Operating an online business often comes with managing a sizable inventory. With that in mind, the advantages of a well-organized fulfillment process are hard to ignore. The less time and money you spend on fulfillment, the easier you can maximize efficiency and boost revenue.
The top contributors to ensuring a positive customer experience in e-commerce are fast shipping (62%) and an easy delivery process (54%).
Luckily, custom kitting is a simple yet highly productive way to manage your inventory and achieve both of those crucial elements. It doesn't just help you save time and money, it also speeds up delivery and keeps customers happy. As a result, your entire business benefits while gaining new opportunities for growth and development.
Let's take a closer look at what custom kitting is and the role it plays in the fulfillment process.
What is Kitting?
Kitting is a process of grouping separate but related items together and assigning them a new SKU.
The process involves bundling together different products and storing them under a new SKU to simplify inventory management. The kit is then shipped to the customer as a single unit. By creating these kits, you can ship items to consumers quickly instead of spending time packing and shipping each product individually.
A kit contains items that are usually ordered together. For example, people who plan camping trips tend to order tents, sleeping bags, sleeping pads, and headlamps. Instead of packing and shipping each item individually, you can create a kit and send it to the customer as one package.
In a warehouse, when a customer places an order, each item is located with a code through the warehouse management system. Then the staff member finds the item by the individual SKU, collects it, and ships it separately.
Knitting allows you to bundle items that are usually ordered together and create a single SKU. When the order comes in, you can locate items faster and easier.
Pre-Built Kitting VS. Custom Kitting
Both pre-built and custom kits can improve the efficiency of the fulfillment process.
- Pre Built Kitting: involves working with kits that are created based on the past purchasing history and customer buying behavior analytics. For example, your customers tend to buy tents, sleeping bags, and sleeping pads together. You create a kit with a separate SKU in advance and ship it when the order comes through.
- Custom Kitting: involves allowing a customer to create a kit online. For example, they can buy a set of shirts in five custom colors. Once the order goes through, fulfillment center workers create a kit by collecting individual products, bundling them under a new SKU, and shipping them to the customer. With time, data collected about custom kits can help you create highly demanded pre-built kits.
The goal of each kitting method is to speed up delivery and streamline the fulfillment process. Besides being less time-consuming, kitting is also environmentally friendly since it doesn't require as much packing material as individual shipping does.
Benefits of Kitting in Order Inventory
Kitting can have significant benefits for your order fulfillment process. Some of them are:
1. Efficiency
Instead of looking for individual items and packing them separately, you are putting similar items together in a kit. This saves you time on packing, labeling, and shipping, thus streamlining your order fulfillment efficiency.
If you take advantage of pre-built kits, you can make several of them in advance to ship immediately upon request. Custom kits can also speed up the process by helping you skip the individual shipping process.
Only 15% of consumers say that online retailers meet their delivery speed expectations at all times. By improving fulfillment speed, you are indirectly affecting the shipping speed, thus increasing customer satisfaction.
Kitting can reduce labor costs by decreasing the effort of the warehouse and fulfillment center staff. Meanwhile, it saves you money on shipping since shipping several items individually is always more expensive than shipping one bundle.
2. Inventory Management and Organization
When you are creating kits, you generate fewer SKUs, thus having an easier time organizing your massive inventory. If your customers often buy products in bundles, you can improve inventory management by working with fewer separate items.
Kits can help you optimize the warehouse space, thus allowing you to save money and avoid shipping errors. By saving space, you gain new storage opportunities and cut fulfillment costs.
Kitting can also save time when you arrange inventory audits. Instead of counting individual items, you'll be dealing with kits.
3. Improved Sales
Kitting is an excellent option for online retailers who want to sell products that suffer from a decrease in demand. You can use kits to sell items that have been around for a while and look like candidates for dead stock. Kits help with inventory reduction and increase inventory turnover ratio.
You can incentivize the customer to buy a kit by offering a discount. Since consumers can get all they want in one purchase, kitting can go a long way toward improving customer experience. Creating kits for customers allows them to feel a personalized approach while helping them learn about new items in your inventory.
Kits are also amazing gifts. You can take advantage of kitting to create holiday packs. By throwing in value-added services like gift packing, you can turn a one-time buyer into a loyal customer.
Take Advantage of Custom Kitting with Smart Warehousing
Kitting is an excellent technique that can help you save time and money while streamlining order fulfilling and increasing customer satisfaction. Both pre-built and custom kits are designed to help online retailers improve revenue growth through optimizing processes and streamlining efficiency.
At Smart Warehousing, we optimize your order fulfillment process by offering such tried-and-tested techniques as kitting. If you'd like to learn more about our capabilities, please contact our team at any convenient time.