The Importance of Kitting & Packaging for E-commerce Businesses
The process of fulfilling ecommerce orders can be a daunting task for online sellers, especially as their businesses grow and they need to manage more orders. From sourcing and stocking products to packing and shipping orders, the process can be time-consuming, complex, and expensive. Fortunately, there are ways to streamline and simplify the order fulfillment process, one of which is warehouse kitting.
Warehouse kitting is a process where individual items or products are bundled together into a single kit or package, ready for shipment. This process involves picking and grouping together the necessary items from inventory, packaging them together, and labeling the kit for easy identification. This approach can be particularly beneficial for ecommerce brands, as it can help to save time and money, and optimize inventory management.
What is kitting & packaging?
Kitting and assembly are essential components of the order fulfilment process, and they play a critical role in streamlining the operations of ecommerce brands. These services are performed by third-party logistics (3PL) providers, who offer dedicated workstations and trained staff to assemble the individual items that make up a kit and prepare it for shipment.
The kitting process involves bundling different products together to create a single unit of sale or SKU. This approach can provide several benefits for ecommerce brands, including increased efficiency, faster order processing, and improved customer satisfaction. Once the products are bundled together, they are ready for assembly.
Assembly is the process of putting together the individual items that make up a kit. This step involves taking the bundled products and arranging them in a specific order to create a complete kit. The assembly process can be performed manually or using automation, depending on the complexity of the kit and the requirements of the ecommerce brand.
One of the significant advantages of kitting and assembly is that they can help to streamline the fulfilment process. By bundling and assembling products in advance, ecommerce brands can reduce the time and labour required to process individual items and fulfil orders more quickly. This approach can be particularly useful during peak sales periods or when dealing with high volumes of orders.
Moreover, kitting and assembly can help to improve accuracy and reduce errors in the fulfilment process. By bundling products together into kits, the likelihood of missing items or incorrect shipments is reduced. Additionally, dedicated workstations and trained staff can help ensure that each kit is assembled accurately and to the required standards.
In conclusion, kitting and assembly are essential services for ecommerce brands looking to streamline their operations and improve the fulfilment process. By working with 3PL providers who offer dedicated workstations and trained staff, online sellers can bundle and assemble products quickly and accurately, reducing the time and labour required to process individual items and improving customer satisfaction.
What are the benefits of Kitting & Packaging for E-commerce Businesses?
Kitting and assembly can offer the following benefits to customers:
- Maximizes exposure as bundled products are more likely to be added to a customer’s shopping cart
- Provides reasonable value deals with simplified product selection and discounted prices
- Targets multiple needs through a single purchase, offering various benefits of all the products in the kit
- Creates a great unboxing experience, leaving a lasting impression on customers
- Empowers customers through custom combos and aims for higher engagement with the brand
On the other hand, kitting and assembly can provide various benefits to ecommerce brands, such as:
- Increases revenue and Average Order Value (AOV) by offering more product options and deals
- Offers an opportunity to rebrand deadstock by including them in a kit
- Reduces shipping costs and return rates by shipping more products together, making it cheaper than shipping them individually. If a customer is not satisfied with one product in a kit, they are less likely to return it as they want to keep other products.
- Serves as a value-added fulfilment solution to achieve several advantages simultaneously, driving sales for seasonal kits
- Organizes inventory effectively as kitting reduces the number of SKUs, making it easier to manage inventory levels
- Increases efficiency by making it simpler for the team to locate all items in one place, boosting productivity and efficiency
- Minimizes inventory costs and better inventory tracking by keeping down expenses like storage space, labor, and insurance
- Faster, more seamless shipping process by reducing the risk of human error and delivery time
- Frees up warehouse space by bundling similar items together, optimizing and reducing warehouse space
- Increases inventory turnover ratio by helping to clear out inventory quickly.
What Are The different types of kitting & packaging?
Kitting can occur at various stages in the supply chain and is not limited to a single phase. Depending on the business, kitting may be arranged before the manufacturer ships products to the merchant, during regular fulfillment, or for various types of fulfillment. Below are some of the typical types of kitting that take place throughout the supply chain.
Warehouse kitting & packaging
During the regular fulfillment process, the most widely adopted form of kitting involves assembling pre-built kits in a warehouse. This type of kitting is usually carried out at a dedicated kitting station or, depending on the nature of the project, at the packing stations as customer orders are fulfilled.
In a warehouse setting, kitting is a well-organized process that is designed to facilitate efficient and accurate assembly of kits. The process typically involves identifying the required components, picking them from their respective storage locations, and assembling them into a complete kit. This is done to ensure that the customer receives all the necessary components and that the kit is assembled according to the specific requirements.
