The extra fulfillment services you didn’t know you needed
When growing e-commerce companies reach the point where they can no longer manage order fulfillment themselves, they turn to a third-party logistics (3PL) or fulfillment company. These partners handle some or all of the post-manufacturing operations for e-commerce brands—everything from inventory warehousing and rotation to picking, packing, and shipping orders. Some select 3PLs offer much more.
Service-oriented 3PLs like ShipMonk are 100% focused on helping ecommerce brands grow. You want to try your hand at subscription boxes? We are on. Would you like to put together a gift package for the holidays? We’ll wrap it up like Santa’s elves. Not every ecommerce order fulfillment company is that accommodating. Many don’t have the flexibility or technology to do anything outside of normal fulfillment services. However, if you want the freedom to test new ideas or repackage your products however you see fit, a 3PL that offers add-on services like kitting and assembly may be just what you need.
What is warehouse kitting?
Kitting is the process of combining multiple SKUs into one SKU that is stocked in the warehouse and sold on your website as a single unit or kit. Examples of kitting are:
- Subscription boxes containing a different selection of items each month
- Multiple units of the same SKU, pre-packaged and sold at volume discounts
- One or more different SKUs sold online as a “virtual bundle” but stored separately in the warehouse
- A pre-wrapped gift box filled with curated items
- A mysterious bag of items randomly chosen by the picker
- A bonus gift such as B. A free pair of socks added to every shoe order
What are assembly services?
Some (but not all) 3PLs also offer assembly services in addition to kitting. While kitting involves putting items together, assembly services involve modifying goods or their packaging in some way after they arrive at the warehouse. It’s basically anything you want to change or a finishing touch that doesn’t make sense from the manufacturer. Mind you, we’re talking about easy assembly here, not Swedish furniture assembly. Some examples of light montage are:
- Place jewelry in poly bags in branded jewelry boxes
- Removal of manufacturer’s protective packaging for bulk shipping
- Unpack, replace a faulty or incorrect part and repack
- Pre-pack fragile items to avoid breakage
- Adding a promotional insert, catalogue, or handwritten note to an order
- Adding custom packaging materials such as ribbons or stickers
- Pre-package odd-shaped items to better fit in shipping boxes
- Repackaging of goods after a rebrand
- Replacing or covering an incorrect or obsolete label
Where does kitting and assembly fit into the fulfillment process?
Ecommerce fulfillment providers are typically responsible for stocking and rotating inventory in their fulfillment center or warehouse, prioritizing orders as they arrive, picking the right products off the shelf to fulfill each order that is placed Packing items into a box or bag for shipping and selecting a carrier, adding a shipping label and shipping the package to the door. Kitting and assembly services are considered add-on services because they take place outside of normal order processing. In most cases, kitting and assembly work takes place before the item is made available in the warehouse for picking.
The kits are carefully packed by specialist teams according to the e-commerce company’s precise specifications. The retailer will assign a new SKU to the kit to match the item on their website and it will be provided as a separate item. When a customer orders a kit, the picker pulls the pre-packaged SKU off the shelf instead of having to walk around the warehouse to pick each individual item.
Likewise, most assembly services are completed before the items are picked. Occasionally, older merchandise may be taken off the shelf for repackaging or relabeling and then returned to storage once the work is complete. There is no need to assign a new SKU to these items. Manufacturing defects are corrected as soon as possible after they are discovered to avoid backorders. At the Packstation there are other light assembly tasks such as tissue paper, ribbons, stickers or printed inserts.
Sometimes an e-commerce business may choose to create a “virtual kit” — a kit that only exists as a single SKU on the merchant’s website — rather than having the fulfillment company pre-package the kits. This allows the seller to test the desirability of different product combinations before spending time and money on kitting. When an order for a “virtual kit” is processed, the picker knows which individual SKUs to select to create the kit, but it will appear as an individual SKU on the customer’s invoice.
Subscription boxes are a specialized form of kitting that require expert teams, a highly flexible fulfillment environment, and powerful inventory management software and API integrations. Some subscription business models aim to replenish the same items each month, while others feature a different collection of unique items each month. The 3PL must work closely with the e-commerce business to ensure all inventory is in stock and assembled before orders are due. In fact, modernized 3PLs typically allocate dedicated resources to serve their subscription box customers, knowing their fulfillment programs are highly customized and time-sensitive.
Subscription boxes are assembled according to the e-commerce retailer’s detailed specifications (usually using branded boxes), exact product placement, and custom packaging material.
Advantages of kitting and assembly services
Partnering with a 3PL that offers kitting and assembly services has many benefits.
1.) Add flexibility
When your 3PL is able to perform simple to complex tasks on demand, you in turn have the flexibility to react quickly when a problem arises or when your marketing department comes up with a fabulous new packaging idea! When you partner with ShipMonk, our advanced software platform can map SKUs across multiple sales channels and bundle an infinite number of product combinations, allowing you to change your product offerings without worrying about tracking, inventory, or fulfillment.
2.) Increase AOV
Kitting and bundling are proven methods to increase sales by boosting average order value (AOV). Some bundled products may be sold with a volume discount, while a nicely packaged kit may tempt customers to purchase multiple products together rather than just one at regular prices. As an added benefit, increasing the value of an order does not necessarily increase the shipping cost, especially if the size of the package dictates that the carrier charge by dimensional weight rather than actual weight.
3.) Minimize storage costs
Kitting and assembly services can help ecommerce businesses reduce inventory costs in several ways:
- They streamline the picking and packing process by eliminating the need for a picker to collect multiple items or to repack items on the fly.
- They allow retailers to bundle slow-moving inventory with popular items to minimize inventory costs.
- They prevent breakage losses by pre-packaging fragile goods.
- You minimize write-offs or write-offs due to obsolete packaging or incorrect labelling.
- They offer a cheaper way to correct manufacturing defects than sending the goods back to the factory.
4.) Encourage repeat purchases
Subscription boxes are the holy grail of repeat purchases, but an exceptional unboxing experience or a beautifully curated selection of merchandise can turn a first-time customer into a loyal brand enthusiast overnight.
The complete package
Ecommerce businesses are always looking for ways to attract new customers and increase sales. At the same time, they often struggle to manage inventory and minimize costs. Kitting and assembly services can help you achieve goals in all of these areas. These services add value in the eyes of the consumer, enhance the unboxing experience, minimize inventory costs, and can even save your butt if you discover a manufacturing defect that needs to be corrected.
Many larger fulfillment companies are turnaround-focused and therefore shy away from offering specialty services like kitting and assembly. This is, in our humble opinion, short-sighted. Ecommerce businesses need to be agile to survive. A 3PL or fulfillment provider that offers kitting and assembly services gives you the peace of mind that a team of experts is on hand whenever you need them. ShipMonk fulfills subscription boxes for over 100 e-commerce businesses and offers kitting and assembly services upon request.
Contact a ShipMonk fulfillment expert today to learn more about our fulfillment expertise, industry-leading software platform, and dedicated 3PL services.