If there’s one thing consumers like is a discount. Who doesn't like saving money on a purchase? Last year, 93% of Americans used one. And when they do, they spend 24% more than shoppers who don’t use them.
Discounts may be great for consumers, but they can lower your profit margins — many times unnecessarily so. For ecommerce stores that want to compete beyond price, discounts must be used strategically, like in a product bundle.
If you want to learn more about product bundling, how to create one, and how you can use them, this article is for you.
Let’s get started.
What is product bundling?
Product bundling is a promotional strategy where an ecommerce retailer sells a group of two or more similar products under one SKU at a lower price than if the products were purchased individually.
Bundling products together has two crucial effects on the buyer’s mind:
- It increases the perceived value of the bundle (if the products are well-chosen), as a set of products can fulfill their purpose better than when bought individually
- It motivates a purchase by discounting the products
By selling a group of products together, the retailer increases the average order value (AOV), despite the discount. In other words, you sell more and generate a higher profit even if the margin is lower.
As a side benefit, purchasing a bundle can help a buyer reach the minimum shipping threshold. By removing the shipping costs, buyers are further inclined to buy their chosen bundle.
How to bundle products effectively
Product bundling isn’t a matter of how you do it (although we’ll explain more on that later) but what products to promote in a bundle. According to one research paper, simply because you bundle many products together doesn’t guarantee higher conversions.
Putting together an expensive item, like a $3,000 fitness machine with a $29 fitness book, can decrease the perceived value of the bundle due to a heuristic the researchers called “categorical thinking.”
People naturally tend to classify products as either expensive or inexpensive, and this categorization influences how they judge products.
When an expensive item is bundled with an inexpensive one, people categorize the bundle as less expensive, and this lowers their willingness to pay for it.
If I tried to sell you a Ferrari and told you it comes with a free box of chocolates, you’d laugh at my proposal. It would seem odd and even desperate. But if I told you that you get a 10% discount on the seating leather of your choice, that’d be appealing because it's relevant.
The researchers explain that it’s crucial to bundle products of similar price and value.
In the case you decide to set up different products of disparate prices (e.g., a TV with a discounted HDMI cable), make sure you establish the value of each product first, especially the most expensive one.
You can present the less expensive items as “add-ons” or free gifts, as in a “Buy One Get One” (BOGO) offer. However, unless you want to get rid of inventory, it’s much better to sell the less expensive items instead of giving them away.
According to a research paper, “when a product is given away “free,” then consumers are willing to pay less for it as a stand-alone product, especially when the original promotional offer does not include the price of the free gift.”
Another study found that when you want to sell more of the higher-priced product, a free-gift bundle works better; when you want to sell more of the supplementary products, a “pure bundle” approach is superior.
How to pick the right products to bundle
Ideally, the products should complement one another, much like cross-sells (except that the bundled products are discounted, as you already know). This point alone doesn’t help much because to create a bundle, you need to take a deep look at your historical data, stock, and profitability.
The first part is common-sense for marketers: nothing creates better decisions than looking at what customers like to buy together. In this sense, a bundle reduces the friction from a purchase.
However, you also need to look at the current stock levels for the products you plan to bundle and their profitability on an SKU level.
You should expect higher sales for the bundled products, but can you handle the increased sales volume?
What's more, what are your current margins for the bundled products? There’s no right or wrong number to aim at, but you must factor in the reduced profits for each bundled product. If your financial model can handle it, go for it. Otherwise, look for another way to increase your sales, like in a traditional cross-sell.
How to sell your bundles
Product complements (mixed bundles)
In a mixed bundle, you sell products that complement one another. This is the most simple and common type of bundle online retailers use. Since it works exactly like a cross-sell, you can use one when trying to get rid of inventory or during a seasonal sale.
To create a mixed bundle, find one product that has shown to sell well with another one, such as a bed frame with a mattress. As explained earlier, look at your data to find the right products to match before deciding on one.
