Product Bundling

Product bundling is a marketing strategy in which multiple products are combined and sold together as a single package at a discounted price. This approach incentivizes customers to buy more than they would individually. It helps businesses increase sales volume and move inventory more efficiently. 

In ecommerce, bundling can be incredibly beneficial, resulting in increased average order values and enhanced customer satisfaction by providing perceived value.

Types of Product Bundling

Different businesses can implement various product bundling strategies based on their objectives and the characteristics of their products:

Pure Bundling

This method offers products as part of a bundle and does not let separate purchases. This approach is often used when complementary products add more value when used together. For example, Adobe exclusively offers its Creative Cloud suite as a bundle, encompassing Photoshop, Illustrator, and InDesign, which designers and artists frequently utilize.

Mixed Bundling

This strategy allows customers to purchase products individually or as a bundle, accommodating different customer preferences and budgets. For example, Microsoft’s Office Suite can be purchased as a bundle or individual apps like Word or Excel, allowing customers to tailor their purchases to their specific needs.

Cross-Sell Bundling

This tactic includes recommending complementary products at the point of sale. It serves as a means to show customers that their requirements are recognized. For example, when a shopper selects a smartphone for purchase, Amazon frequently recommends additional items like a case, screen protector, and charger. This method improves the shopping journey by offering customers products that go well with their primary purchase.

Why is Product Bundling Important?

Product bundling is important for several reasons:

Increased Average Order Value (AOV)

Bundling encourages customers to purchase more items, naturally raising the AOV. For example, McDonald’s “Extra Value Meals” bundles a burger, fries, and a drink, providing a perceived discount that leads customers to spend more than they might on a single item.

Inventory Management

If you want to help move slow-selling items, bundling can be the solution, as it can combine them with more popular products. For instance, electronics retailers might bundle an older model printer with a new laptop to clear out unsold inventory without requiring deep discounts.

Enhanced Customer Experience

Bundling provides convenience to customers by allowing them to buy a complete set of related products in one go. For example, IKEA often bundles kitchenware sets, giving customers everything they need to equip a kitchen in one package. This not only saves time but also creates a perception of value, as customers feel they are getting more for their money.

Competitive Advantage

In markets with high competition, such as ecommerce platforms like Amazon, bundling can differentiate a business’s offerings from competitors. For example, gaming companies like Nintendo often bundle a console with popular games, providing customers with a ready-to-play package that competitors may not offer, attracting buyers looking for added value.

Factors Influencing Product Bundling Strategy

When it comes to product bundling strategies, several key factors can make a big difference for success:

Complementarity of Products when Product Bundling

Products that naturally go together (like razors and replacement blades) are more likely to succeed in a bundle because they enhance each other’s value. For example, Gillette often bundles razors with a pack of blades, ensuring that customers have everything they need for a smooth shave.

Customer Segmentation

Recognizing different customer requirements and buying habits is important. A carefully designed package for budget-conscious shoppers could emphasize the importance of value. For example, Walmart’s discounted back-to-school bundles include essential school supplies. On the other hand, a package targeting high-end customers, such as Sephora’s curated beauty sets, could emphasize the significance of exclusivity and excellence.

Pricing Strategy

Bundles should be priced clearly to provide an incentive to purchase products individually. A discount on the bundle should reflect a fair value that appeals to customers without eroding profit margins. For instance, Apple offers discounts on accessories when purchased with a new device, making the bundled price more attractive than buying each item separately.

Marketing and Promotion

Effectively promoting bundles through the proper channels can significantly impact their success. For example, during Amazon Prime Day, the company heavily promotes significant savings bundles, creating a sense of urgency and encouraging bulk purchases.

Applications in Business

Implementing an effective product bundling strategy can benefit businesses in several ways:

Driving Sales Volume with Product Bundling

Enterprises can boost the number of products sold and the income generated by providing bundled deals. They can also urge customers to buy more than they had initially intended. For example, companies that sell video games, like GameStop, often combine gaming consoles with well-liked games and accessories. This amplifies the number of products sold and presents customers with a convenient package.

Customer Loyalty and Retention

Bundles that provide clear value can improve customer satisfaction, foster loyalty, and encourage repeat purchases. For example, meal kit companies like HelloFresh offer subscription bundles that include everything needed for several meals, enhancing convenience and encouraging customers to subscribe for regular deliveries.

