In order to best meet the needs of their customers, warehouses will use a variety of different strategies to streamline the delivery of product. One of the primary strategies that warehouses use for this purpose is kitting.
Kitting refers to the process of combining multiple product units into one package, creating a new unit that is sold as a single entity. This new entity, or kit, receives a new SKU, or Stock Keeping Unit, which voids the previous SKU’s of all the items within the kit. These kits remain as an entity throughout the shipping process and are delivered to sales facilities or individual consumers that way.
Kitting is a very common occurrence and is used for product distribution in a variety of industries including:
Common types of kits include monthly subscription boxes, movie or television box sets, gift baskets, sets of commonly paired tools or utensils, and other similar combinations of items.
Kitting can provide some amazing benefits for both the seller and the consumer. One of the primary benefits gained from kitting is the lowering of distribution costs for the warehouse. If a retailer or electronics provider notices that a grouping of their products is typically purchased together, they can pre-assemble and sell a kit containing these products, thereby reducing warehouse picking fees. Depending on packaging used, companies can also reduce their shipping costs by rearranging the weight distribution of their products within their kits.
Another huge benefit of kitting for companies is the opportunity to use well-performing inventory to offload underperforming inventory. This works particularly well in retail spaces. If an online candle business notices that some of their candles are selling exceptionally well but a few aren’t, they can create a “variety pack” of candles that includes the candles that are selling well and those that aren’t. Along with good marketing, your underperforming products will face a much greater likelihood of being sold this way than they would without the use of kitting.
Part of the reason kitting works so well for companies is that it benefits the customer too. Selling kits alongside individual products provides a wider variety of options for consumers when it comes to pairing different products for different needs or wants. This gives your customer base more power to choose exactly what they want and even save money when buying in bulk, as most companies choose to make their kits more marketable by making the consumer cost slightly lower than it would be if all the items were bought separately.
Kitting is best for businesses with a very large output of product as well as businesses that are looking to cut down on distribution and warehouse usage costs. If one or both of these apply to your company, kitting could greatly improve your efficiency, spending, and customer satisfaction.
Overflo provides expert, cost-effective warehouse services in Baltimore and D.C. For questions about how warehouse utialization could transform your business, contact us today.
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