Posted: 10/18/2017

Using Kits within Lead Commerce

How to Utilize Kits and Kit Technology as a Broad Concept and in Lead Commerce

This article will discuss how to utilize kits and kit technology as a broad concept, and then how to apply that concept for use in the Lead Commerce system and your everyday eCommerce marketing strategies. We will be discussing some pros and cons associated with using the kit concept and feature within Lead Commerce, as well as some ideas and examples for its application.

What is a “kit”?

To discuss any of the benefits, downfalls, and applications we first must go over exactly what a kit is. Additionally it is beneficial to discuss what are kits as they pertain to how they work in Lead Commerce, and also as they pertain to general use and overall concept in day-to-day business.

We will first start out with a common example of a kit that you encounter in use in everyday life as a consumer. The classic example is a bedding set. When you think about a bedding set, you go to the store and expect to find the bed sheets, the pillowcases, the duvet cover all bundled as a set . It might even come with an additional blanket and a few extra throw pillows. This “bundle” is what essentially constitutes a kit from the consumer standpoint. These items are all things that can be purchased separately by the consumer, but have been conveniently packaged and bundled together by the manufacturer for convenience, and sold as one total bundle/item.

When all of these items are sold as a bundle or package, it is incredibly convenient for the consumer, however it is also incredibly useful and convenient from a business standpoint as well. Each one of those items is a separate product within itself. A pillow is obviously a product. A bed sheet is a product. Ultimately when you have this situation, it is especially useful from an inventory perspective to be able to put those items all into one single item in order to sell it. The concept of a kit came from the ability to take multiple single items and produce items that are going to allow you to put them all together in one nice package product and then sell that outright.

The primary benefit of the concept of a kit is that when you actually sell those items, you are not necessarily selling the kit, but you're actually selling individual items contained within the kit. You're reducing the pillows. You're reducing the bed sheet. You're reducing the duvet cover. All of those items that go in the kit itself, are being reduced from an inventory perspective.

This is the main way kits behave or work within the Lead Commerce system.

The “Pro’s”

When utilizing kits, the very first pro is that you're keeping your inventory normalized and you're keeping your inventory synced. While using kits, you also remove the need for any sort of disassembly.

What is disassembly?

Disassembly is the process of actually putting something together psychically and then putting it up on the shelf. When it is bought, it is pulled off of the shelf and put in the box to be shipped out or put it on a pallet to be shipped out.

This concept can get very complicated if you look at it from this example. An assembly would be like building a high end piece of machinery such as a car. As we are making a truck or an automobile, we are pulling tires and doors, and seats and steering wheels from inventory to go into the finished product of this machine. As we take it through the production process, we're reducing the tires, we're reducing the doors, reducing the seats from inventory and at the end we've actually completely assembled a finished product (the car). If we needed those doors for a separate business purpose, we would have to go manually grab a wrench and physically take them off of the car. This is what we call “disassembly” in Lead Commerce.

As this relates back to kits, assemblies are very different than kits in a broad concept as well as within Lead Commerce as a system. This means that the “pro” or benefit of a kit is that you don't have to assemble or disassemble anything. You don't have to cannibalize inventory as part of a production process, which then at the other side of the assembly line has a totally new product. It's a completely standalone new inventory item.

Kits actually derive inventory levels from the underlying items that the kit requires. Using the bedding set example, if we had a bedding set and that bedding set came with two pillows and we didn't have any pillows left in inventory, then we wouldn't have a full bedding set. The Lead Commerce software will give you the total number of bedding sets that you have based, again, on the underlying inventory. Kits are incredibly useful from that perspective.

The “Cons”

Kits use, at the end of the day, an aggregate inventory. As you're selling individual pillows you may now be reducing that aggregate inventory for the kit. If you look at it in that aspect, from time to time you might be quoting four kits in stock. As business continues, a pillow is sold and now all the sudden you only have three total kits left. Kit and inventory levels do tend to fluctuate and fluctuate pretty quickly, again, because inventory is being reduced by all of the items that go along with the kit together as an aggregate.

Another “con” is that if you have multiple kits all using the same underlying inventory, the aggregate kit levels are not accounting for other kits that use the same items. For example, if we have two bedding sets, both of which use 2 pillow cases, so long as you have 2 pillow cases, both kits would tell the software that they have available inventory. The system then doesn’t say, "Hey, you know what, you only need one more pillow and then you'll have a full kit." Especially since some of these kits will have five, six, seven different items related to them. Certainly, kits are incredibly useful, but at the same time you have to be able to look at those numbers and understand that underneath that kit, other things could get sold, which, is obviously going to affect that inventory... That aggregate inventory level.

How do kits benefit my marketing strategy?

(And other examples and applications)

Having discussed utilizing kits as “bundles” for products, avoiding cannibalization of inventory and having to assemble/disassemble, another classic example of utilizing kits is promotional pricing.

You see this in a grocery store all the time with “buy three and get four” type deals. Essentially this is a kit because what they are doing is saying if you buy in bulk, they will bundle these items for you together for a different price-per-unit.

Using kits for promotional pricing, you want to promote the aspect of people buying more versus one at a time so you might create kits as a unit of measure. You might have kits that are created that will reduce the underlying inventory item by 12 or 24 as part of selling a case or selling a pallet, or selling a truckload of product. Kits are usually being used in some sort of a pricing scheme or tiered pricing model in addition to being able to just reduce the core inventory as part of selling in volume to certain customers.

Other Applications

Certainly there are other channels and other methods of utilizing this technology. Another aspect of promotional strategies around kits is to use it as a re-listing tool with sales channels like Amazon or Ebay. With those sorts of companies and those sorts of marketplaces, you can take a single product and with a kit, you could create many different combinations of that product.

For this example, we will use climbing rope and say that we want to sell that in a combination of different lengths (such as 10, 12, 15, 18, 24, 36 feet at a time). We wouldn't want to necessarily cannibalize that spool of rope, meaning we wouldn't want to take a whole spool and cut it into 12 foot sections and take another spool and cut it into 24 foot sections. It's much more optimal, especially when we talk about inventory, to be able to (in real time) cannibalize the inventory for that particular spool.

With that concept, you can use kits to control how much 12 foot lengths you have based on what's left on the spool. You can then answer the question of “How much 24 foot rope could I produced based on the spool." Lead Commerce will determine that amount based on the underlying item, which is the actual raw spool of rope.

Utilizing that concept, you could have one spool of rope in your warehouse and yet you could create endless number of kits at any length that you wanted (8 feet, 9 feet, 10 feet, 11 feet, 12 feet, 13 feet instead of these 12, 18, 24 sizes). You could have any size that a particular customer wants and are listing that on a marketplace like Amazon, and yet the inventory is all feeding

from just that spool that sits in your warehouse that isn't pre-cut. You are just pulling the length that you need, snipping it off, putting it in a bag, and shipping it out. This feature is incredibly useful for products where you are going to be producing items in real time.

Hopefully this information has been useful and provides a basic overview of how kits work in real world applications and how useful they can be from an inventory and marketing aspect.

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