Product Bundling in E-Commerce – Benefits and Types

Posted By: editor
Posted On: 02 Dec, 2021

Wine with cheese. Microwave with ceramic bowls. Shoes with socks.

No matter how different, some things just go well together. Pairs like these are always perfect in our minds.

If you wonder what all this has to do with an e-commerce business, here comes the concept of product bundling.

Product bundling is a technique in which several individual products are sold together as a combined package at a lower price than if they were sold individually. This strategy allows e-tailers to persuade shoppers to buy more by offering the right suggestions. And, at the same time, it makes shoppers feel good about getting a deal by making the savings explicit.

Benefits of Product Bundling

For Customers:

  • Additional Perceived Value: Bundles increase customers’ perception of value and make them feel like they got a good deal.
  • Convenience: It decreases decision fatigue by presenting convenient, prepackaged options.

For E-tailers:

Engagement: Bundling is a proven way to drive more revenue and increase average order value.

Costs: Bundling enables e-tailers to sell more and decrease marketing and distribution costs.

Loyalty and Trust: Curated recommendations can enhance the relationship between the e-tailer and the customer.

Inventory management: It can help sellers better plan their inventory and clear out overstock or slow-selling products.

Let us take a closer look at what product bundling entails and the several types of product bundling strategies used in e-commerce.

Types of Product Bundling Strategies

Mixed bundling:

Mixed bundling is the most common type of product bundling. It is based on products that are oftentimes sold together based on historical order data. Shoppers can purchase one or two items individually, or opt to buy multiple products bundled together at a discounted price.

Pure bundling:

Pure bundling refers to the grouping of products that are only available when sold together. The problem with pure bundling is that it limits options for the customer to purchase items individually, which might lead to a dip in sales over time.

New product bundling:

In this technique, newly launched products are grouped along with existing or popular products as a promotion to help customers discover the latest product. The more well-received the existing product is in the market, the more it brings the buyer closer to the new product.

Same product bundling:

Same-product bundling is a great way to offer a discount when a customer orders multiple of the same product at once. Many direct-to-consumer (DTC) brands that sell essential or personal care products (e.g., toothpaste, paper towels, or hand soap) do great with this type of bundling strategy.

Cross-sell bundling:

In this technique, a complementary product is sold as an add-on to the main product. This technique works well with lower-priced items, or accessories or parts that go with a more expensive item.

Inventory clearance bundling:

In this bundling technique, a faster-moving item in the inventory is paired with a stagnant or slower-moving item to clear inventory space and decrease inventory holding costs. This method includes discounts on bundles so that shoppers who are interested in a top-selling item will see the whole bundle as a bargain and will be more inclined to buy it.

Which Bundling Strategy Works Better?

Although product bundling is effective, not all bundling strategies work the same. E-tailers must make sure to choose a product bundle option that works for them and continue to test. It can be as simple as one-time email promotion with A/B testing to see which bundle type works best.

Historical data also provides great insight into what items are often purchased together. It is good to review past orders and repeat purchases to see what customers typically try and/or purchase together. From there, e-retailers can strategically group items together that are more likely to generate more sales as a bundle.

Conclusion:

When it comes to branding and value perception, product bundling will provide e-tailers with a significant advantage. Bundling, when done right, increases revenue, grows cost efficiency, and improves AOV.

But, e-tailers must look at their data to understand the product combinations that provide maximum value, experience to the customers, and at the same time, offer maximum profits to them.

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