Product Bundling Full Guide 2023
LAST UPDATE: JUL 5, 2022
6 minutes reading
omer satisfaction is a crucial thing for every successful business. e-Commerce businesses are constantly looking for ways to increase their profits, get more sales, and improve the experience for their customers.
Product bundling is a fantastic way to increase sales and optimize average order value as well as improve customer satisfaction.
In this guide, we will break down what product bundling is, how it works and what are the best practices that will help your business.
What is Product bundling?
Product bundling is, at its core, to asset two or more products together as a combined package and selling them at a lower price than selling the same products separately, keeping the option for the buyer to choose the products individually or together as a bundle.
It is a common strategy for businesses that want to find new customers or market products online which will help them to increase sales and shift stock more efficiently.
Product bundling strategies
Pure product bundling refers to bundles containing items that can be purchased only as a bundle and not as individual items, shoppers can’t purchase it as standalone products.
Example: Netflix, one package of media collection for a monthly fee.
This type of bundle is for specific occasions or holiday seasons like birthdays, Christmas, or any other occasion.
This is a way of combining complementary products as bundles to be presented to the family, friends, or beloved to show them how much they care. Customers of gifting bundles are not price-sensitive; they are more likely focused on choosing the best present.
New product bundling
E-commerce stores use this type of bundling to promote the latest products, the bundle contains newly-launched products grouped together with popular products to encourage customers to discover the new products.
Example: The Nintendo switch + the legend of Zelda product bundle.
This type of bundle includes multiple similar products, giving the customer the ability to choose products they want and create their own bundle from a few products you specify for them.
Example: Some brick-and-mortar stores offer any shirt with any tie and any pair of trousers for 60.
It is a bundling type for complimentary products to be sold as an add-on to the main product.
Bundles can include likely an expensive item gathered with accessories or parts, or lower-priced items.
Example: iPad and a case along with it.
Inventory clearance bundling
This type of bundling technique is used to decrease inventory waste and holding cost, and free up storage spaces.
You can bundle a faster-moving product in the inventory with a slower-moving product or stagnant inventory item in a certain quantity at a low price, So the customers see the bundle as a bargain and will be more interested in the package.
Price Based Product Bundling
In this bundling technique, you pair products into a bundle where the price of it is lower than the sum of its parts.
Example: It is better to buy a McDonald’s meal rather than buy each item separately.
Why is product bundling important?
Businesses should consider product bundling as a marketing strategy due to its efficiency as a compelling way to increase upsell and cross-sell products. It also increases competition among e-commerce merchants and it’s a win-win tactic for both the business and the customer.
How bundles benefit sellers
- Create a positive impression of the brand
- Save time and marketing costs
- Open customers up to new product lines
- Take advantage of seasonal opportunities
- Improve customer satisfaction
- Reduce shipping costs
How bundles benefit buyers
- Try out different products
- Reduce the amount of research and the pain of buying
- Personalize orders
Examples of product bundling
McDonald’s Happy Meals
A popular example of product bundling is McDonald’s Happy Meals, customers get an all-in-one package from a single purchase, the package comes with French fries, a beverage, a toy, and a hamburger.
McDonald’s uses Product Bundling to Increase Sales as it aims to encourage higher-priced sales by offering a low-priced bundle of products to customers.
McDonald’s increases AOV (Average Order Value) using bundling, as well as getting happier customers for getting more for their money.
The mega-success story of the empire of Kylie Cosmetics based on a simple product concept, (lip kits) a product bundle consisting of lipstick and lipliner.
Kylie Cosmetics also has a dedicated section on their website to showcase all their bundles and highlight the season’s most popular bundles to allow customers to find their actual needed bundle.
Naturebox is an innovative brand for selling healthy snacks online.
Naturebox innovates an awesome way for health food enthusiasts by bundling different snacks together in one package.
Naturebox also is one of the most successful examples of subscription bundling, which is a great idea to build trust and boost customer loyalty.
Subscription bundles give customers the flexibility of buyers choosing their box contents, discounts, and doorstep delivery.
Moreover, if you want to buy a gift for someone, Naturebox is a place where gift bundles come in.
Another clever approach that Naturebox does in gift bundling is to create occasion-based bundles such as birthdays, Black Friday, or any other occasion, this can make it simple for buyers to select the right gift.
If you’re a health food enthusiast, HelloFresh is the best example of a successful pure bundle method that encourages healthy home-cooked meals.
HelloFresh packages ingredients together to offer many recipe options and well-rounded meals in just one big bundle, which is a very attractive option for a health-conscious lifestyle.
IHerb is an example of product bundles promoting, it is a famous brand that sells dietary supplements and beauty and health products. IHerb have different bundles on each product page, depending on a customers previous purchases, they offer to save $3 for each new purchased item in order to get their customers’ attention at checkout.
What are the advantages of product bundling?
Increase revenue and average order value AOV
One of the important metrics to measure business growth is average order value, Product Bundling encourages customers to spend more on each transaction, instead of just selling one item you will sell five at the same time for example. So, it helps you to increase AOV which results in boosting your revenue. For example, a client might want to purchase a laptop, but he then finds a bundle that includes a laptop and a mouse, so he buys the bundle instead.
According to an analysis from McKinsey, 35% of all Amazon purchases come from product recommendations that include bundles of buy it with.
This type of bundle recommendation, according to research from Forrester, has a success rate of around 50-60%. That’s because bundles let customers more likely to purchase items in one transaction instead of buying items at different times from different places.