Another common option is to give a discount when buying in bulk. The logic behind the discount is that a bulk order takes advantage of your economies of scale, which benefits both the consumer and the retailer.
Bulk bundles work best for:
- Low-ticket products: It’s easier to sell in bulk when the price of the product is low, such as a shoe retailer that sells socks.
- Recurrent purchases: Food, dietary supplements, and beauty products usually fall in this category.
A pure bundle is when you sell a product only when it’s sold in a bundle. The product’s scarcity can increase its appeal along with the rest of the bundle.
Usually, pure bundles are ideal for accessories and add-ons or products that few people buy alone. For example, if you run an eyewear store, you could offer a premium cleaning cloth for a few dollars.
Buy One, Get One (BOGO)
A “Buy One, Get One” bundle is quite popular due to the predilections consumers have to get free gifts, especially during sale promotions and the holiday season.
As explained earlier, a BOGO bundle works best if you want to sell more of the lower-ticket product. Otherwise, you risk lowering the value of your bundle.
However, if you want to get rid of inventory, or if you have found a particular product to work best when sold through a BOGO offer, go for it.
Promoting your product bundle
The first and most crucial place to promote your bundles is on your product pages. They should be placed below the product photography and near or below the description, close to your cross-sells, if you have any.
The same rules that apply for positioning a cross-sell apply for bundles. That includes promoting your bundles as:
- Products other customers liked
- A special recommendation
- A “Match the look” recommendation
- A one-time offer
- A time-sensitive offer
If you want to kick your bundles up a notch, show them with the help of a popup and slide-in. With the help of a tool like Getsitecontrol, you can show a bundle that consumers can add to their carts right away.
Another place where you can promote your bundles is on your social media accounts. Whether using a Pinterest board, a Facebook group or fan page, or Instagram, it’s up to you. Anywhere where you have an engaged following is an excellent place to try.
The image and description you use on your post should show the bundled products and the discount the shoppers will receive. Describe the products in the bundle and explain clearly the benefits of the discount. If you are offering the bundle due to a sale or seasonal campaign, mention that as well.
Finally, don't forget to add a link to the product page to make it easier for your followers to buy it (even though the example above doesn’t follow that advice).
For those retailers that want to make the most out of their bundles, paid ads never disappoint. The same points you saw in the previous section apply to ads. The only difference is that you are paying to boost the reach of your posts.
You can run a paid ads campaign on whatever social platform where you have the largest following. Facebook and Instagram are the most common choices due to their advanced targeting options. However, don't discount Pinterest or even TikTok.
If you aren’t experienced in paid ads or have a small budget, it will make the most sense to leverage a custom audience. With a custom audience, you will target people who have visited your site or even purchased in the past.
Although most ecommerce platforms don’t provide an easy way to create and promote product bundles, however, for platforms like Shopify and Bigcommerce, there are dedicated apps that can help you do it without coding.
For instance, Shopify doesn’t allow merchants to create bundles, but many of the apps in its marketplace do. Although we haven’t personally tested them, the following product bundling Shopify apps seem to have great reviews and popularity:
If you’re using (or planning to use) popups in your store, Getsitecontrol popups can also be a solution to promote bundles and let customers add bundled products to cart.
To close this article, remember that product bundles aren’t a standalone tactic to try. Instead, you want to use them along with upsell, cross-sells, and other AOV-increasing tactics .
Go deep into your analytics to find the right products to bundle and discount the products while respecting your margins. Make the discounts work in your favor, and you will be on the road to success.
Ivan Kreimer is a freelance content writer for hire who creates educational content for SaaS businesses like Leadfeeder and Campaign Monitor. In his pastime, he likes to help people become freelance writers. Besides writing for smart people who read sites like Getsitecontrol, Ivan has also written in sites like Entrepreneur, MarketingProfs, TheNextWeb, and many other influential websites.
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You're reading Getsitecontrol blog where marketing experts share proven tactics to grow your online business. This article is a part of Ecommerce marketing section.