Optimizing Marketing Campaigns

Product bundles can be central to marketing campaigns, especially during peak shopping events like Black Friday or Amazon Prime Day. Retailers like Best Buy often promote exclusive tech bundles during these events, creating urgency and driving higher sales. The bundling strategy maximizes sales during these critical periods and differentiates the retailer’s offerings.

Practical Examples of Product Bundling

Let’s take Apple as an example. If Apple offers a discounted bundle that includes an iPhone, AirPods, and an Apple Watch, it attracts customers who see the bundle as a comprehensive tech solution. This not only increases sales but also enhances the customer’s perceived value, leading to greater satisfaction and potential word-of-mouth promotion.

Alternatively, Microsoft might notice that a particular edition of their Surface tablet is not selling as expected. They could bundle it with popular accessories like the Surface Pen and Type Cover at a special price. This approach helps clear out inventory while providing a deal that customers find appealing, ultimately boosting sales and enhancing customer value.

Wrap Up

Product bundling is a flexible tactic. It can assist businesses in enhancing perceived value, boosting sales, and managing inventory more effectively.

Comprehending the different types of bundling, their advantages, and the factors that impact their success is essential. Companies can develop compelling bundles that appeal to various customer segments.

To assess the effectiveness of a bundling strategy, companies can track metrics such as the increase in average order value, the speed of inventory turnover, and customer feedback.

In today’s competitive market, product bundling provides significant benefits. It can help increase average order values, streamline inventory management, and help companies stand out from competitors.

Explore more about Pricing

Why sell one product when you could sell four, our five, or even six?

As a savvy e-commerce store owner, you know you need to increase your average order value if you want to see increases in your profit margins and overall sales.

One smart way to do this is through product bundling.

Product bundling as a price strategy is fairly simple. You sell a range of products together for a combined price. This is different to customers simply adding various products to their bag separately because it plays on the psychological, economic idea that consumers will be more likely to make the purchase when there’s a significant perceived value.

By improving the value of what you’re selling, you’ll sell more and make your customer’s happy.

In this post, we’re going to look at three things. The benefits of bundling your products, a framework to help you do it successfully and we’ll share some examples of stores who get ecommerce product bundling right.

Let’s go!

What are the benefits of ecommerce product bundling?

  • Your average order value will increase
  • You will see an increase in your profit margins
  • Your customers get to spend less time making decisions
  • Harder to compare like for like products with competitors
  • Shopping with you appears more valuable

Product Bundling Framework

Although product bundling does offer a number of beneficial advantages for ecommerce store owners, there is still the challenge of implementing an ecommerce product bundle strategy that entices the shopper to buy, but also is profitable for the store owner.

The price of the bundle must be lower than the prices combined

There must be some sort of perceived discount for the customer, otherwise what is the point. In an ideal world, you should be aiming for around 10% or more discount. If it helps, make it obvious to the customer that they’re getting a valuable product discount.

Another method is the buy more and save. Although this is typically not a ‘bundle’ the buy more and save approach ensures customers will be rewarded for adding more to their basket.

It works well for the customers who are ‘umming’ and ‘ahhing’ about making that extra purchase. In their heads the conversation goes something like this: “Oh I want that extra item, but I should probably save money instead. Oh look at that, spend $50 and you get 10% off? I might as well buy the item then I get them all on discount.”

Product Bundling discount

Again pertaining to the idea of a perceived discount. Customers like to feel as though they’re getting a good deal. Here you should use the rule of 100 which establishes that if the total price of all items in the basket is under $100 (or whatever currency you’re selling in), then give a discount by a percentage. But if it’s more than $100, then give an absolute discount, I.e. a numerical value. For example, $200 off when you spend $2999 or more, for example.

The most important thing about product bundling is the customer needs to be able to understand it. It’s not enough to say “buy these products together” you have to say “buy these products together and you’ll save money”. It all comes back to the psychological economical ideology we mentioned earlier. For example, the difference between 2.87 and 3.86 seems smaller than the difference between 5.00 and 4.00, even though it’s not. It’s all about perception.

amazon shop deals of the day

You’ll know by now, if you’ve ready any of our other content, or check out our product, we’re big advocated in looking at what your competitors are doing. The internet is a place where shoppers can choose where they get their items from, and by and large, if you’re selling something on the internet, someone else is selling the same thing. If your customers are browsing for comparisons, why aren’t you? But first, you need to conduct some research to find out who your competitors are This can be done simply by researching the key phrases you use to describe your products.For example, if you sell pet accessories, you can look on Amazon, Google and other familiar marketplaces to see who your competitors are, and what sort of products they’re selling as bundles.

google pet accessories

You don’t even need to shell out for super expensive software, simply using Google and Amazon, should provide you with a wealth of knowledge to get started.