Sell stagnant inventory
Unsold inventory remains in your warehouses as deadstock, causing inventory waste and increasing holding costs. Product bundling, when done correctly, keeps inventory moving and improves inventory management. When you bundle a slow-moving item with one from best-sellers items or package certain quantities of stagnant inventory at a lower price, clients will be more attracted to the bundle and feel it as a bargain.
Consequently, inventory turnover ratio will be improved, inventory holding costs will be decreased, and you will free up storage spaces, and speed up inventory clearance.
Decreases marketing and distribution costs
Bundling is a vital technique to simplify marketing and reduce distribution costs.
Marketing a bundle of products as a single product is more efficient than marketing every product alone. For example, when you create a bundle of 5 products as one package, you have only to create one marketing campaign instead of creating five marketing campaigns for every single product. it will also save more storage space and shipping costs, which means a greater product line, selling at lower prices, and increased profit margins.
Encourage customers for product exploration
Product bundling helps shoppers to understand your products better since they have to review each bundle and its different features and benefits. this can make them feel more controlling in the decision purchase and increase their loyalty for your products.
Simplify the customer experience
Product bundling is a useful technique to enhance and simplify the customer experience, customers have the opportunity to choose products and services bundles that meet their needs.
Although too many options can cause headaches for customers, retailers use product-customer matching algorithms to set up tailored recommendations, which direct shoppers toward bundles that meet their needs and increase customer satisfaction.
Tips for making the most effective use of product bundling
Now we have explained product bundling strategies with their benefits, and the different types of bundles.
Let’s take a look at some top tips that help sellers to create bundles that increase sales, boost profits, and improve customers’ experience.
A/B test different product combinations
probably, your bundles won’t be right from the first time, you need to try different bundles to identify which product combinations get the best results. Customer data and sales performance will help you get the best product combinations.
Personalize product bundles
The best-seller bundles cater to customers’ expectations and meet their demands. Make sure to allow custom bundling for your clients and encourage them to suggest bundles based on their unique interests and needs.
Customer data approach
It’s essential when bundling products that you avoid the trial-and-error approach, bundling products arbitrarily may end up selling fewer of them rather than more.
Sales data and performance metrics can highlight what products the customers frequently purchase. Using these data can give you insights into what products might make sense when grouped together, and give you the ability to make more accurate forecasting, and create stronger bundles in order to improve sales.
Bundle related products together
Your bundles could fail if it consists of products that aren’t related together. For best results, make sure the products actually work well together and are related to each other in some way.
your bundles, also, should make sense and understand the needs of your audience.
Emphasize savings involved
Another point to make into consideration when bundling is to guarantee customer savings.
In other words, it is not just selling items together, customers need to feel they’re saving money when they purchase a bundle.
Make sure to highlight how much they are saving when buying this bundle, how good is the deal they’re getting, and what is the value of the bundle. If done in the right way, your clients will tightly be interested and they will come back again and again.
You can clarify the added value of your bundles in your website, your social media ads, and your email marketing efforts.
Keep Bundles Simple
Bundling many products can offer great savings, but it may not be tempting for customers to buy huge bundles. Just two or three items the customers don’t like could drive them not to buy a bundle of ten items, making your sales suffer.
As simple as your bundles, as tempting as it is for the customers, so make sure to create simple, small, and make sense for your clients.
Bundles as a Subscription
A very popular type of product bundling is turning bundles into subscriptions, it makes a steady stream of revenue.
This form of bundling is done often once a month when you have clients who pay for their subscription to get a box of complementary products for example.
Rewards and discounts
As everyone likes to save money, customers like to feel rewarded by getting discounts when they purchase your products.
rewards and discounts can create some value by motivating shoppers to purchase your bundles, and turning them into loyal customers buying more and more.
Bundle overstock items with the best-seller item at a discounted price, if you have stagnant inventory, so you can adjust inventory and avoid stocktaking problems, in addition, to free up some storage of your warehouses.
This increases your customers’ satisfaction, helps you stand out above competitors, and makes your loyal customers become business builders paying premium prices.
However, you should remember that offering discounts just to tempt shoppers could lead to disappointing results, lower ROI for example.
Include a free item
As with the previous point, bundling items with discounted prices can be an effective way to tempt shoppers, but the most effective is a free item since shoppers love freebies.
make sure the free item is relevant to the main products in the bundle and meets the customer needs in order to provide a convenient reason for shoppers to buy.
Focus on Marketing
Make sure to promote your bundles through various ways of marketing like social media and SEO, create unique campaigns and ads for each bundle to reach more customers.
How Product Bundling Applies for Ecommerce?
Product bundling is a smart tactic for eCommerce to boost sales, increase revenues, and make customers happy.
Many brands use bundles to increase upsells, cross-sells, and customer loyalty.
You can accomplish the same goals by choosing the right system software for your eCommerce store.
How to upsell and cross-sell with New G Solution?
New G Solution is multichannel selling software for order and inventory management providing you everything you need to streamline and automate order fulfillment and shipping.
Our system is compatible for all forms of business including eCommerce, wholesale, and distribution.
Plus, we have features that can easily upsell and cross-sell your customers.
Expand your eCommerce online store and promote your products by enabling consumers to purchase them across diverse platforms like Amazon, Walmart, eBay, and more.
Simply make product categories to group several products with similar features, and make a tree with a hierarchical structure consisting of numerous levels of subcategories.
New G Solution also allows for the synchronization and processing to control products with no need to update each product on every channel at a time.
New G Solution will help you make useful product bundles, easily clear out overstock or slow-moving inventory, and make your customers feel they are getting a better deal.
Get your free trial now.
Product bundling strategy is a very effective pricing one, it helps you outshine your competitors, as well as increases your revenue, and keeps customer satisfaction levels high.