The process of kitting during regular fulfillment is most commonly used in e-commerce businesses, where the inventory is stored in a warehouse and assembled upon the receipt of customer orders. This enables the business to streamline its operations and ensure that the customer receives the kit promptly and accurately.
Manufacturing kitting & packaging
Manufacturing kitting refers to any kitting activities that occur at the manufacturer’s facility before the finished inventory is shipped to the merchant. There are two main types of manufacturing kitting: material kitting and internal kitting.
Material kitting is similar to warehouse kitting, where the manufacturer groups various finished inventory items into a single package to send to the merchant. This type of kitting is beneficial for the merchant because it saves them time and effort that would otherwise be spent assembling the inventory themselves.
Internal kitting, on the other hand, involves the manufacturer assembling kits to assist in the production process. For instance, in an assembly line model, Manufacturing Worker A may create kits containing various raw materials and components required to speed up product assembly. Each kit would contain items necessary to build a specific product so that Manufacturing Worker B wouldn’t have to search for each item individually.
Internal kitting helps to streamline the manufacturing process, enabling manufacturers to produce inventory more efficiently and with less waste. Additionally, it can improve worker productivity and reduce errors by ensuring that all necessary components are readily available during the assembly process.
Subscription boxes
Subscription boxes are packages that contain a specially curated selection of complementary products and are designed to be shipped out to customers on a recurring basis. The frequency of these shipments can vary depending on the customer’s subscription plan and the frequency of product usage, typically ranging from weekly to quarterly.
At the start of each new subscription period, the merchant selects a unique set of items to include in the box. These items may be new to the customer or intended to replenish their existing supply. This personalized curation process helps to keep customers engaged and satisfied with the subscription service.
Since subscription boxes contain multiple items that typically do not vary from customer to customer and recur regularly, they require kitting. By assembling these orders in advance, merchants can save time and effort for their team and ensure accurate and timely delivery to customers.
Subscription boxes have become a popular business model in recent years, offering convenience and variety to customers while providing merchants with a steady stream of revenue. By offering personalized and well-curated boxes, merchants can build customer loyalty and increase retention rates.
On-demand kitting & packaging
On-demand kitting refers to the process of allowing customers to create their own customized bundles virtually. Rather than the merchant deciding what products to include in the kit, customers have the freedom to choose which items to include based on their unique preferences and needs. This process is similar to building your own bundle.
The products in an on-demand kit may exist as standalone items with separate SKUs, allowing customers to mix and match items as they please. Once the customer places an order, the personalized kit is assembled and shipped out to them.
On-demand kitting is a great way for merchants to provide customers with greater flexibility and control over their purchases. By allowing customers to personalize their own kits, merchants can enhance the customer experience and increase customer satisfaction. Additionally, on-demand kitting can reduce inventory costs and minimize waste by ensuring that items are only assembled and shipped when ordered by the customer.
Manage The kitting & packaging For Your Business
Kitting can be a complex process for businesses, especially when managed manually. While kitting offers numerous benefits, it also presents challenges in terms of inventory management. Creating new SKUs and using existing inventory to build kits requires accurate inventory tracking to reflect changes. However, manually tracking inventory movement, SKU creation, and kitting requirements can be a cumbersome task, especially with outdated systems.
To simplify the kitting process, many ecommerce merchants partner with a third-party logistics (3PL) provider that offers robust inventory management software. With automatic updates to unit counts after sales activities and inventory changes, working with a 3PL partner can save time and minimize the risk of human error. Additionally, outsourcing kitting and fulfillment to a 3PL eliminates the need for businesses to handle these processes in-house. This allows businesses to focus on other areas of their operations while leaving kitting to the experts.
Conclusion
In conclusion, kitting and packaging are critical components of a successful e-commerce business. Effective kitting and packaging strategies can enhance the customer experience, increase sales, and streamline operations. By understanding the different types of kitting and the benefits they offer, businesses can tailor their approach to meet their unique needs.
To achieve optimal results, e-commerce businesses should invest in robust inventory management systems and work with reliable third-party logistics providers to handle kitting and packaging. By outsourcing these processes, businesses can focus on core activities, such as marketing and customer service, and improve their bottom line.
As e-commerce continues to grow, businesses that prioritize kitting and packaging will have a competitive advantage over those that do not. By embracing these practices and constantly refining them, businesses can build a loyal customer base and achieve long-term success.