What is Product Bundling? Strategies, Tips & Examples

Introduction

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How can you boost your sales and stay ahead of the competition?

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Many online retailers, like Amazon, harness product bundling, with the latter attributing up to 35% of its revenue to its "Frequently Bought Together" recommendations.

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This comprehensive guide will dive deep into what product bundling entails and how it can be harnessed to your advantage.

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1. Top 7 strategies to maximise sales with product bundling

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1.1 How product bundling works

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Product bundling is a marketing strategy where two or more products or services are combined and sold together as a package.

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The bundle can be offered at a slightly discounted price compared to purchasing each item separately, thus incentivising consumers to opt for it.This approach offers several advantages, both for businesses and consumers, making it a powerful tool in the world of sales and marketing.

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1.2 Differentiating bundle types for success

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Pure bundles

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Pure bundling involves offering products exclusively as bundled packages, meaning customers cannot purchase the items individually. This strategy encourages customers to buy the entire package, often at a discounted price.

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New product bundles

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When launching new products, businesses can create bundles that include these items, allowing customers to explore the latest offerings while enjoying a value-added deal.

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Makeup brand Fenty Beauty, founded by Rihanna, often introduces new makeup or skincare and limited-edition products in bundles.

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For example, the “Prime + Set Essentials Instant Mattifying Set” includes its primer and mattifying powder. This not only promotes new products but also incentivises customers to try multiple items at once.

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Mixed bundles

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Mixed bundling, also known as custom bundling, gives customers the choice to buy a bundle or individual items. You can encourage bundle purchases by offering them at a lower price than the combined cost of individual items.

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This way, some customers get a discount on specific items, while others pay the full price for what they choose not to bundle. This approach provides flexibility and a sense of personalisation.

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Unbottled, a solid-cosmetics brand, offers its three best-selling products in a bundle smartly called “Trio Bye Bye Plastic” that includes a shower soap, a shampoo and a face wash.

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Research indicates that mixed bundling is particularly potent, while pure bundling has been found to decrease sales by more than 20% in comparison to mixed bundling.

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Cross-sell bundles

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Cross-sell bundling involves pairing products from different categories or brands, encouraging customers to explore a wider range of offerings.

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One of the most successful examples of e-commerce bundles is Amazon’s “Frequently Bought Together” type of bundle that displays relevant additional items on the product page, based on what a customer is browsing. Amazon attributes up to 35% of its revenue to these types of deals – a hefty chunk indeed.

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Gifting bundles

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Gifting bundles are curated with the intention of being given as gifts, often featuring corresponding items or themed assortments.

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Skincare brand, Horace, created a “Skincare Gift Set” for the holiday season that includes their best-selling products, making them ideal gifts!

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Inventory clearance bundles

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When businesses need to clear out excess inventory, they can create bundles that include slow-moving or surplus items, providing customers with significant discounts.

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Clothing retailer ASOS often offers clearance bundles of clothing, shoes, and accessories from past seasons. By bundling these items together at a reduced price, ASOS can clear out older inventory while offering customers a great deal.

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Buy-One-Get-One bundles

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Buy-one-get-one (BOGO) bundles involve offering a free or discounted product when a customer purchases another item, encouraging them to buy more.

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As in the words of Dan Ariely, the author of Predictably Irrational, "Zero/free is a source of irrational excitement; it’s called the 'zero price effect.'"

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Explore these BOGO variations:

1. Percentage discount: Customers receive a percentage off the second item when they buy the first at full price. For instance, enjoy 50% off the second item.
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2. Value reduction: For example, get $5 off the second product when you buy the first at the regular price. Common in clothing, beauty, and hardware.
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3. Buy X Get Y: Customers receive a free product when they purchase a specified number of items, like the classic "buy 2 get 1 free."
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4. Free samples: Brands offer complimentary samples when customers buy any product, particularly effective for introducing new product lines.
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5. Free gifts: It encourages purchases, receiving a free gift when buying a set of items is a common practice in cosmetics.

