Personalized product bundling is an excellent and popular way for most eCommerce merchants to sell more products and steadily increase their profits. The world of eCommerce has already become highly competitive, and businesses continuously look for ways to improve sales and customer satisfaction. Product bundles are an inevitable part of effective strategies that offer multiple products together at a discounted price.
These personalized product bundles increase average order value (AOV) and improve inventory turnovers to provide customers with a better shopping experience. Now, this guide further explores the different types of product bundles, their benefits, and the different ways to implement them successfully in eCommerce stores.
Understanding Product Bundles
Product bundling is the process of selling several individual goods together as a combined package at a lower price than those sold individually. Common examples of product bundles are beach kits, value meals at restaurants, or shampoo and conditioner sets.
When thinking of product bundling, we usually think about direct-to-consumer sales from a single brand or label. However, personalized product bundles also come into play when resellers shop for various goods to display on online marketplaces like Amazon. These popular marketplaces can easily suggest bundles for businesses to create on their site. Then, the resellers can place their respective product bundles in separate posts from the original product listing.
Types of Product Bundles
There are many different types of product bundles and their associated strategies for businesses, each of which comes with its own benefits. These are:
- Gift bundles are popular product bundling strategies in which brands can sell multiple complementary products at the same time. It means the same product can act as a gift set and is particularly efficient during the holiday season.
- Buy-One-Get-One (BOGO) bundles allow businesses to sell two products in conjunction, with the second product discounted or free. These bundles usually apply to frequently used items that allow customers to stock up or incentivize buying one-time purchase items with complimentary products.
- Mix-and-match bundling (or mixed bundling) allows customers to choose the specific products they wish to bundle from a category of similar items. Popular examples of these personalized product bundles are meal deals or clothing sales.
Benefits of Product Bundles
Personalized product bundles are effective pricing strategies as well as a compelling way to upsell and cross-sell different types of products.
Let’s take a closer look at some of the top benefits of leveraging product bundles, all of which can have a positive impact on businesses and their bottom line.
1. Generate More Sales
Every customer has an amount in mind that they are usually willing to pay for a product. Here, the primary difference between that price and what the person pays is called the consumer surplus. Product bundles are an excellent effort to capture the maximum amount of this particular surplus, making customers feel like they’re getting products as per their requirements, all while making their buying journey much easier.
However, it’s not just consumers who benefit from personalized product bundles. Several retailers can also reap the benefits of individual products being packaged together. That’s because customers are more likely to spend more upfront with product bundles than when purchasing items over an extended period and from multiple marketplaces or locations.
Most often, the push for omnichannel retail feeds this purchasing behavior, and it always comes at a cost for brands, who have to pay for retargeting emails and ads to bring them back to their online store.
Bundling also helps businesses increase sales revenue by improving the average order value (AOV), a key metric for the success and growth of a particular company. Bundling strategies also boost total revenue by increasing the AOV and the total amount spent on each transaction. This is because multiple items will still cost more than a single product, and this applies even when promotional price points are in effect.
2. Save on Marketing and Distribution Costs
Product bundles can save businesses a great deal of money on marketing and distribution. That is because a key component of any personalized product bundling strategy is receiving a higher initial return on the cost of acquiring a customer. Similarly, companies that specifically implement bundling worry less about product returns or customer retention. When a larger purchase is made on one visit to your site, it automatically eliminates the pressure to draw customers back to whatever items remain in their cart.
When done correctly, personalized product bundles also keep inventory moving at a steady rate instead of becoming obsolete or sitting stagnant and unsold in warehouses. Products whose sales have slowed can get a boost when paired with excellent, sales-driving items. Later, businesses can also develop bundle pricing to increase the appeal of the newly paired items while improving their inventory turnover ratio.
Another relevant approach is to package certain quantities of dead stock at a lower price. This may still turn into profit across multiple instances. Moreover, if a product bundle is exclusively available to customers who’ve purchased the product earlier, it also increases the desirability of those goods and speeds up inventory clearance to create valuable storage space. Retailers who offer package deals may run out of the bundled products at the same time, restocking, making reorder point calculations, and general inventory management more straightforward.
3. Simplify the Customer Experience
Product bundles are a practical way to simplify customer experiences. Customers can easily choose products or services that have been categorized with their needs in mind. This satisfaction increases further when they’re able to remove, add on, or edit products from the same base bundle.
Product bundling can overcome challenges associated with decision-making. While customers often appreciate having choices, too many options can make them feel overwhelmed. Online retailers who set up customized recommendations with the help of product-consumer matching algorithms can direct these customers toward the types of products they would be likely interested in. This tactic relieves buyer fatigue and helps businesses close the sale at the same time.
Bundled offers further help customers to better understand products, since they’re likely to review each item within the collective packages. Customers have increased confidence in their purchase with this knowledge because they feel more invested in the decision and control of their purchasing power.
Bottom Line
Product bundles are highly effective because they encourage customers to buy more items by combining them at a reduced total cost. These strategies easily enhance customer perception of value, increasing sales and reducing marketing and distribution costs. By offering personalized product bundles, businesses can also introduce new products or clear older inventory by pairing them with some of their bestsellers.