Globally, it’s expected that in 2021, 27 percent of consumers will increase their number of eCommerce subscription services, and the numbers domestically are even more promising for direct-to-consumer (DTC) subscription brands: In the U.S. 36 percent of consumers plan to increase their number of subscriptions this year.
DTC brands are becoming busier and busier and subscription services are on the rise. It’s undoubtedly a good time to have an eCommerce business model, but to stay on top of all the increased demand, many DTC brands are beginning to feel overwhelmed—especially those with labor-intensive fulfillment processes like kitting.
Just how can kitting services performed by a third-party logistics (3PL) provider impact your business? Here’s what you need to know.
About Kitting and Assembly
Kitting refers to the process of filling online orders by assembling individual components into ready-to-ship kits in advance, instead of picking and packing individual items as orders roll in. This is done to expedite the retail fulfillment process when customers place orders; it’s about taking multiple SKUs and grouping them into a singular SKU. For online retailers, it offers a high rate of savings associated with the costs of fulfillment. For fulfillment centers, it means grouping products that arrive separately into a single kit.
Beauty and wellness brands might group skincare products, makeup, vitamins, or healthy snack foods into ready-to-ship kits that are then sent to customers who have either made a one-time kit purchase or have signed up to receive a periodic subscription box.
Kitting is a smart strategy to streamline the fulfillment process, but it still requires time. Rather than devote valuable employee time to kitting, some DTC brands are hiring a third-party logistics (3PL) provider to handle their kitting and assembly services.
So where does assembly fit into all of this? Assembly refers to the arranging of products within the kit, allowing for personalized packaging and all the unique touches that enhance the customer experience
One particular subset of kitting is a concept that’s called “smart kitting.” Smart kitting can use technology to create practical sales strategies to sell off current stock to be able to order new inventory. It’s about Bundling similar items together to save warehouse space and pay less money to store your product. This strategy makes it easier for retailers to take advantage of the increasingly successful subscription model.
Kitting with Third-Party Logistics
Why should you employ third-party logistics to handle your kitting and order fulfillment processes? For starters, with the help of a kitting and fulfillment-as-a-service expert, you can avoid the manual labor of kitting and assembly. It makes sense to work with a provider designed to make this process as efficient and cost-effective as possible, avoiding errors as you go.
Additionally? You can even get reorder notifications so you receive notifications before your kitted items go out of stock.
Another benefit of a 3PL kitting service? Fulfillment logistics also includes returns logistics:
When items are packed into kits, processing each returned item on your own is a frustrating challenge. 3PLs process these items for you and then enter them into your available inventory. They also handle shipping label generation for your customers to send kits back to the warehouse.
With technology like return automation, returns are easier than ever with a 3PL—especially since you don’t have to handle them. Using return automation, your 3PL can even assist in refunding customers quickly for speedy customer service.
Without 3PL, you’re likely overpaying for warehouse space; you’re either paying for too much space for inventory storage or you’re outgrowing it right away. 3PLs manage your warehouse space for you and handle all your inventory management and kitting at the fulfillment center, even when it’s time to scale your operations. When your 3PL uses kitting services to group like items together, it means less packaging and less volume so you pay less for warehousing your product.
Faster, More Affordable Kit Shipping
In 2016, online shoppers expected to wait an average of 4.8 days for a package to be delivered. Just 3 years later in 2019, 48 percent of consumers say they received online orders within 2 to 3 days.
In this new age of online shopping and expediting shipping, deliveries have to get to where they’re going quickly. While your customer may not understand what a logistical feat it is to get their package to their door in 2 or 3 days, they still expect fast delivery—which means slow delivery could cost you repeat business.
Without a 3PL quickening the kitting and delivery of these goods, DTC brands can’t offer the same fast shipping major online retailers can without taking a bit hit to their revenue to pay for faster shipping.
As eCommerce giants are looking for ways to stand out in a sea of online retailers by providing fast and inexpensive shipping options, consumers are growing accustomed to widely-available two-day, free shipping, and even same-day shipping. Customers who demand these shipping conveniences may not realize how difficult this can be for smaller DTC businesses to achieve—without the aid of a kitting fulfillment service, that is.
While these options may not be possible when operating out of a single, home-based warehouse, packing, storing, and shipping kits in warehouses located in multiple regions can make fast, inexpensive shipping a reality for DTC brands.
One of the ways that large online retailers like Amazon make fast, free shipping possible is by having fulfillment centers all over the country. When smaller companies store their kits and other products in regional warehouses, they can reduce the shipping time and costs for delivery.
With multiple warehouses, 3PL providers can reduce the number of shipping zones you’re spanning to deliver kits to customer mailboxes. Additionally, these 3PL fulfillment services can use their influence in the industry to negotiate lower shipping rates, increase your daily order outputs, and eliminate issues like backorders and delayed shipping.
Why is this so important? Over half of US consumers will abandon an online order if delivery is too expensive. One-quarter will cancel an order because the delivery speed was too slow. It’s never been more critical to ensure fast shipping speeds
Also? Kitting reduces the amount of packaging you pay for, and therefore the money you spend on shipping. Employing the help of a 3PL service for kitting is a strong strategy for subscriptions and other kits to offer your customers fast, reliable shipping and delivery.
Your Kitting and Assembly 3PL Partner
At OceanX, we’re committed to helping DTC brands do what they do best; only better. With beauty fulfillment services plus health and wellness fulfillment services, we offer faster kitting services, technology-focused solutions, and capabilities for personalization and kit customization, there’s never been a better third-party logistics provider to handle your kitting services and deliver exceptional customer experiences.
Let us handle the kitting so you can get back to revolutionizing your industry. Contact us today to learn more!