Kits and subscriptions in the beauty and wellness industries are undeniably poised to see major growth in the coming years. Why is this?
While 11 percent of female-identifying cosmetics consumers already subscribe to some kind of beauty box, another 40 percent say that they are interested in subscribing to some kind of beauty box. What’s more? Even these figures may rise as the population ages; 17 percent of cosmetics consumers aged 18 to 29 subscribe to a beauty box, more than their older counterparts.
Especially in beauty and wellness where there is a need for ongoing products and where consumers are always curious about what’s new and what’s next, warehouse kitting is an approach that just makes sense.
Kitting and bundling is a smart way to sell more products, introduce customers to new products, and sell down unsold inventory. Here’s why this online retail sales strategy deserves your attention.
What Exactly is Warehouse Kitting?
Kitting is the process of filling online orders by assembling multiple individual components into ready-to-ship kits. This makes the order fulfillment process faster and simpler than picking and packing individual product pieces when orders roll in. Multiple SKUs are grouped together and combined into a single SKU with kitting and assembly.
Online retailers and direct-to-consumer brands that work within the beauty and wellness industries might group specific skincare products, makeup items, vitamins, or healthy foods into these ready-to-shop kits, which then go out to customers who either purchase these kits on an as-needed or as-desired basis, or who subscribe to receive periodic subscription boxes.
About Smart Kitting at OceanX
OceanX is a modern logistics partner, fueled by data. This data makes smart kitting a valuable tool for online retailers and eCommerce brands. Smart kitting refers to the use of technology to build practical sales strategies that sell off current stock to make room for new inventory. It allows online brands to bundle similar items together to reduce warehouse space and pay less to store product.
By compiling data and taking advantage of at-a-glance inventory levels and forecasting from the Bridge Platform, retailers can utilize smart kitting to clear inventory, increase revenue, and pave the way for what’s coming next.
Maximize Inventory Organization
Generally, one of the major perks of implementing a warehouse kitting system is that it offers a streamlined, organized inventory management system. Kits generate fewer SKUs, making it simpler to organize and track inventory, optimize space in the warehouse, and achieve stronger organization overall.
Because items are sold in bundles and kits instead of in individual pieces, there are fewer items to pull, fewer bins of products to sort and arrange. It means incoming shipments of products are processed in bulk rather than in pieces, making processing fast and easy.
Reduce Labor Costs
Both when receiving new inventory and fulfilling orders, kitting fulfillment requires less work in the warehouse. Fulfillment workers do not have to travel from aisle to aisle or bin to bin picking and packing items; they merely have to grab a single kit instead. Likewise, kits can be processed faster upon arrival.
As a retailer, this means your third-party logistics (3PL) partner won’t have to employ quite so many team members to manage your tasks and can pass these savings directly onto you. Since it’s been widely reported that the costs to fulfill an order amount to 70 percent of the average order value, anything that online retailers can do to reduce these labor costs is a critical step to maximizing profits.
Reduce Order Processing Times
eCommerce kitting also dramatically cuts into the time it takes to process orders when they are placed. For retailers who are concerned with meeting promises of same-day shipping and expedited fulfillment, this is crucial to getting orders filled quickly and efficiently.
Online retailers hoping to increase their average order outputs, or those who are expecting to see a spike in order volumes will greatly appreciate the faster order processing times afforded by warehouse kitting.
Reduce Processing Errors
Errors in processing and fulfillment can be expensive when it comes to reverse logistics. Online returns cost brands an average of $550 billion per year and when incorrect items are shipped to customers, it results in lost profits to correct the error and ship the right products. They cause confusing inventory errors
What’s more, fulfillment mistakes can also be damaging to a brand’s reputation. A staggering 55 percent of shoppers will not return to a brand or online retailer after one bad experience. Additionally, the cost of customer acquisition is on the rise, which means it’s never been more important to retain shoppers.
With so little tolerance for a single poor customer interaction, warehouse kitting is one way to limit errors, ensure order accuracy, and retain customers.
Consolidate Warehouse Space
One of the main reasons that online retailers who work with modern fulfillment partners and 3PL providers like OceanX—those with an emphasis on scalable support—is that product kitting gives these companies the ability to free up space in their fulfillment centers. By bundling product into pre-packaged kits, retailers can reduce the amount of warehouse space they need, giving them the option to either introduce new products or operate in a smaller, more optimized warehouse space.
Additionally, retailers use warehouse kitting services to sell off older products that are taking up space in their fulfillment centers. Kitting offers customers the opportunity to test out new products (sometimes even at a discounted price) while retailers enjoy the chance to clear out their inventory and consolidate their warehouse space.
Modern Fulfillment and Warehouse Kitting
For subscriptions, seasonal kits, bundling, and other services, you need data-driven solutions to manage your inventory efficiently.
OceanX isn’t just well-versed in the rules of kitting eCommerce: We wrote the rulebook when we got our start with brands like Proactiv. And? We continue to redefine and optimize the genre, with faster kitting services, technology-driven solutions, and plenty of capabilities to make personalization and kit customization a reality for your brand.
Truthfully? If it’s kitting you’re interested in, there’s never been a better 3PL partner than OceanX. To discover firsthand what it would look like for our kitting pioneers to handle your kitting and fulfillment services for you, contact us today.