Here’s how to prove that 1+1=3.
Try bundling products.
Bundling products together into combo deals packs a serious punch for ecommerce merchants.
The results of product bundling equal much more than just selling a couple of products in one order. This single ecommerce strategy accomplishes many useful functions from increasing average order value, to building brand, to simplifying the customer shopping experience.
And here’s the bottom line: Bundling drives sales and profits. A study by the National Bureau of Economic Research found that product bundling can increase profits by up to 30%.
Product bundling presents a huge opportunity for brands as they expand their D2C fulfillment capabilities. But there are some serious – and potentially catastrophic – challenges if you don’t get it right.
How exactly does bundling work and what are the best practices for implementation? Here’s our complete guide to making product bundling an important part of your online revenue and brand-building strategy.
What Is Product Bundling?
In a nutshell, bundling means packaging together multiple products into a single product offering. Instead of a customer buying Item A and Item B separately, the seller groups and lists them together.
Let’s break this down with an example we can all relate to - the McDonald's Happy Meal. By putting together a burger, fries and a drink into one appealing package, McDonald's taps into our human psychology. We're programmed to seek value, so bundling delivers.
For brands moving into the ecommerce world – and especially brands expanding their D2C fulfillment capabilities – ecommerce product bundling offers a huge advantage over bundling in traditional, brick-and-mortar retail settings.
In traditional retail, to create a product bundle you would need to forecast potential sales, design and produce packaging to hold the combined product, get a unique UPC code for the bundled package, and ship the new product bundle to retailers – and perhaps even pay a slotting fee or other promotional consideration to get the product on the shelves and in front of consumers. All before actually selling your first unit.
In ecommerce, consumers expect the bundle to ship together – but not to arrive in a retail package together. So you can promote the bundled product on marketplaces and your website, then assemble the bundled product as orders are received. Without the need to forecast and assemble units upfront, you’ve cut a huge amount of risk from the equation. (Of course, you’ll need some forecasting upfront to ensure you have enough stock of each component of the bundle on hand to build orders – we’ll get to that in a bit.)
The Power of Ecommerce Bundling
So why has bundling emerged as such a popular strategy amongst top ecommerce retailers? What core functions make it so useful?
Drive Sales Growth
Bundling makes products seem more valuable, leading customers to spend more. Brands see larger order sizes and increased revenue as shoppers perceive better deals. Bundling also allows you to obscure individual product pricing so customers focus on the bundle value, not individual item costs.
Bundling also makes upselling and cross-selling easier. Cross-selling can significantly boost average cart size, particularly with high-ticket items like electronics, where customers might also need related accessories such as SD cards or travel cases. The bundling strategy allows retailers to blur the price lines of individual items, making upsells seamless and removing purchase barriers involved with consumers needing to click and add individual items to their cart.
Improve Inventory Turns and ROI
Savvy online sellers often create bundles from items that they also sell individually. This is especially effective when selling on Amazon and other marketplaces. Each bundle becomes a unique SKU with its own listing. More listings means more chances for shoppers to discover the products. That provides multiple opportunities to sell inventory – either as a single unit, as part of a multi-pack, or as a component of the product bundle.
Sell Slow-Moving Stock
Pairing stagnant inventory with popular products breathes new life into slow-moving items that are collecting dust and amassing storage charges and overhead in warehouses.
Holding slow-moving inventory incurs considerable costs including storage, facilities and manpower. By bundling slower-selling products with best-sellers, sellers can enhance the overall perceived value of the package, clearing warehouse shelves while generating additional sales.
This strategy is especially useful for moving perishable goods during peak seasons or clearing old inventory to make room for new items. However, success requires careful listing management and inventory planning to ensure stock levels to fulfill orders.
Increase Product Awareness and Encourage Exploration
Bundling encourages customers to explore products they wouldn't typically buy standalone, such as the inclusion of lash tweezers in a false lashes starter kit. This not only boosts product awareness but also increases the likelihood of repeat purchases of newly discovered favorites, enhancing customer loyalty and lifetime value. It’s also a great way to get new products in front of consumers who are searching for your more established products.
Boost Customer Loyalty
Offering product bundles can deepen customer engagement by allowing them to try multiple products at once. This broader exposure increases the chances of discovering other products they’ll love, encouraging repeat business and fostering a stronger connection with the brand.
One of our favorite examples of driving customer loyalty with bundles involved an Etail customer who sells spices. They realized they had a core of raving fans for certain spice SKUs. They also had a supply of aprons that were branded with their logo and used for trade shows, sales calls and employee gifts. They bundled a selection of spices with an apron. Not only did bundling increase sales with a high-ring SKU that wasn’t normal in the grocery business, but their hardcore fans also raved about their newly discovered “finds” in social media!
