eCommerce Glossary: Product Bundling

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A Brief Guide on Product Bundling

What is Product Bundling?

The primary aim of any business is to maximize revenue. But for this, you need the perfect pricing strategy. One of the most popular pricing strategies used by businesses is product bundling. This is a true pricing model and has been tried and tested.

Let’s take a look at product bundling in detail.

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Many products come with complimentary items and often people purchase them together. The idea of product bundling is to take complementary products and sell them as one unit. A company’s primary aim in introducing the pricing strategy is to sell out more products than they initially would have. Product bundling is beneficial for a business, as well as for some items.

A product bundle allows improving the average order value. An estimate from McKinsey stated that 35% of purchases made on Amazon come from the recommendations. These recommendations are known to have a success rate of 60%.

Examples of Product Bundling In case you are wondering if product bundling the right choice for your business; take a look at some of the best examples that have been successful with it.

Combo Meals

A great example of product bundling is a combo meal. As customers order food, they look for the main course, 1-2 side dishes, and a drink or dessert. Restaurants can offer various items bundles together as a meal for increasing sales. It makes it easier for customers who used to purchase the items separately can now make regular combo purchase of the meal. For example, dominos offers a combo of pizza and coke.

Clothing Outfits

Tuxedos and suits are a great example of bundling products as all these parts are needed to make the outfit. Often, you will get to see other bundles of shirts along with pants that match with the suit. People spend a lot of time choosing clothes that will go together. Thus, clothing companies sell bundled outfits for helping shoppers find out what they are looking for much faster.

Shampoo and Conditioner

Almost everybody uses a conditioner for their hair after washing it. A few companies have blended these items into one bottle but there are many that bundle two of these products together. The two items will have a scent that complements each other nicely. Also, it can specialize in addressing certain hair problems and hair type. It is an ideal way to save customer’s time when they are buying these two things together.

Increased Revenue, Decreased Operational Costs, Profit...

Reasons You Should Consider Product Bundling

Bundling helps in doing much more with the existing stock. Check out the benefits of product bundling and how it can help your business.

Improves the Average Order Value. With product bundling, you will be able to increase the profit and sales of each item you offer, over time. By grouping them, you will be able to make the customers purchase over one product in just one purchase. This increases the average order value.

Decreases Distribution and Marketing Cost. Product bundling will make you sell more and truncate the marketing or distribution cost. Rather than marketing each product you offer, you can offer a group of complementary items and then market them as one product.

Since you are packaging items together, you can put them in one warehouse bin. You can ship fewer boxes of individual items. So, you can save money on postage. There is no need to print or advertise for every single item you are selling. You can just show the bundle that will help in saving more on the marketing cost.

Reduces Inventory Waste. The items that don’t get sold will remain in the inventory. It is called deadstock. It adds to your holding cost. Eventually, you tend to discard it as waste if it expires. Use bundle for clearing out the dead stick before it turns into an issue. When you bundle stagnant or slow-moving items with a faster-selling item, it can entice customers and they are more likely to purchase it. Thus, you can reduce inventory waste and free up space in your warehouse.

Finding the Right Bundling for the Right Product WILL Make all the Difference

Types of Product Bundling Pricing

You will come across different types of product bundling techniques. Here are a few of them.

  • Pure Bundles: In this, the individual items making up the bundles are going to be purchase only as bundles and not as an individual product. It is a technique that can limit the choices the customers have.
  • New Product Bundling: This is a technique where the newly launched products are bundled together with a pre-existing one. It serves as a promotion to make the customer discover the new product. The technique is primarily used by e-commerce sites that combine the new product with a popular product to get better exposure for the new item. The more popular the pre-existing product is in the market, the more it brings the buyer closer to the new product.
  • Cross-Sell Bundles: In cross-sell bundling, businesses sell a complementary item as an add-on to the primary product. This works well with items that have a lower price. It can also be used for parts or accessories that go with the expensive product.
  • Mix-and-Match Bundles: This technique will allow customers to select from multiple products. It is primarily brick-and-mortar stores for all fast-moving consumer items like bulk or perishable items. You list a few items for the customers and they can create a customized bundle from the items on the list. It makes the customers feel that they are in complete control of what they are purchasing. This increases the perceived value of an item.
  • Buy-One-Get-One Bundles: This technique is used when you purchase the main item and you can get a discount for the other or get another item for free. It is the best technique for one-time product purchases such as hair dryers.

By bundling items, you will be able to add value to your product. With this, you can tailor the product offering as per your customer’s preference for aligning with their requirements. Providing carefully curated and unique bundles will help in standing out in the crowd.