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France's leader in Nutricosmetics, Lashilé Beauty, includes free gifts depending on the bundles you buy. For example, for three months, you can get a free pouch or for 6 months, you also get a free bamboo brush.

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2. The advantages of product bundling

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Increase sales

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Product bundling can significantly boost sales. The greater the number of products a customer purchases in a single transaction, the greater the average order value (AOV) they will have at the checkout. This can lead to substantial revenue growth.

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Enhance customer value

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Customers appreciate the convenience and value that bundled products offer. They can get everything they need in one go, saving time and effort. This enhances customer satisfaction and loyalty.

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Competitive advantage

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In a crowded marketplace, product bundling sets your business apart from the competition. It showcases your creativity and ability to cater to the diverse needs of your customers.

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Inventory management

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Bundling can help manage inventory more efficiently. It allows you to sell slow-moving products by pairing them with popular ones, reducing the risk of overstocking.

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Cross-promotion

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Cross-promotion is inherent in product bundling. When one product in a bundle gains popularity, it can boost the sales of other items included in the package.

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3. The disadvantages of product bundling

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Loss of individual sales

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While bundling can increase overall sales, it may lead to a reduction in individual product sales. Some customers may only be interested in specific items.

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Pricing challenges

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Determining the right price for bundles can be tricky. Overpricing can deter customers, while underpricing may reduce profitability.

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Complex inventory management

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Managing inventory for bundled products can be more complex, as you need to ensure all components are available when needed.

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Consumer confusion

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If not done correctly, bundling can confuse customers, making it challenging for them to understand the actual value of the offer.

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Customer resistance

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Some customers may resist bundling, especially if they feel forced into buying items they don't need, which can result in negative customer experiences.

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Reduced profit margins

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Depending on how you price your bundles, profit margins on individual items may be lower than if sold separately.

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4. Implementing effective product bundling

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To maximise product bundling's potential and drive business growth, adopt a flexible and informed strategy.

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4.1 Know your audience

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Thorough market research is key to understanding your customers. Use your CRM data, surveys, and social media analytics for a comprehensive view.

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Actionable tips:

• Segment your audience based on demographics and buying behaviours.
• Study past sales data for purchasing patterns.
• Gather feedback through surveys and monitor social media for product discussions.
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4.2 Choose related products

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Successful bundling comes from combining products that complement each other, offering greater value together.

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Actionable tips:

• Examine purchase history for commonly paired products.
• Use A/B testing to find resonating product combinations.
• Pair popular items with complementary accessories.
• Update bundles regularly based on customer preferences.
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4.3 Pricing strategy

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Ensure bundle pricing offers notable savings compared to buying separately, enhancing its appeal.

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Actionable tips:

• Calculate bundled product prices and set a suitable discount.
• Provide tiered pricing options catering to various budgets.
• Apply psychological pricing, like ending with "99" or "95".
• Offer time-limited promotions to boost sales.
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4.4 Marketing and promotion

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Promote bundled products effectively, showcasing their unique value.

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Actionable tips:

• Design dedicated bundle landing pages with quality images and descriptions.
• Use email marketing for tailored bundle promotions.
• Share customer testimonials and unboxing videos on social media.
• Partner with niche influencers to promote your bundles.
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4.5 Monitor and adapt

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Stay agile by continually assessing bundle performance and adjusting based on feedback and trends.

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Actionable tips:

• Use KPIs to evaluate each bundle's success.
• Refine strategies with A/B testing.
• Take onboard customer feedback for improvement.
• Keep track of market trends and competitors.
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Conclusion

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A product bundling strategy can be your secret weapon for boosting sales and staying ahead. Understand your audience, choose smart product pairs, and strategise effectively to gain a competitive edge.

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Follow these tips and a customer-focused approach to master it and achieve lasting e-commerce growth. Happy bundling! 🚀🛍️

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