The Add-on Fulfillment Services You Didn’t Know You Needed
When growing eCommerce businesses get to the point where they can no longer manage order fulfillment on their own, they turn to a third party logistics (3PL) provider or fulfillment company. These partners handle some or all of the post-manufacturing operations for eCommerce brands — everything from inventory storage and rotation to picking, packing, and shipping orders. A select few 3PLs offer much more.
Service-oriented 3PLs, such as ShipMonk, are 100% focused on helping eCommerce brands grow. You want to try your hand at subscription boxes? We’re all in. You want to bundle a gift pack for the holidays? We’ll wrap it up like Santa’s elves. Not every eCommerce order fulfillment company is quite as accommodating. Many don’t have the flexibility or technology to handle anything outside of normal fulfillment services. But if you want to retain the freedom to test new ideas or repackage your products the way 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, to be stored in the warehouse and sold on your website as a single unit or kit. Examples of kitting include:
- Subscription boxes that contain a different assortment of items each month
- Several units of the same SKU, prepackaged and sold at a volume discount
- One or more different SKUs sold as a “virtual bundle” online, but stored separately in the warehouse
- A pre-packaged gift box of curated items
- A mystery bag of items chosen randomly by the picker
- A bonus gift, such as a free pair of socks added to any shoe order
What Are Assembly Services?
Some (but not all) 3PLs offer assembly services in addition to kitting. Where kitting involves bringing items together, assembly services involve modifying merchandise or its packaging in some way after it arrives at the warehouse. It’s basically anything you’d like changed, or a finishing touch that doesn’t make sense to have the manufacturer do. Mind you, we’re talking light assembly, not Swedish furniture assembly. Some examples of light assembly include:
- Placing poly-bagged jewelry into branded jewelry boxes
- Removing protective packaging placed by the manufacturer for bulk shipping
- Unboxing, replacing a faulty or incorrect part, and re-boxing
- Pre-packing fragile items to prevent breakage
- Adding a promotional insert, catalog, or handwritten note to an order
- Adding custom packaging materials such as ribbons or stickers
- Pre-packing oddly shaped items so they’ll fit more snuggly into shipping boxes
- Repackaging merchandise following a rebranding
- Replacing or covering an incorrect or outdated label
Where Does Kitting and Assembly Fit in the Fulfillment Process?
Ecommerce fulfillment providers are typically responsible for storing and rotating inventory in their fulfillment center or warehouse, prioritizing orders as they come in, picking the correct products off the shelf to fill each order, packing the items into a box or bag for shipping, selecting a shipping carrier, adding a shipping label, and shipping the package out the door. Kitting and assembly services are considered add-on services because they happen outside the normal stream of order processing. In most cases, kitting and assembly work occurs before the item is slotted in the warehouse for picking.
Kits are carefully packed by special teams according to the eCommerce company’s exact specifications. The merchant assigns a new SKU to the kit, which corresponds to the item on their website, and it is slotted as a separate item. When a customer orders a kit, the picker pulls the pre-kitted SKU off the shelf instead of having to run around the warehouse picking each individual item.
Similarly, most assembly services are completed before items are picked. Occasionally, older merchandise may be pulled off the shelf for repackaging or relabeling, and restocked when the work is completed. There is no need to assign a new SKU to these items. Manufacturing errors are corrected as quickly as possible after they are discovered to avoid backorders. Other light assembly tasks, such as tissue wrap, ribbons, stickers, or printed inserts occur at the packing station.
Sometimes an eCommerce business may decide to create a “virtual kit” — a kit that exists only on the merchant’s website as a single SKU — rather than have the fulfillment company pre-package the kits. This allows the seller to test the appeal of various combinations of products before spending time and money on kitting. When an order for a “virtual kit” is processed, the picker knows which individual SKUs to pick to create the kit, but it is listed as a single 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 software to manage inventory and API integrations. Some subscription business models aim to replenish the same item(s) every month, while others contain a different collection of unique items each month. The 3PL must work closely with the eCommerce business to ensure that they have all the inventory in stock and kitted before orders are due. In fact, modernized 3PLs will commonly allocate dedicated resources to service their subscription box clients, knowing that their fulfillment programs are highly customized and time sensitive.
Subscription boxes are assembled according to the eCommerce merchant’s detailed specifications (usually using branded boxes), exact placement of products, and custom packaging materials.
Advantages of Kitting and Assembly Services
There are many advantages to partnering with a 3PL that offers kitting and assembly services.
1.) Add Flexibility
If your 3PL has the capacity to perform simple-to-complex tasks upon request, 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! If you are partnering with ShipMonk, our advanced software platform has the ability to map SKUs across various sales channels and bundle an infinite amount of product combinations so you can change your product offerings without worrying about tracking, inventory levels, or fulfillment.
2.) Increase AOV
Kitting and bundling are time-tested ways to increase revenue by increasing average order value (AOV). Some bundled products may be sold at a volume discount, while a beautifully packaged kit may entice customers to buy several regularly-priced products together rather than just one. As an added benefit, increasing the value of an order does not necessarily increase shipping costs, especially when the size of the package dictates that the shipping carrier charge by dimensional weight rather than actual weight.
3.) Minimize Inventory 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 gather multiple items or repackage items on the fly.
- They enable merchants to bundle slow-moving inventory with popular items to minimize holding costs.
- They prevent loss from breakage by pre-packing fragile goods.
- They minimize write-downs or write-offs due to outdated packaging or incorrect labeling.
- They provide a less expensive way to correct manufacturing mistakes than returning merchandise to the factory.
4.) Drive Repeat Purchases
Subscription boxes are the holy grail of repeat purchases, but an exceptional unboxing experience or a wonderfully curated selection of goods 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 revenue. At the same time they often struggle to manage inventory and minimize costs. Kitting and assembly services can help you achieve goals in all those areas. These services provide added value in the eyes of the consumer, enhance the unboxing experience, minimize inventory costs, and may even save your butt when you discover a manufacturing mistake that needs to be corrected.
Many larger fulfillment companies focus on turnaround and, as a result, refuse to offer specialty services like kitting and assembly. This is shortsighted, in our humble opinion. Ecommerce businesses need to be agile in order to survive. A 3PL or fulfillment provider that offers kitting and assembly services brings peace of mind that comes from having a team of experts standing by whenever you need them.ShipMonk fulfills subscription boxes for over 100 eCommerce businesses and provides kitting and assembly services upon request.
Contact a fulfillment expert at ShipMonk today to learn more about our fulfillment expertise, industry-leading software platform, and specialty 3PL services.