Custom 3PL Kitting Services can be a powerful cost-saving strategy for fast-growing eCommerce brands. They help reduce labor costs, improve fulfillment accuracy, and streamline inventory management.
Look for a 3PL with experience assembling kits and an established technology infrastructure. Check their warehouse management systems for supply chain visibility, tracking capabilities, and platform integrations.
Reduce Overhead Costs
Kitting services can reduce operational costs by minimizing warehouse storage space requirements, handling time, and shipping costs. As a result, these services help brands scale their operations without straining the bottom line. In addition, they offer several other efficiencies across multiple layers of the supply chain that can reduce costs, such as reducing warehouse labor, minimizing inventory waste, and streamlining shipping processes.
Unlike ecommerce companies that handle fulfillment in-house, 3PLs specialize in handling large numbers of orders and can leverage economies of scale when it comes to warehouse space, staffing, picking and packing tools, shipping options, and other operational expenses. This helps brands reduce their overhead costs while increasing the speed and quality of shipping, making them an attractive option for ecommerce growth stage businesses.
In addition, a 3PL’s streamlined fulfillment processes also reduces shipping costs by consolidating smaller shipments into pallets or truckloads. This minimizes the number of less-than-truckload (LTL) shipments, which are often subject to costly accessorial fees like liftgate and residential delivery charges.
Another way that 3PLs can lower operational costs is by leveraging cost-to-serve analysis to identify inefficiencies and recommend process improvements, technology upgrades, or service adjustments that benefit both parties. By comparing actual fulfillment costs to standard rates, 3PLs can improve profitability and strengthen customer relationships by optimizing resource allocation.
For example, 3PLs can perform a kitting service in advance to assemble products that will be ordered as a single unit (such as a skincare kit with cleanser, toner, and moisturizer), or bundle together subscription boxes or B2B retail fulfillment items. This makes it faster and more cost-effective to fulfill orders, because the items are already assembled and tracked as a single SKU in the warehouse management system. It also ensures that the finished kits look the same, which is important for brand presentation and a positive customer experience.
Another area where a seasoned 3PL can save ecommerce companies time and money is by performing rework services to correct product defects or make upgrades. These tasks can be time-consuming and expensive for in-house teams, especially if the products need to be shipped back to the manufacturer. A 3PL with a strong track record in rework services can streamline these projects and help customers meet tight deadlines while avoiding unnecessary costs.
Scalability
Whether you’re creating subscription boxes, product bundles, or promotional gift sets, kitting can help reduce your shipping costs and improve your customer experience. It’s a valuable service that streamlines fulfillment operations and supports scalable growth, and a 3PL can provide the resources and expertise needed to handle your unique requirements.
The right 3PL can manage the entire process from receipt of your individual components to assembly, quality control, and preparation for shipment. They’ll also handle the tracking and management of inventory so that you can rest assured your orders are shipped with accurate, complete kits. And, since they’ll be handling a variety of kitting needs for different customers, your 3PL can often get the materials you need at a much lower cost than it would be possible to do in-house.
In addition to the savings on materials, a 3PL can also help you save on shipping costs. When you ship items separately, it’s costly to pay for the box and its protection. But, when you ship the items together as a single kit, you’ll only pay for the box once. That’s a significant saving that can make a huge difference to your bottom line.
When you choose to outsource your kitting and assembly services, you can also save on in-house overhead costs like space, specialized equipment, training, and labor. You’ll also avoid the fixed expenses associated with maintaining your own kitting infrastructure, which can quickly derail budgets as your business grows. 3PLs can also convert these fixed costs into variable expenses that scale with your operational needs, helping you keep your costs low.
A 3PL can also help you improve the efficiency of your kitting and assembly operations by analyzing your order patterns and customer demand. This enables them to create the perfect mix of products and packaging to meet your needs and maximize sales. In addition, they can optimize your packaging so that you can fit more products into a single box. This can significantly reduce packing costs and increase your average order value. And, since they’ll be storing your pre-assembled kits in their warehouses, you can benefit from faster turnaround times for shipping your packages to customers.
