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Kitting - a powerful tactic to boost your revenue

Versha Kamwal
October 14, 2020
7
mins read

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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 companies. The utilisation of creative strategies and value-added 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.

What is a kit?

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 store 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 order fulfilment process.

Multiple SKUs become a kit with a unique SKU
A kit

What is kitting?

Kitting is the process of combining multiple single items into one unit of sale.

As a marketing tool, it can help businesses sell more items in a single customer encounter, and can open avenues to new products and new marketing channels.

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.

Types of product kitting

Fundamentally, there are two categories of product kitting in ecommerce:

Pre-built kit

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 pre-built kit
A pre-built kit

Virtual combo

A virtual combo is a combination of multiple products which are physically available in the fulfilment center 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.

Supp nutrition provides an expansive array of curated packs for specific problems with product kitting
Supp nutrition provides an expansive array of curated packs for specific problems.

Beyoung provides custom selection of products to suit the specific requirement through product kitting
Beyoung provides custom selection of products to suit the specific requirement of the customers.

OZiva offers a curated collection of products that target specific needs through product kitting
OZiva offers a curated collection of products that target specific needs of the customers.

How are pre-built kits different from virtual combos?

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.

What are the benefits of product kitting?

Kitting reaps numerous advantages to not only businesses but also customers by offering all-in-one solutions to both of them.

How does it benefit a customer?

Maximises product exposure

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.

Bobbi brown, a cosmetic brand lures customers with their palette and lipstick sets via product kitting
Bobbi brown, a cosmetic brand lures customers with their palette and lipstick sets.

Provides reasonable value deals

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 specialised packaging allure customers. Personalisation hits bull’s eye if you are keenly observant on ecommerce data.

Kimirica boasts an adorable pre-kit gifting option as a reasonable value deal enabled by product kitting
Kimirica boasts an adorable pre-kit gifting option as a reasonable value deal.

Targets multiple needs through a single purchase

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.

Laneige’s hydration-to-go kit is a collection of five products which target several skincare needs enabled by product kitting
Laneige’s hydration-to-go kit is a collection of five products which target several skincare needs.

Offers a great unboxing experience

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.

Glossier's unboxing experience enabled by product kitting encompasses every aspect of its values
Glossier, a US beauty brand’s unboxing experience encompasses every aspect of its values. Customers are greeted by a lithographic printed inside, once unboxed along with its social media hashtag and handle. Moreover, the box is functional, minimalist and reusable.

Empowers customers through custom combos

It’s a versatile tool for higher engagements. Allowing shoppers to create their own collection of goods can elevate the overall experience.

Kotis design takes custom combos and product kitting to a higher level with a kit for every occasion
Kotis design takes custom combos to a higher level with a kit for every occasion.

How does it benefit a business?

Increases revenue and average order value

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.

Offers an opportunity to rebrand deadstock

Kitting allows businesses 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.

Reduces shipping costs and return rates

Kitting helps sellers to save money on shipping 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, thereby eliminating errors and increasing consumer confidence.

Minimises inventory costs and better inventory tracking

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.

Serves as a value-added fulfilment solution

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.

Kitting with a 3PL

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:

Dedicated space and team

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.

Additional cost savings

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.

Bottom line

Customers relish the option of 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 fulfilment experience.

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