What is Kitting and Bundling?
Kitting and bundling is a process of grouping products together to sell them as a single product. However, where they differ is the products being grouped.
When you create kits, you package separate but related items as a single unit, which becomes one SKU. For example, someone purchasing a new smartphone might also be interested in accessories like a phone case, and wireless earbuds. If a store offers a kit that includes the smartphone and these accessories, the customer might be more likely to buy the kit. This approach encourages customers to purchase additional items they might find useful.
When you create bundles, you package the same product in multiple quantities. For example, a store may offer a bundle of three bottles of a popular ketchup at a discounted price. This approach encourages customers to purchase the bundle instead of a single product.
When businesses create kits or bundles, they generate a new SKU representing the grouped products as a single item.
Why Do Kit & Bundle?
Offering kits and bundles is a win-win situation for both the retailer and the customer. Customers usually purchase more than one product at a time. For example, a customer purchasing a new laptop might also need a laptop bag, portable mouse, headphones, and other accessories. If you offer all these accessories in a single kit, customers will find it convenient to purchase all in a single package instead of exploring different retailers for separate products.
Likewise, bundling gives a sense of cost-saving, as customers will think of a combined purchase as more economical than purchasing 1-2 quantities. This increases the sales volume and average order value per customer.
The key benefits of using kits and bundles include:
- Increase Sales of Underperforming Items: Boost the sales of items not selling well individually by pairing them with popular products.
- Increase Average Order Value: Encourage customers to spend more by purchasing multiple items together.
- Reduce Cost Per Order: Minimize packaging and lower shipping expenses to reduce the cost per order.
- Stand-Out: Get a competitive edge by offering customers a discounted product mix.
- Enhance Customer Experience: Customers get a convenient shopping experience by purchasing necessary products in a single order at a discounted rate
In short, a kitting and bundling strategy is a way to naturally drive customers to spend more by offering them something valuable, such as cost savings or a comprehensive all-in-one package.
Kitting vs Bundling: Key Differences
By now, you must have a basic understanding of kitting and bundling, but let’s closely look at the key differences between kits and bundles to better clear concepts:
Product Composition
Kitting creates a package of separate but related products, such as a laptop, mouse, keyboard, headphones, etc. Bundling creates a package of the same product in multiple quantities, like a pack of soda.
Purpose/Use
Kitting is useful for operational efficiency and selling less popular items alongside other items. Bundling is useful for marketing/sales purposes and encouraging customers to make larger purchases by offering discounts.
Customer Experience
Kitting offers customers convenience by providing all the related products in a single package. Bundling offers customers financial savings by providing the same product in bulk at a discounted rate.
Inventory Management
Kitting requires more care when assembling kits with the right products. Bundling requires simple packaging of the same product in bulk quantity.
Challenges of Kitting and Bundling
Kitting and bundling is useful for some industries, but it is not universally acceptable in every business. Some products are best sold individually. For example, you cannot bundle different medicines. In addition, many manufacturers don’t prefer kitting their products with third-party goods.
Another major challenge is pricing. Customers often expect bundled products to come at a lower cost than purchasing items separately. If your business is already running on slim profit margins, you can face financial losses instead of increased sales if you offer kits and bundles.
Strategies for Implementing Kitting and Bundling
Many businesses are confused about how to implement kits and bundles. Some are confused about which packaging to use, while others are unsure about how to manage inventory complexity.
Analyze Customer Needs
Identify your customer needs and pain points. Based on that, create kits or bundles that fulfill their needs. For example, a customer who wants to set up a home workout space may need a yoga mat, fitness tracker, resistance bands, etc. You can create a kit that includes all these items.
Monitor Buying Trends
Watch the buying trends of customers and notice which products they are purchasing together or in bulk. For example, if you notice that most customers purchase 2-3 soda bottles together, you can create a bundle of four or more bottles at a discounted price and encourage them to buy more.
Price Smartly
Customers expect a discount when purchasing packaged deals. They will quickly calculate the cost benefits they will get if they buy the kit or bundle. So, try to adjust the price smartly that is profitable to you and also valuable to customers.
Create Relevant Products Kits
Kit sales are possible only if customers find value in them. Make sure your kits include relevant products. For example, avoid creating a kit that includes a laptop and a blender. Your kits should encourage customers to purchase the combo instead of those items separately.
Test Different Combination
You must test different combinations and see how customers react to them. This will help you better understand customer preferences and package kits and bundles as customers want.
How C2W Inventory Can Improve Efficiency in Kitting and Bundling?
Effective inventory management is crucial for businesses that utilize kitting and bundling strategies. When items are sold in kits/bundles, there are more chances of mismanaged inventory or negative stock levels. With C2W Inventory, you can avoid this issue and improve efficiency effectively.
C2W Inventory is an advanced, cloud-based inventory management software that allow users to easily create kits/bundles with a unique SKU. When a kit/bundle SKU is picked for an order, it can automatically process the necessary stock adjustments to prevent inventory mismatches.
C2W Inventory also provides detailed insights into the inventory to help you decide how many kits can be assembled based on current stock levels.
Simply put, you can optimize your kitting/bundling operations with full inventory control using C2W Inventory’s real-time tracking, automated SKU management, and reporting.
Try C2W Inventory and experience automated and well-tracked inventory management.
Conclusion
Kitting and bundling are the easiest ways to increase profits, but they require a strategic approach with the proper knowledge to grab customers attention. The best way is to test different kit and bundle combinations, monitor customer responses, and adjust your offerings accordingly. So, get
kits and bundles as part of your sales strategy to boost sales and enhance the customer experience.
