It happens to every retailer; sometimes, an item doesn’t catch on or move like planned. What was thought would be a hit ends up in the warehouse taking up space and costing money. Kitting can be the answer to moving less-popular inventory and driving customer satisfaction simultaneously.
What is Kitting?
Kitting starts when a company decides to group items and create a single product offering with a new SKU. In the logistics process, kitting is assembling the items into a single package to be delivered to the customer.
The new package might mean boxing the items together for shipping or incorporating custom packaging for the product bundle.
How Does Kitting Help Move Inventory?
Businesses may be different, but the core benefits of kitting are the same: efficiency and revenue creation. Product values increase, repeat business is fostered, efficiency improves, and inventory moves faster utilizing kitting.
Customers love bundles that lower the price per item and tend to have greater satisfaction in their purchases.
The more specific benefits of kitting include:
- Average order amounts increase: Bundles make for a higher average order value, increasing customer spending per transaction. Offering customers the ability to add more to their bundles at bigger discounts can increase transaction sizes even more.
- Dead stock is eliminated: On its own, a product might not be moving but becomes much more valuable when bundled with a popular product at a discount. Bundling slow-moving inventory will move it faster.
- Customer satisfaction increases: Kitting delights customers, turning them into repeat customers. Examples of bundles customers love include basic packages, subscription boxes, holiday sets, and giveaways.
- Costs are reduced, and efficiency increases: Moving inventory more quickly reduces the costs of holding it, allowing funds to be redirected into other aspects of the business. Efficiency increases as time is saved from selling products separately while fulfillment costs decline.
- Kitting saves on packaging: Kitted items reduce packaging as separately shipped items go out in one package. Less packaging saves companies money.
- Shipping becomes most cost-efficient: The cost of separately shipped items is much more than adding kitted items to bulky shipments.
- Fulfillment risks are reduced: Putting more products into fewer packages reduces handling and the chance of product damage in transit.
How to Start Kitting
Utilizing kitting to make and save more is relatively simple. Identify slow-moving stock that offers a benefit when sold with another item. Market the bundle as an option when customers view one of the items and trumpet the savings of buying together.
Let your experienced 3PL partner take care of the rest as the orders come in.
Start a Kitting Program Now
As customers become more value conscience to offset the impacts of inflation, now is the time to start kitting. They love bundles and are ready to increase their transaction size if it saves them money over buying individual products.
Companies that utilize kitting save money, operate more efficiently, move products, delight customers, and make more money. Don’t wait to take advantage of the benefits of kitting.
American Warehouse, Inc. offers kitting services and has helped companies reduce costs while increasing sales with bundle offerings. Contact our experts today and start a kitting program that will benefit your company.