Technology has made businesses smart and consumers smarter.
There is too much competition in every niche now and offering just the basic is not enough anymore.
One has to be dynamic and spontaneous and ready to offer a little extra. However, the situation should be a win-win for both buyers and sellers.
Product Bundling is something that can ensure the same for the eCommerce industry.
After all, who doesn’t love a good combo in everything from food delivery to salon services!
So, let’s dive right in and discover all about it in detail.
What is Product Bundling?
Product bundling is a sales technique where several products are grouped together and sold as one unified unit for one price.
It assigns more value to each product in your inventory (or each service on your list) and encourages customers to buy more products.
Value meals at restaurants, hair-care kits, sanitation kit, etc., are some examples of product bundling in the real world.
Brands selling protection and sanitation kits during covid times was another great example of product bundling. For example, many of them sold masks, gloves and sanitizers together. Some apparel brands also started selling clothes with matching masks.
Clearly, product bundling is an abundant and popular practice that can bring in many benefits.
However, the absolute meaning and application of product bundling can be different for different industries, while the essence remains the same.
The basic difference between product bundling and other combos like “cross-sells and add-ons” is the fact that in bundling, all the products become one.
On the other hand, cross sell and add-ons are more about complementary products that may or may not get a unified treatment in terms of pricing, discount, etc.
When used strategically, product bundling can lead to many advantages and benefits for your brand. We will discuss them in detail here.
But before that, let’s learn about the type of product bundling in the section below.
Types of Product Bundling
The various kinds of product bundles and their applications are as discussed below:
Pure bundles include a mix of products and services that are not flexible. Customers do not have a way out and they are compelled to buy those products in the bundle itself.
For example, cable TV or DTH service providers usually sell their products in pure bundles. Subscriptions to various channels are not sold individually and different channels are grouped or bundled in packages.
Another great example of a pure bundle would be tour and travel packages that often include, lodging, fooding, site-seeing, etc., and customers are usually not allowed to opt out of any one of these services or even claim a cheaper package.
As evident, pure bundles are not very customer friendly and hence, they usually do not get a warm or overwhelming response.
Mix and match bundling
Unlike pure bundling, mix and match bundling gives customers a more flexible option.
Customers get to pick and add products of their choice from a range of options. Hence, it gives them a sense of control and satisfaction.
Mix and match bundling can be beneficial for both customers and sellers.
It motivates customers to buy products in bulk while tempting them to buy more than what they intend to.
BOGO or Buy One, Get One bundling is probably one of the most common bundling methods used since ages.
It has always worked well for physical stores, and does still for the eCommerce stores.
This bundling often seems very lucrative to customers and can also be used to sell two related products together.
As the name suggests, cross-sell bundling is like cross selling itself.
Here, complementary products are bundled together and sold as one. For example, mobile phones and their cases can be sold together in a bundle as one product.
Remember, the secondary or bundled product should complement the actual product and initial choice of the customer and be relevant to it.
New product bundling
This technique is used to create buzz and market for a newly launched product.
Businesses bundle their new arrivals with some existing and already popular product or service (much like free samples), and thus introduce the product to their customer-base without extra marketing.
It can also allow businesses to collect first hand responses for such newly launched products and get an idea about its strengths and weaknesses.
Gift set bundling
Gift set bundling is done for products that can be grouped together as gifts. People generally love gifting such bundles to their loved ones around festivals or other special occasions.
This technique is usually used around holiday seasons, special occasions, festival sales, Black Friday sales, and more.
It makes users feel that they are getting something extra for far less price, all under one place, and hence makes the process more intriguing, easy and lucrative for them.
Old inventory bundling
This technique is used to clear old stock and get rid of inventory stagnation. Here, a slow moving or less popular product is clubbed with a popular one and sold as a bundle.
Much like “clearance sales”, it helps businesses in clearing stock and making room for new and more exciting and trending products.
While it reduces the stock maintenance burden on businesses, it gives customers better deals. Hence, making it a win-win for all.
Advantages of Product Bundling
Now let us go through some primitive advantages of product bundling one by one:
Decrease in inventory waste and congestion
The first advantage of product bundling is that it expedites your inventory movement. Customers start noticing and buying more products as more products and services start gaining the extra exposure.
As discussed above, it can also help in clearing up old inventory and reducing wastage that often becomes a cause of loss for the stores.
Increase in Average Order Value (AOV)
AOV or Average Order Value is a crucial metric for eCommerce businesses. A higher average order value for all your customers is directly equivalent to a booming business.
Product bundling can help you achieve that with ease. As customers start eyeing more and buying more, their average order vale or cart value skyrockets, and so does your revenue.
Increase in sales and conversions
Product bundling can also increase your sales count over a particular period which is again a great metric to cover. Basically, it can help grow the statistics and numbers in your favor on many levels.
Therefore, product bundling also works great for your sales and conversions. People get multiple things under one roof, and it influences their psyche, tempting them to buy more than what they initially intended to.
Easy marketing, promotion & distribution
Let’s admit. Marketing new products and services does not often agree well with our budget.
Besides, it is not reasonable or feasible to run a huge promotional or distribution campaign for everything new. Product bundling can come in handy in these scenarios.
As discussed in the “New product bundling” section, bundling products can help you gain free and effective exposure for your hidden or new products and services.
Rewarding experience for customers
Product bundling not just works great for the store owners, but for the customers as well.
It gives them the opportunity to bag better deals and more products under one roof, without having to ransack the web.
Imagine browsing the internet for Christmas gift shopping for your family, and getting it all under one roof as a ‘gift bundle”. What can be more Christmassy than this!
Things to keep in mind when bundling products
We were searching the web to look for some studies on successful and unsuccessful real world examples of product bundling.
An interesting study done by a Harvard Business School faculty, Vineet Kumar, caught our eyes. We are sharing it with you here.
Based on this study, it was discovered that when Nintendo used mixed bundling to market video game units, the sales of these units went up by 100,000. There overall video game sales increased by more than a million, as well.
On the other hand, when Nintendo tried pure bundling their sales declined by 20% because customers were forced to buy the bundled package only. This led to a decrease in the sales of both video game consoles and the games too.
Well, the point is, that product bundling must be done in the right way and with absolute caution and consistency, else like any other half-cooked strategy, it can backfire.
Do not be daunted. All you need to ensure is that you understand what is best for your business and your customers, and offer just that.
Make the best of product bundling for your eCommerce store
You can keep the following points in mind when implementing product bundling for your eCommerce or mCommerce store:
Take help from your data analysis team and crunch some numbers before designing the packages.
It will help you make more robust, and data driven decisions and create packages that suit your own goals while fulfilling your customers wishes.
For instance, if you know which products your customers buy together more often, you will be able to package them together in a bundle.
Try different packages
You can take small risks and test the waters before creating full-fledged bundles. Use your observation and data to create value-driven bundles.
Try a combination of several different packages for different products, instances, and events, and continue with the ones that work the best.
You can also create a sense of urgency and captivate the eyes of impulsive buyers by introducing time-bound bundles and promoting them as deals and offers.
Additionally, do not forget to publicize the bundles across channels like social media, email, push notifications, and more.
Give preference to customers
Just like their phones, customers have now become smarter as well. Thus, modern day businesses do not have an option but to have a customer-centric approach.
Give importance to their value perception and make them feel informed and rewarded. You can also create customized bundles for your customers based on their activity and preferences.
Do not forget to keep your users informed of these deals and bundles, and take their suggestions and feedback on such offerings.
That was all about product bundling. Club your products together and make the most of this technique to increase your profits.
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