When it comes to marketing strategies for product pricing, one major trend in ecommerce is product bundling. This strategy groups together multiple products to sell as a package.
While this seems like a straightforward concept, there’s an entire psychology to the practice. A study from Harvard Business School showed that this tactic worked wonders for Nintendo. The brand sold bundles of video games and consoles, which sent sales through the roof. The tactic alone contributed to a spike of 100,000 units and more than a million in video game sales. However, the same study showed that when Nintendo only sold bundles of games (no individual consoles or games), sales plunged by 20%.
This example demonstrates that price bundling isn’t as straightforward as it might seem. Price bundling presents its own unique challenges, but the potential benefits could be worth the risk.
Here, we’ll discuss the ins and outs of product bundling, outline the advantages, and list some solutions to common challenges.
What Is Product Bundling?
The concept of product bundling is fairly simple: Rather than selling a single product per order, business owners can sell several items at once.
Essentially, product bundling allows you to group products together and sell items as a package with adjusted price points. For example: A skincare brand may sell individual items like toner, face wash and moisturizer. But to cater to specific customer segments, the brand could also group all three of those items together to sell as a set.
One great example of a brand doing this successfully is Saje, a retailer that sells essential oils and similar wellness products. The brand sells individual essential oils in bottle and roller form, but Saje is particularly successful at bundling products together into themed “kits.” While they may offer a roller version of their best-selling Peppermint Halo oil blend, they also sell it as a bundle for treating headaches, along with the Peppermint Halo Wand and the Stress Release Mist, in their “Headache Relief” kit.
Saje is just one business using product bundling to its advantage. Businesses across a variety of industries use this tactic to incentivize customers to purchase multiple products at once.
Why Retailers Bundle Products
Now that you have a better grasp on the fundamental concept of product bundling, we’ll take a look at the various reasons a brand would choose to group their items together to sell as a single unit.
To move slow-moving stock
Product bundling is a commonly used tactic brands use to sell stock that’s been sitting on the shelves for a while. If an item isn’t performing well, then it may pay off to reframe your customers’ perspective on its inherent value.
Ecommerce brands can pair slower-selling products with their best-sellers. Because of the high perceived value of your best-selling product, pairing them with more static items can help clear some of those cluttered shelves.
To introduce customers to new and relevant products
Product bundling can also provide a valuable service to your customers.
When you group relevant items together, you can make the shopping experience more seamless for your customers. If you’re a camera reseller, for example, creating a “starter bundle” for newbie photographers can ease the overwhelm they may feel when choosing their first digital camera and accessories.
However, the key is to understand what “relevance” means to your target customers. When you get some insights on your buyers’ motivations when they purchase your products, you can leverage it to bundle appropriate items with the primary product they want.
One ecommerce company doing this well is meal-delivery service HelloFresh. They sell pure bundles, or items that are only available in a bundle and aren’t sold separately.
Offering several bundle options (or meal plans, in their case), the company groups ingredients based on prominent customer segments: omnivores, vegetarians and families. Based on those segments, they create weekly recipe “bundles” that fit within each of their respective product groups. Each week, customers are exposed to new recipes and seasonal ingredients — one of the major value propositions of their service.
As an upsell tactic
Not only does product bundling offer businesses the opportunity to move aging products and introduce customers to new items, but it’s also an excellent upselling tactic.
Product bundling encourages customers to spend more per order. By grouping multiple items together in a lot and selling it as a unit at a slightly discounted price, customers see the bundle as a great deal. Essentially, you’re increasing the perceived value of the items by grouping them together while also increasing the units per order.
As marketer Neil Patel illustrates, Amazon expertly uses this tactic to upsell and cross-sell customers.
“Amazon is by far the best at the upsell. Amazon also effectively uses the cross-sell, which is when you recommend that your customer buys another product that complements their existing purchase, but usually from a different category, vendor or website,” says Patel.
Here, you see the upselling and cross-selling options Amazon offers when a shopper searches for the Canon PowerShot ELPH camera. The ecommerce giant shows shoppers relevant accessories for the Canon camera, including a camera case and memory card. The accessories are slightly discounted when the three items are purchased together, proving a good deal for customers and encouraging them to buy the bundle versus the three items individually.
3 Common Product Bundling Challenges (And How to Overcome Them)
1. Bundling the wrong products together
Not every brand gets bundling right on the first try. Grouping the wrong items together may have little to no effect on sales, which can be discouraging.
But before you group products together, establish a goal. Why do you want to use product bundling in the first place? Are you trying to move slow stock? Or perhaps you want to boost average basket size? Focus on a specific goal.
To get some ideas on which items to offer in a bundle, use Google Trends to identify products which have high search volume. You can also conduct a search on Google.com for your products and see which related searches appear at the bottom of the page.
2. Running out of one (or more) items in a bundle
Your inventory is finite — which means there’s often a risk of selling out of one or more of the items in any given product bundle.
One way to tackle this issue is to offer a variety of bundles for customers to choose from. Grouping different products not only offers customers more options, but also decreases your chances that you’ll run low on stock for any particular item.
Another option is to offer “pure” bundles — as in, the grouped items are only available for purchase as a package. You can’t buy the items individually. In this scenario, a seller would stock the same number of products equally for each bundle, so it’d be impossible to run out of a singular item.
Additionally, make sure your internal teams are on the same page. If marketing is in charge of establishing product bundles, they should be in close contact with your operations team. Otherwise, you run the risk of inaccurate forecasting, which leads to out-of-stocks. And that defeats the purpose of product bundling in the first place.
3. A diminished value for bundled products
When you sell products grouped together at a discount, the bundle might sell well. However, what happens if you try to sell those items individually at their regular price? Customers might not be as keen to buy those single items.
When customers see your product bundle and its corresponding discounted price, you change the perceived value of all of those products. They think: “Why would I buy those single items at $12 each when I get get both in a package for $20?”
This can prove to be a problem for brands that want to sell previously bundled items individually. However, there are a couple of ways to correct this issue:
- Only bundle products you don’t plan to sell again: If you sell out of products, you won’t need to worry about selling them individually at a future date.
- Only offer product bundles as a customer loyalty incentive: If product bundles are a perk for VIP customers, you won’t need to worry about perceived value. Your most loyal customers already understand the value of your products or services and will return regardless.
Moving forward with product bundles
Despite its challenges, product bundling is a tactic that presents plenty of opportunity. If you’re strategic and thoughtful about how you create and market your product bundles, this tactic can prove to be useful in moving static inventory and boosting your ecommerce business.