Product Bundling Strategy: What is It and How to Use It

6 minutes reading time |
Geschrieben von Elisabeth Meyer
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Product bundling is one of the most powerful selling strategies available to the modern eCommerce business. 

Current research suggests that the sale of product bundles make up to 30% of eCommerce revenue, which is nearly a third of all funds. With such an impact on revenue, product bundling is something to consider implementing if you want to increase sales and clear out inventory, it’s clear that product bundling is a strategy to be relied upon for decades to come.

That said, while it might be a mainstay of the industry, product bundling doesn’t come naturally to every business. This article will explore product bundling strategy in detail, investigating examples, pros and cons, and ways to build a bundling strategy into your business model.

 

What is Product Bundling?

Product bundling is a sales tactic where several individual goods or services are sold as a combined package (with one SKU code). The bundle price is typically lower than the cost of each item sold separately, making the bundle more appealing to customers. 

Many businesses use this strategy to increase sales and customer loyalty, while simultaneously selling harder-to-sell inventory.

Brands may choose to leverage product bundling for several reasons, including: 

  • Selling products that may be coming up on expiry or aren’t selling well.
  • Making best-sellers more exclusive, thereby enticing more buyers.
  • Ensuring that top sellers are only used with complementary products, ensuring that the customer has a better experience with the brand.

 

Common Product Bundling Examples

Bundled products range from goods and materials to services and experiences. Depending on the industry, it may even be a combination of both.

  • Home products like pots and pans may be combined with smaller items like kitchen utensils, which represents one of the most common examples of product bundling.
  • Food and beverage companies often bundle new flavors with fan-favorite classics, boosting their acquisition process.
  • Beauty brands often bundle their cosmetics with a complementary sample packet, creating the ultimate customer experience
  • A large number of fashion businesses sell a base product with add-on bundles, including accessories such as shoes or jewelry.
  • Garden products are sometimes combined with multiple ‘free’ seeds for the price, duplicating its value.

Product bundles do not always have to be congruous, but customers do prefer eCommerce cross-selling to capture their original intent.

 

Why Product Bundling is Important: Business Benefits

Ecommerce brands can use product bundling to meet a plethora of industry needs, from reputation and customer retention to eliminating older products, saving money, and targeting seasonality. However, this process is much easier on paper than it is in practice.

For example, eCommerce brands using online shops like Shopify, Shopware, or WooCommerce can easily create new SKUs in their internal system. This, of course, is completely useless to fulfillment companies, who must receive pick and pack orders before moving forward. Your 3PL partners also need to know what products will be in your proposed bundles, and all details about what to ship to ordering customers. Larger or more extensive bundles become more complicated, creating lost inventory, messy return processes, and unhappy customers. If you want to play the bundle game with ease, choose an ERP like xentral to streamline the entire process.

 

Let’s take a closer look at some other reasons why product bundling is so important to modern business:

 

Improve Brand Reputation

Product bundling can cement a brand’s reputation by showing consumers it cares about their lifestyles, values, and budgets. Providing popular bundles to consumers will make a brand more exciting to engage with, as well as more accessible to new customers. Enjoy efficiency at its finest by creating more products using a range of inventory already owned, and reap the rewards that follow. Bear in mind that changing pricing can dramatically change the consumer’s perceptions of a brand.

 

Retain Customers

Providing opportunities to save money can leave a positive impression on consumers. Not only will it encourage them to return, but it highlights the value of shopping at your brand on a regular basis. Bundling items together also makes the shopping experience less stressful, reducing the decision-making process.

 

Save Costs on Marketing and Shipping

When lesser known or less popular products are paired with a company’s bestsellers, they are far more likely to leave the shelves quickly. More often than not, additional products need no external advertising campaigns. This reduces your invested resources in costly marketing programs, and lowers the number of shipments you make through a 3PL.

 

Make Use of Older or Less Popular Products

Product bundling can make the most out of sluggish or poor-moving inventory. Less popular or out-of-season products can easily be off-loaded into bundles with popular items. This allows eCommerce brands to still make a significant profit from unpopular inventory.

 

Take Advantage of Seasonality

Special events, seasons, and holidays help to stoke the market for seasonal or specialty bundles. This provides an exclusivity that incentivizes customers to buy right away, getting additional items to give as gifts or presents. Peak seasons like Christmas, Valentine’s Day, and Graduation are some of the best holidays for this purpose. Consider packaging bundles that fit well together, including accessories, matching items, or sets.

 

Customer Benefits of Product Bundling

Brands aren’t the only beneficiaries of product bundling. Customers can also enjoy a better experience from simple decision-making, as well as improved cost savings and less buyer’s remorse. Let’s look closer at the details:

 

Better Customer Experience

Product bundles help customers save even more on the items they already love. Bundling also helps them to discover new products, increasing their familiarity with the marketplace. When customers view a brand as accessible, they are far more likely to report a better customer experience.

Consider the customer’s journey to buying cosmetic creams. Many buyers struggle to choose between multiple colors or types, and would be more interested in purchasing bundles that offer a wider selection. Price reduced bundles have a higher chance to sell, a stronger customer reception, and a much better experience overall.

Do you want to learn more about customer experience? Click here 

 

Simpler Decision-Making

By carefully streamlining the shopping experience, bundles take the guesswork out of purchasing. Limited options help to reduce the number of returns, which can be costly for eCommerce brands. They also increase happiness and reduce buyer’s remorse, helping customers feel more satisfied with their decisions.

 

Cost Savings

The most obvious benefit of product bundling for the customer is the discount, helping them save more on items they want to try. Reference pricing is a key component for many decision-making processes, especially for customers on the fence about purchasing bundles. If customers don’t get a sense of perceived value, they won’t purchase the item.

