If you’re interested in outsourcing kitting to a third-party logistics provider be sure they have the warehousing capabilities to support the kitting solution you need. Ultimately you want a 3PL provider who can give you fulfillment services that enhance customer satisfaction, give you cost savings, and support your overall supply chain management goals.
This post was written by Maureen Walsh, Marketing Manager at DCL Logistics. A writer and blogging specialist for over 15 years, she helps create quality resources for ecommerce brands looking to optimize their business.
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