What is inventory kitting and how can distributors use it to boost sales?
Sell commonly bundled products as a packed set to increase average order value.
If you count a musician among your friends or family, you’re probably familiar with drum kits.
Among musicians, drummers have the unique, unenviable task of buying, maintaining, and carrying around at least five individual instruments, several metal stands, a dozen drum sticks, and their own special chair to top it all off.
The reason we’re talking about drum kits is because they offer the perfect example of how inventory kitting works. Most drummers don’t go out and buy their kits one drum at a time. Only career professionals have the knowledge and experience it takes to build a good drum kit from scratch.
Musical instrument distributors know this, so they sell the entire kit as a single product. Often, they’ll throw in some cymbals, a set of drumsticks, the chair (technically, it’s called a throne), a pair of foot pedals, and more.
Inventory kitting is the process of bundling multiple individual products together into a single product with a single SKU. It streamlines customer purchases, increases the average value of orders, reduces return rates, and improves shipping efficiency – in short, it helps everyone get a better deal.
Seven Key Benefits to Inventory Kitting for Wholesalers
Inventory kitting presents clear benefits for customers and retailers, but it’s also a powerful tool for distributors and wholesalers. There are plenty of situations and industries where putting products that are commonly sold together as a single kit can generate cost-saving efficiencies for wholesalers and improve average order value.
- Stand Out From Competitors. If you have competitors who sell the same items, kitting can help you stand out by offering all-in-one solutions to customer problems. Customers appreciate being able to purchase kits and bundles that streamline the retail experience.
- Lower Return Rates. Product incompatibility is one of the major reasons why customers return items. If you offer guaranteed-compatible items as a single product, you can avoid confusing customers or forcing them to look up compatibility data on their own.
- Reduce Shipping Costs. If you take the extra step of creating customized packaging for your kits and then weigh and label them as individual products, you can reduce handling errors and shipping costs.
- Rebrand Dead Stock. Kitting allows wholesalers to gather up loose ends and successfully push products that may not otherwise sell well on their own. Sewing needles and thread are more successful products when included in crafting kits, emergency kits, and travel kits.
- Increase Order Value. Inventory kitting helps wholesalers increase the average value of orders. It can immediately generate a positive impact for your bottom line and improve cash flow.
- Reduce Inventory Costs. Inventory kitting helps to keep down inventory holding costs and free up deposit space.
- Better Inventory Tracking. One of the most important benefits that kitting offers wholesalers is the ability to track and maintain stock levels more effectively. This is particularly true for items that would otherwise sit on the shelves as dead stock.
The Key to Kitting Success: Know Your End-User
In order to put kit products, components, and accessories together successfully, distributors need to know who their end-users are and what those users value in their purchases. The main advantage kits provide over single items is that they illustrate a clear purpose.
Kits also allow wholesalers to package less-than-stellar products with in-demand products while satisfying customer needs. Using this strategy depends on choosing the kit’s primary product correctly.
Let’s expand this point by taking the drum kit example further. For most drummers, there are two elements of their kit that are more important than any other: the kick drum and the snare drum. If a wholesaler offers a good deal on these two elements, customers will not complain about getting budget drumsticks or cymbals along with the package.
Similarly, you can use inventory kitting to address specific buyer profiles. A computer component distributor whose retailers serve hardcore gamers may wish to combine a high-quality GPU with a few other accessories and sell it as a complete gaming package. The same distributor could just as easily sell an almost identical set of products to a graphic designer.
In both of these cases, the products serve a specific purpose. Inventory kitting helps the customer choose the right combination of products to serve a particular end.
It’s clear that inventory kitting offers value to retailers and customers. But it is also an important asset for wholesale inventory management.
In order to benefit from this and use inventory kitting as a competitive advantage, you need to use inventory management software that supports kitting.
erplain Makes Inventory Kitting Simple
erplain’s kitting features allow wholesalers to intuitively create kits from individual products. The software calls these products components and allows users to manage components in a highly organized way.
In erplain, individual kits have their own inventory levels, prices, and SKUs. These parameters are all unique to the kit in question, and they reflect the state of each component in the kit in real-time. This makes it easier to control multiple items as components of a kit than it is to keep track of a large amount of loose inventory.
With erplain, you can enable batch tracking and monitor bundled products with a single glance. You can create, group, ungroup, and manage sets of products directly from within the application with ease.
Kits can be created and undone with a single click in erplain. This encourages wholesalers to experiment with kit products. If a certain kit type doesn’t produce results, you can switch its components to a different kind of kit and try again. Sometimes, the same group of products can perform better simply because a different item is displayed as the primary item of the kit.
As a distributor, your success relies on responding to your customers’ needs and looking for opportunities to kit products together in ways that serve those needs. Kit-compatible inventory management software represents one small, critical step towards achieving that goal in a streamlined, value-generating way.