Adding a marketing-centric spin on your inventory management can unfold stellar possibilities. As the industry spectrum is transforming at a fast pace, innovative ways to maximise product exposure on ecommerce platforms are also evolving.
The pursuit of increasing order size and optimising free shipping can be a challenging quest for ecommerce brands. The utilisation of creative strategies and value-added ecommerce order fulfilment solutions have surfaced with some of the most exciting revelations. A systematic approach towards them can ascend your business to new levels of success by increasing your ecommerce sales.
In this blog, you will learn what is a kit, what is kitting in ecommerce, how are pre-built kits different from virtual combos, what are the benefits of product kitting for ecommerce brands, and the advantage of product kitting with a 3PL.
A kit is a combination of two or more products as a single unit of sale or SKU (stock keeping unit). Instead of selling items piece by piece, an ecommerce brand can bundle similar items together to create kits, offer special deals, and cross-sell promotions. It serves as a ready-to-ship set when an online order is placed to expedite the ecommerce order fulfilment process.
Kitting is the process of combining multiple single items into one unit of sale.
As a marketing tool, it can help ecommerce brands sell more items in a single customer encounter, and can open avenues to new products and new marketing channels by increasing ecommerce sales.
According to a study by Harvard Business School, Nintendo uses kitting to boost its unit sales up to 100,000 units with a single campaign.
Fundamentally, there are two categories of product kitting in ecommerce:
A pre-built kit is a combination of multiple base products that are stored physically together and kept in stock as a single unit.
For example, an online retailer of office supplies observes that customers frequently purchase a pack of pens, a legal pad, and a padfolio together. In this scenario, the retailer combines the three items into a kit that is pre-assembled and ready to ship as a single SKU (stock keeping unit).
A virtual combo is a combination of multiple products which are physically available in the fulfilment centre but stored as different products (separate SKUs). These different products are picked from their respective locations when an order is received to create a virtual combo. It's packed as a single SKU at the time of order processing.
The critical distinction between a pre-built kit and virtual combo is the time when they are combined. A pre-built kit is received and stored by a warehouse as one unit. Whereas, a virtual combo is physically available as separated products in the fulfilment centres (FC) and only combined when a customer places the order.
Kitting reaps numerous advantages to not only businesses but also customers by offering all-in-one solutions to both of them.
Products make their way into your customers’ shopping cart easily when they are bundled. It increases their appeal and streamlines the retail experience. A curated collection of complementary products fascinates not only eager-to-buy shoppers but also casual browsers.
Let’s say; a customer wants to purchase a lipstick. But is enticed by a combo deal which contains a lipstick, eye palette and a mascara.
Customers often have access to substantially discounted rates when purchasing a bundle of products. It simplifies product selection and derives more value for a discounted price.
For example, during the festive season, customers are on a lookout for the perfect gifting option. Bundled gifting items adorned with custom packaging allure customers. Personalisation hits bull’s eye if you are keenly observant on ecommerce data.
Customers buy products to address specific needs. If a product bundle addresses more than one of them, it will be convenient for the customer– they can make one purchase instead of many.
Unboxing is the first real touch-point of a brand with a customer which creates an unforgettable first impression. A powerful kitting operation is key to delivering a great unboxing experience.
It’s a versatile tool for higher engagements. Allowing shoppers to create their own collection of goods can elevate the overall customer experience.
Achieving a year-round operational efficiency for multichannel ecommerce businesses can be challenging. Kitting can be a powerful tool for distributors and wholesalers to improve their AOV (average order value). It can immediately generate a positive impact on your bottom line by improving cash flow.
For example, a customer wants to buy a shirt. On finding a combo of a shirt and a trouser, the customer is lured into purchasing it.
Kitting allows ecommerce brands to tie up loose ends and successfully push products that aren’t selling on their own, just like a flash sale.
For instance, sewing needles and threads are more successful products when they are included in crafting kits or emergency kits.
Kitting helps sellers to reduce shipping costs by combining items that will go to the same address. The cost may be further reduced by utilising customised packaging. Moreover, shipping time can be reduced as sellers can not only package but also weigh and label kits in advance. Besides, by eliminating the possibility of a customer ordering incompatible parts, kitting also slashes downs returns. It ensures that the customer is buying complementary items, improving order accuracy and increasing consumer confidence.
Kitting helps to keep down all the expenses related to storing unsold stock, i.e. inventory holding costs which includes storage space, labour, and insurance. Furthermore, it provides the ability to track and maintain stock levels more effectively.
It helps to achieve several advantages simultaneously. It encourages customers to try a new product, provides a solution to clear out the items that aren’t selling well on their own, and drives sales for seasonal kits.
In an order fulfilment process, kitting plays a vital role. By enlisting a 3PL service with substantial expertise in handling such process, you’ll be able to reap an array of advantages.
Let's take an example here—you are a retailer dealing in stationery supplies. You have an assortment of pens in various colours.
You can sell these pens in two ways—individually or in different colour combinations.
Selling pens of different colours individually is easy. Whereas, to sell pens in different colour combinations, you have to provide pre-built kits of two or more pens with different colours (e.g. red and blue, black and green).
But what if the customer wants a different colour combo apart from what you are offering?
You can either provide every possible colour combination, which can be a difficult task or use a platform which enables your customers to make their own custom combos. Moreover, manual errors can occur in kitting. Instead of a combo- red and blue, a combo of red and black can be kitted together. You can prevent and detect such errors manually or leverage a tech-enabled 3PL like Eshopbox to ensure 100% order accuracy.
Furthermore, working with a 3PL will also provide the following benefits:
An individual workstation is assigned to each kit with a committed team. With time, the team becomes more familiar with the handling of your merchandise. It ultimately leads to both quality and efficacy.
A 3PL partner who has extensive industry experience can provide value beyond savings. It can accurately forecast the operational costs of kitting and analyse the cost-value benefits.
Essentially, picking one kitted item is significantly more cost-effective than picking three items separately. Likewise, picking one order with five kits is more time-efficient than picking orders with ten items. A 3PL partner can give you operational efficiency in kitting in a cost-effective way.
Customers relish the option of product kitting as they save on order prices and shipping. However, the backend function has to flow smoothly for attaining customer engagement. In order to make sure your ecommerce business is ready to offer kits, you need powerful workflows that can handle it, so you can truly reap the benefits and create an exceptional ecommerce fulfilment experience.