 

Confidence in Decision-Making

Customers that perceive a bundle as valuable may be happier with their final decision. Research suggests that confident customers are roughly 2.6 times more likely to purchase again from the same brand. Happy customers feel confident and satisfied that all components of their bundle will complement one another. 

 

Disadvantages of Product Bundling

Despite its many advantages, there are some downsides to a product bundling strategy. Some buyers may target bundles alone, while others ignore your ‘tainted’ popular products. In some circumstances, you may not be able to create a meaningful bundle at all.

 

Customers Might Only Go for Bundles

Product bundles might deter customers from buying single products due to the great value they provide. This can be a problem for brands that sell primarily single items, or a short list of exclusive products.

 

Not All Products Can Be Bundled

There is a very specific strategy that goes into choosing product bundles. Customers will take time to do the math, and they’ll quickly notice any discrepancies in the price. If there isn’t a significant savings margin, or if there simply isn’t enough offered, they may decide to ignore the bundle.

 

Bundling Can Taint Your Popular Products

If a product that customers love is paired with a product that is perceived as undesirable, buyers may find the bundle less attractive. Conversely, if the product is more valuable in a bundle, consumers may stop purchasing the solo product entirely.

 

How to Build a Product Bundling Strategy

Building a highly functional product bundle begins with a host of modern tools, namely ERP software, metrics, and pricing strategies. By emphasizing customer savings and placing purposeful bundles at the forefront of the buyer’s journey, consumers are better equipped to move forward with a great deal. We’ll examine each of these points in greater detail below.

 

Employ the Help of the Right Software for Managing Bundling

More than ever, business owners need to consider the best ways to operate practically, efficiently, and intelligently, ensuring workloads are as sustainable as possible. This includes streamlining – or automating – all product bundling deals. Many eCommerce platforms can create arbitrary bundling processes, but few possess the depth required for managing meaningful results. ERP software allows users to customize bundling features with real-time data and analytics, providing opportunities for better management and growth over time. Alongside other technology, ERP platforms help companies ensure long-term success and sustainability, all without sacrificing hands-on management.

Xentral provides high-level product data management to assist brands of any size. With a suite of automations and integration opportunities, you have everything you need to start bundling products with ease. Get started with a free demo to see our solutions in action.

 

Look at The Right Metrics to Determine Which Product to Bundle

In order to better understand the success of your product bundles, you’ll need to consistently measure their performance in the marketplace. This could take the form of many strategies, including:

  • Top and bottom performing metrics rank your packed items according to their highest or lowest sales volume. This allows you to rank bundles in terms of popularity, identifying trends.
  • Average order value (AOV) determines the average price of every customer’s cart. Use this metric to undercover where customers are seeing value in your bundles.
  • Annual growth of a product determines the success of a commodity as a standalone item. If an item isn’t performing as well as you’d like, or if it struggles to sell by itself, it could be an excellent candidate for bundling.
  • By comparing sales with positive reception, your business could identify trends, pairings, or unique themes that customers gravitate toward. Leverage these insights during the holidays for added effect.

 

Choose the Right Bundling Strategy

Your industry and niche will dictate the bundling strategy you choose, as well as any potential price points.

The following strategies are some of the most common for the eCommerce industry:

  • Price anchoring: Monthly payment plans allow customers to purchase items in installments, reducing the perceived cost.
  • Marketing benefit over cost: This strategy provides customers with a rationale of why they should buy, minimizing the cost of the bundle.
  • Time-limited bundles: By building a sense of urgency or exclusivity, customers may be more likely to buy within a certain time period.
  • Customer referral marketing: Promote bundles to leads provided by other customers, allowing new shoppers to feel confident about their decisions.
  • Bundle by theme: Pair items, accessories, or other products together with the intention of building a motif.
  • Showcase cost savings: Point out the customer’s overall savings with strike-throughs, discount lettering, and enhanced value dialogue.
  • Customizable bundles: Allow buyers to personalize their product bundles, increasing the customer experience and adding perceived value.

 

Bundle Items with Purpose

When creating a product bundle, choose products that complement one another and offer a similar level of value. This is best used around the holidays, where consumers are hunting for additional deals and services. Bundle items thoughtfully, considerately, and above all, with a theme. Customers are far more likely to purchase items that make sense in a package deal.

 

Product Bundling Pricing: Emphasize Savings

Bundle products together in a way that makes the most financial sense for your customers. The price of a bundle should always be less than the sum of each item separately, even if only by a small degree. For example, placing two $50 products together for a $100 price tag simply won’t encourage sales, but $90 would.

Focus on ways to introduce discounts into your bundles with emphasized savings. For example, place a best-selling product with a mid-tier product and provide a small price reduction when bought together. This makes the bundle more attractive to consumers, opening the door to repeat purchases.

 

Place Bundles at the Front of Your Customer’s Digital Journey

Make bundles and their respective product pages easy to find throughout the user’s journey, particularly on your website. Product pages should always include a list of recommended bundles and their price cut, similar to large eCommerce companies such as Amazon. 

 

The integration of product recommendations helped Amazon experience a 29% increase in sales, resulting in billions of dollars in profit. Product bundles can also be highlighted in other outreach efforts, including personalized emails or newsletters.

 

Bringing The Product Bundle Together

Using product bundles strategically can help boost the quantity and quality of your eCommerce sales. The right strategy can optimize product movement, enhance customer experience, or increase overall revenue. Before choosing a bundling approach, consider ways to streamline the process and reduce strain across multiple departments.

 

ERP software is an excellent solution for businesses needing a single view of their eCommerce processes. At Xentral, we provide you with the ability to manage products and services at a glance, supported by real-time data streamlined sales funnels.

 

For more information about our powerful software or how we can help grow your business, enquire about a demo.

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Written by Elisabeth Meyer