Once you’ve located your competitors, you need to find opportunities where you can create a competitive advantage. For example, if you have one product that is already cheapest on the market, and you’re already making good profit margins on this, then there is no reason why you should bundle this product with others because you already have a competitive advantage.

So in this scenario, if you have products that aren’t selling as well, evaluate whether you could bundle them with others of a similar nature. Moreover, look at your competitors to see what products they’re making the best deals on and see if you can offer a similar bundle at a better discount.

We mentioned earlier, you need to make sure that you are running a profitable business when offering product bundles. This means you need to look at how much it costs you to market the bundle, the cost of returning all the items? What if your customer orders a bundle, but doesn’t like one of the items? Do they have to return the rest?

Display your bundles wherever it necessary, but also don’t limit yourself and offer them at the checkout as well. How many times have you been to a physical store, reached the counter and the shop assistant has said: “we’re offering X deal because you’ve spent Y amount in store today”. The same can be achieved with online experiences too.

Successful eCommerce bundle examples

When you create product bundled packages, you get an opportunity to be creative while also increasing your average order value, and therefore, your income.

Let’s look at some examples of product bundling done right and evaluate what makes these specific product bundles so successful

Accessories

Many products require accessories. Some are mandatory (like a lens cap on a camera that usually comes with the camera), but some are highly desired, but optional, like a tripod for a camera.

Bundling products of a similar nature is a great way to increase your average order value because customers are likely to be looking for similar things. Someone buying a DSLR camera is likely going to be interested in buying a different lens or a tripod to go alongside it.

e-commerce product bundle

At DigitalRev, when you go to purchase a camera you’re met with a section of the website that offers deals for bulk buying. This doesn’t mean you need to buy five of the same camera to get a deal. It simply means buying all the accessories from their store alongside your camera will save you money.

They are also clever enough to list the exact discount rate you will save buying it all there. One of the greatest benefits of product bundling is it limits the number of people who shop around.

Think about it. If you were in need of all of these items, would you research each individual price and compare it to the discounted price here, or just take a great deal?

Remember, your product bundles don’t have to be physical bundles either. While DigitalRev used camera equipment as their product bundle, they also could’ve been lucrative and offered a year’s subscription to Adobe Photoshop

Ecommerce product bundle: like for like products

Naturally, if you’re looking to buy a new outfit, you’re often looking for multiple items. Perhaps you’re going to a new event and would like a completely new style, or perhaps you just want a few pieces to freshen up your wardrobe.

Whatever the reason, e-commerce owners (especially in the fashion industry should be making use of this.

Fashion e-commerce retailers have a unique opportunity to bundle products together to encourage shoppers to buy more and increase their average order value.

e-commerce product bundle

Fashion store, The Hut, allows users to shop certain looks. They use carefully selected models who wear the entire outfit to encourage shoppers to buy it. In this scenario, they list the exact items of clothing you’ll receive and the entire price.

This is a great way to bundle products because often you wouldn’t consider certain pieces of clothing going together until you see it on someone else.

Ecommerce product bundle: Bundles you don’t think are bundles

HelloFresh is a great example of product bundling without it seeming like product bundling. In fact, their whole business model is based on the idea of product bundling.

Think about what Hellofresh is. They provide you with the ingredients and the recipe and deliver it to your door. Realistically you could do all of that by researching a recipe online, ordering your food online and having it delivered.

e-commerce product bundle

So why on earth do people use Hellofresh if they could do it all themselves? It’s because of the perceived value. You don’t have to fiddle around with measurements because Hello fresh provides you with the exact amount of ingredients you need to make your meal, again leading towards that perceived value we spoke about earlier.

E-Commerce Product Bundle Pricing Takeaways

As an e-commerce store owner, you have to think of yourself as a salesperson. You need to use psychological tricks to encourage consumers to spend their money with you over your competitors.

One way to do that is through product bundling.

When it comes to value perception and branding, offering product bundles will provide you with a significant advantage. Bundles, when done right, work in the way of increasing revenue, growing cost efficiency and improving average order values.

But don’t forget to look at your own data to decipher what products you can afford to bundle together and what products you need to bundle together to provide maximum experience for your customers as well as maximum profit for you.

What product bundles have you seen executed well? Leave a comment below.