Kitting

Many direct-to-consumer brands use kitting as a regular part of their fulfillment process. Kitting can help businesses upsell, create unique product offerings, and streamline order fulfillment. Learn more about kitting at the warehouse, what the kitting process involves, and its advantages.

Kitting, sometimes called full kitting or fulfillment killing, is the process of pre-packaging multiple products together and creating a new SKU that identifies the collection as a single unit. Most of the time, the items sold as part of a kit are not for individual sale. 

Kitting is not the same as pick and pack. During pick and pack, the individual SKUs from an online order are collected from their storage place in the warehouse and packaged for a shipping carrier. During kitting, a predetermined collection of items are packaged together—usually in branded packaging—and assigned a new SKU. When a customer orders the kitted item, it is then picked and packed for shipment. 

Kitting is commonly used for subscription services, products that require assembly after shipping, and special limited-time offers. When shipping a larger volume of similar orders, kitting can be a good way to save money on pick and pack, which is typically one of the most expensive elements of ecommerce fulfillment.

Kitting vs. bundling

Kitting and bundling are two of the most common projects that happen in a warehouse outside of fulfillment operations like receiving and packing. Though similar, there is a distinct difference between the two. 

Product kitting involves proactively putting together multiple items, usually decoratively, before a customer places an order. Kitting is also typically done in bulk. Think of a subscription meal kit that comes with every ingredient needed to make a meal. 

A bundle refers to complementary items that are sold together, like shampoo and conditioner, but may also be sold separately. Most of the time, the packaging for bundles is solely about utility, while kit packaging tends to be decorative. 

Bundling may happen in advance or as orders come in. Traditional bundling required merchants to prepare the bundles in advance, but virtual bundling allows sellers to use the same inventory to fulfill both individual and bundled orders—a bundled order would simply require two or picks for a single SKU. 

Kitting vs. assembly

Kitting and assembly are very similar. Some warehouses and 3PLs will refer to the kitting process as “kitting and assembly.” Generally, kitting is the process of putting multiple items together to create one SKU, while assembly involves making a change to a product itself. 

For example, kitting may be the entire process of gathering various products, putting them in decorative packaging, and affixing a new barcode to the finished product. Assembly, then, would refer to the actual arranging of the products in the decorative packaging.

Kitting is a common practice in ecommerce fulfillment that has many applications. Some of the most common are:

• Subscription boxes like BarkBox and Blue Apron that send an assortment of themed items on a regular basis. 
• Large products, like furniture, that are sent disassembled. In this case, the kit would include all the pieces of the furniture, along with any nuts, bolts, nails, screws, or other tools needed to put the piece together. 
• Special edition or limited time offers. Imagine that a novelty playing card company were to release a Harry Potter themed collection, with one deck for each Hogwarts house. If the company were to package these cards in a collector’s box and sell all four together, the assembly of those boxes would require kitting.

Step 1: Determine what items are included in the kit

Kitting requirements are usually standardized, requiring the same components in each kit. In some cases there may be variation between kits, but for now we’ll focus on identical kits. 

First, the merchant has to decide what to include in the kit. Kitted items are usually complementary. For example, consider a cosmetics company that is selling a full skincare routine kit. The company may decide to include a facial cleanser, toner, moisturizer, and serum. Each kit would come with all four of these products. 

Step 2: Create a new SKU

Once the company has decided what it wants to sell in its kit, it will need to create a new SKU so your 3PL can easily identify and track sales of the kit. The SKU identifies the kit as its own singular product. 

Step 3: Assemble and label the kits

Once all of the items in the kit have been brought together, they are carefully assembled in decorative packaging—usually a box. To use the skincare company example, each of the four products might be carefully placed in a cardboard insert that will hold them in place inside the box during transit. The box is then sealed, barcoded, and stored until an order is placed. 

Step 4: List the kits for sale

Now that the kits have been assembled in bulk, the company can introduce them on their ecommerce store. When a customer places an order for one of the kits, it will be picked from its storage space and packaged for shipment.

Kitting services refer to the paid labor of assembling kits by a third party. These services are usually performed by a manufacturer or a warehouse.

Manufacturer kitting

Outsourcing kitting to the manufacturer is the preferred method for large, optimized companies. That’s because it’s usually more efficient and cheaper. Since the manufacturer already has all of the items that will go into the kit, they can easily put them together and send them to the fulfillment center that way. Depending on the size and shape of the kit, this may also save on freight costs, because instead of sending pallets with each item to the warehouse, the company is only shipping the fully prepared kits. 

Warehousing kitting

Warehouse kitting is the more popular kitting option. Not all manufacturers offer kitting services, and there’s no guarantee a company is sourcing all the elements of a kit from the same manufacturer; so, many companies use their warehouse for kitting instead. 

In this case, the warehouse receives all the elements of the kit separately and assembles the various components before storing the products as they await fulfillment.

Kitting offers a host of benefits in ecommerce fulfillment, including:

• More efficient warehousing
• Fewer errors
• Streamlined pick and pack process
• Lower labor costs
• Increased revenue

More efficient warehousing

Kitting saves storage space at the warehouse. Instead of storing five components of a kit in five separate pallets, the pre-assembled kits can be stored together. For companies that outsource to a 3PL, this can result in lower storage fees. 

Fewer errors

Most warehouses have quality control inspections built into their kitting processes, and with fewer picks required for each order, you can expect fewer errors both per kit and per order.

Plus, as employees have to inspect each item before assembling the kit, they can identify any manufacturer defects or damage the product sustained in transit before it’s sent to the customer.

Streamlined pick and pack process

With pre-assembled kits, warehouse workers have fewer picks per order, which means they can prepare orders for shipment more quickly. Depending on the box the kit uses, it may also double as the shipping container, saving on packaging and dunnage costs.

Lower labor costs

While kitting can be a costly project upfront, it ultimately reduces the number of picks per order. Pick and pack is one of the most expensive elements of fulfillment, so reducing the amount of time workers spend finding and packaging individual items for shipment can ultimately result in savings. 

Increased revenue

Kits offer a great opportunity to upsell. Customers might buy a kit for the novelty, or they might buy a kit with a product they wouldn’t normally purchase because the price of the kit is less than the sum of all its products together, creating a higher perceived value. Kitting also provides a unique opportunity to introduce your customers to new products, which they may go on to purchase again in the future. In some cases, companies may even use kits to move older merchandise from the warehouse.