What’s one thing that shoppers love? Getting a good deal. What’s one way that can brands and retailers serve up those deals? With product bundling.
Keep reading to learn more about product bundling, what it is, why it works, and how brands and retailers should incorporate bundling into their eCommerce and brick-and-mortar strategies.
What is Product Bundling?
Product bundling is when two or more items are packaged together for sale at a lower price than the items sold individually.
There are many different types of bundling, including:
- Razors and replacement blades
- Kitchen appliances
- Smartwatches and replacement bands
- A McDonald’s Happy Meal
- and much more
The items paired together could be captive products, like razors and razor blades, complimentary, like a deal on kitchen appliances, or accessories, like smartwatches and replacement watch bands. Or, it can just be a way to demonstrate value to shoppers, like with the Happy Meal. You can eat a burger without fries, but when you can get a burger, fries, drink, and a toy for less money than each item individually? That’s just a good deal.
Product bundling is when two or more items are packaged together for sale at a lower price than the items sold individually.
How Does Product Bundling Work?
Product bundles are valuable for both retailers and consumers. Looking at shoppers first, bundling is a plus because of the perception of value.
Buying multiple items—or expensive ones—can be a challenge, and a bundle makes that a less painful experience. Shoppers feel like they’re getting a discount and they’re doing it with less hassle, not having to bounce between product pages or calculate the cheapest options when buying more than one product at a time. This is a big win.
A well-crafted bundle is also convenient for consumers. It makes it easy to buy more items at once, with less work tracking down the ideal complementary product and adding it to the cart. Saving time and energy is a major motivator for consumers, and bundling plays right into that.
So, how does bundling work for retailers? The big reason to do this is to increase basket size. Many shoppers may not know about a specific item or add-on, and presenting it as a bundle is a quick and easy way to communicate that deal. As stated above, consumers love saving money and getting more bang for their buck, so bundling is an excellent incentive to buy more—thus driving up sales for the retailer.
Other added bonuses for retailers include the ability to test marketing and sales channels or support a new product launch by leveraging bundled packages to get eyes on certain products. It’s also a good strategy to improve customer loyalty, as bundles can be viewed as perks or rewards. Finally, this tactic is one possible solution to excess or underperforming inventory. Pair a slow-moving product with a top-seller. However, this could have a negative effect on sales if consumers can see through this and feel like they’re being taken advantage of, so use with caution.
How to Create a Successful Bundling Strategy
Are you ready to entice shoppers to buy more with an effective product bundling strategy? Here are five tips to bundle in a way that benefits both your company and your customers.
1. Variety is Spice of Life
To begin, you need a selection of bundles that are unique and varied. For example, create multiple packages based on one core product. Say you sell smartphones. The base product is the phone. One bundle could be the phone plus earbuds. Another could be the phone plus a case. Other bundles could include screen protectors, phone plans, wireless chargers, and other options. You want your bundles to demonstrate how that core product can be used in different ways and which related items work with it.
2. Make Bundles Optional
What you don’t want to do is force bundles on your customers. How can you force it? You can create a bundle that includes products not sold individually. You can also price your bundle so that it’s so much cheaper than the individual items. This can have multiple negative consequences, including making shoppers wonder what’s wrong with the products to get that suspiciously low price. Instead, sell bundled products separately, price bundles to be competitive with the individual products, and don’t force bundles on your customers.
3. Offer Bundles at Checkout
When you present a bundle to shoppers can also help or hurt sales. In many cases, the smart strategy is to offer bundles at the point of sale. This is a technique that Amazon has perfected, as you’ll always see the “frequently bought together” section right before you check out. Then, it’s one click to add that bundle to the cart. For brick-and-mortar retailers, cashiers make suggestions at checkout, or displays can be set up right near the registers to encourage shoppers to add an item or two to their baskets.
4. Find Your Bundle Partner
Depending on your industry, bundles may be best-suited for products outside of your core business. What does this mean? That you should find your bundle partner. Going back to the example of smartphones, the phone manufacturer may partner with a service provider to bundle their phones with a plan. These types of opportunities will depend on your core product, but they can be excellent bundles when done right.
5. Pair the Right Products
Above all else, a good bundle is a smart mix of complementary products. The products should be different enough that there’s a reason consumers buy them individually (it’s not a bundle if you sell a hairdryer but lock the power cord in a “bundle,” that’s just a bad product) and there needs to be value in the package deal (including batteries does not a bundle make). As previously noted, good bundles can include top-sellers with slow movers. It can include captive products, like a new gaming console paired with a video game. Or, the bundle can just a more convenient way to buy a few items.
What About Product Bundling Pricing?
Of course, how you price your packages can play a major role in the success of those deals. Importantly, your offer doesn’t have to be priced drastically lower than the sum of the individual products sold separately—not if there are other reasons why the bundle exists.
However, there are still bundle pricing mistakes. Make sure you know your audience, for starters. This is where accurate retail intelligence comes into play. Get the most up-to-date data on pricing trends and consumer behavior. Then, price your product bundles so they are perceived as a good deal, not so low that they appear cheap, and not higher than the items purchased separately.
Furthermore, your bundle prices should also be sustainable compared to your own costs. You don’t want to lose money on the deal. Plus, your prices need to remain competitive in the market and align with your brand reputation (are you a discount brand, premium brand, or somewhere in between?)
Get Started with Product Bundles
Do product bundles sound like a valuable strategy for your business? Whether eCommerce or brick-and-mortar, bundling can be a great way to drive sales, increase basket sizes, and provide a bit of value and reward to your customers.
Just make sure you follow these tips to bundle strategically and provide a beneficial experience for both shoppers and your company alike.