Accuracy
Achieving a high level of order accuracy is essential for ecommerce brands. Errors not only slow fulfillment speeds, but they also create costly operational firefights. They often trigger returns, replacements, and customer service interactions that eat into revenue. In addition, poor quality impacts brand reputation and detracts from sales opportunities.
To maintain optimal accuracy, ecommerce companies must carefully analyze their needs, volume patterns, and growth trajectory to determine whether kitting is the right solution for them. However, too many businesses make the mistake of rushing into 3PL partnerships without doing a thorough cost analysis or evaluating the provider’s capabilities. Warning signs include inconvenient or unresponsive communication, outdated systems, limited references, and cultural fit issues. Ultimately, these mistakes lead to expensive and inefficient operations that drain budgets while consuming internal resources and distracting from strategic priorities.
Professional logistics providers invest millions in technology infrastructure that would be prohibitively expensive for individual ecommerce companies to build and manage in-house. This allows them to integrate all key kitting and assembly processes into unified platforms that streamline workflows and automate critical operations. Check to see if your potential partner’s warehouse management system (WMS) integrates directly with your sales channels and can track inventory in real time. This is especially important for subscription box, ecommerce, and B2B retail fulfillment.
The right 3PL partners have flexible workforce models specifically designed for the peaks and valleys of demand. This enables them to absorb your seasonal peaks while serving other clients during the low season. They also convert fixed costs into variable expenses, improving cash flow while aligning expense with revenue.
Investing in 3PL kitting services can save you a great deal of money in the long run. In addition to reducing labor costs, the process is more efficient than traditional fulfillment methods. Kitting reduces the number of touchpoints in fulfillment and streamlines the entire supply chain, increasing efficiency and boosting accuracy. In addition, pre-assembled kits can reduce order processing times and enhances the product presentation for the end customer. Whether you’re bundling product duos, creating subscription boxes, or organizing promotional gift sets, 3PL kitting services are an excellent solution for ecommerce brands seeking to maximize efficiency and improve customer satisfaction.
Flexibility
Kitting involves combining items into a single shipment to save warehouse space and reduce shipping costs. It also helps ensure that each component SKU is tracked through the warehouse management system (WMS), preventing stock outs or overstocking. When done right, a well-designed kitting process can improve the customer experience and even increase sales.
While the benefits of 3PL kitting are compelling, it’s not a decision to take lightly. Incomplete analysis, short-term thinking, and unrealistic expectations often result in costly mistakes. To avoid these pitfalls, businesses must conduct thorough cost analysis and a rigorous evaluation of potential providers’ capabilities.
Resource Efficiency
A 3PL’s specialized focus on value-added services like kitting means they can offer efficiencies that in-house operations cannot match. For example, they may be able to obtain raw materials in bulk, and pass those savings on to the client. They can also handle seasonal spikes and other fluctuations in demand with a level of flexibility that would be difficult to achieve with an in-house team.
The most significant savings from 3PL kitting come from the ability to pre-kit items in bulk. This enables the team to streamline assembly and fulfillment processes, saving time and labor. It also frees up resources that could be better spent on more pressing issues like product development, marketing, or customer service.
In addition to the direct labor costs associated with kitting, companies must consider other indirect expenses. The purchasing department must source the necessary materials, IT maintains kitting-related systems, and finance processes additional payroll and invoices. These indirect expenses add up to a significant burden that is difficult to capture in a single line item on the balance sheet.
It’s essential to choose a 3PL partner that has the capacity to meet your needs and exceed your KPIs. When making your decision, visit the provider’s facilities and observe the kitting process. Ask detailed questions about capacity, accuracy rates, and quality control procedures. Assess their technology infrastructure, integration capabilities with your e-commerce platform, and financial stability. It’s also helpful to interview former clients to hear about their experiences and the level of service they received.