Inventory Challenges in Product Bundling
From an ecommerce operations perspective, product bundling is called “kitting”. In kitting, multiple products are combined into one shipping package to be sold as a single SKU. The products that make up the kit are called “components” or “children”. Since these components are often also sold separately, they each have their own individual SKUs. However, the bundled products are listed under a different, single SKU when sold as a kit.
Once a bundle has a sales track record, a supply of kits may be prepared beforehand to cut fulfillment time or take advantage of slow days in the warehouse by having packers produce kits. But often kits are prepared as the order is received. That’s the least risky, most cost-effective approach. And that’s where the challenges lie.
Kitting adds complexity because sellers must ensure that all kit components are available when the order arrives to produce the kit. But remember, often these same components are sold as individual units or as multi-packs. And, to make things even more complex, the single units, multi-packs and bundles may be sold across multiple marketplaces and sales channels – each with their own way of reporting sales and other critical data for forecasting and inventory replenishment.
And the consequences for getting it wrong? Overstocks. Stockouts. And, in the case of marketplaces, penalties include losing product rank or even being banned from listing.
You don’t want to go there.
Successful product bundling demands a seriously powerful ecommerce platform.
For example, the Etail platform was designed for high-volume sellers, selling across multiple sales channels, with products sourced from multiple suppliers, and leveraging large product catalogs to produce the most profit possible from each sale.
So Etail’s bundling technology includes:
- Single Item Master SKU: Etail collects and normalizes data from all sales channels and suppliers – no matter how the component is sold, packaged or reported – into a single master SKU that is used for forecasting and inventory management. No more struggling to sort out data on individual packages, multi-packs or components. Etail ensures inventory accuracy no matter how products are packaged, kitted or bundled.
- Automatic Updates: When a component is sold, Etail automatically performs a unit of measurement conversion to deduct the right number of “eaches” from available inventory, adjust inventory across all SKUs using the component, and even can issue a purchase order to replenish inventory if the component comes from an external supplier.
- Inventory Aware Listings: Etail then adjusts the inventory allocated to each channel as the components are sold – either as individual units, multi-packs or as part of a bundle. When inventory is not available to fill a potential order, Etail pulls down the listing. When inventory is replenished, Etail relists the bundle SKU.
- Real-Time Reporting: Data drives successful bundling. Etail provides consolidated reporting across channels to review order, sales, cost and profit data by SKU – including individual units, multi-packs and bundles.
Getting Started with Product Bundles
A successful ecommerce product bundling strategy involves more than just combining components on listings and tossing them in a box when you get an order.
You'll want to tailor offerings to different customer segments and purchasing occasions. Make your bundles feel curated and purposeful, not just a random mashup of stuff. Think through what someone would logically need and use together. Appeal to specific interests and needs. Take advantage of promotional opportunities. And recognize that it will take some testing and tweaking to get the mix right, but the payoff can be huge in the form of more sales and happier shoppers.
Here's how to get started:
Research Shopping Habits
If customers frequently purchase product A along with product B, that's a sign that the products complement one another and may make an attractive bundle. Identify these natural affiliates and always have relevant bundles available. You can take the guesswork out by letting data guide your bundling decisions.
Identify Promotional Opportunities
Consider creating bundles for…
Targeting Major Shopping Holidays: Limited-time bundles feel special during peak spending cycles like the winter holidays, Valentine’s Day, Halloween or back-to-school season.
Creating Gift Bundles: These bundles are aimed at shoppers who want to give an all-in-one bundle of products together as a gift. This type of bundle is often sold during holiday seasons or to mark a special occasion like an engagement, anniversary or milestone birthday.
Rewarding Super Fans: Target your most loyal users (and others searching for the perfect gift for their fanatic loved ones). Remember the spice brand that included a branded apron in their bundle? Here’s your chance to include branded SWAG and tchotchkes to reward your most loyal fans.
Marking Limited-Time Events: Changing seasons and category-specific peak seasons such as spring clean-up, summer vacations or winter prep all allow for time-limited bundles that generate excitement.
Leveraging Slow-Moving Inventory: Give languishing items new life by bundling them with more popular products. Judicious markdowns make bundles extra enticing while still maintaining profitability.
Highlighting New Products: Combine new products with tried-and-true sellers to expose them to your loyal customer base.
Providing Subscriptions: Subscription boxes provide a foundation for ongoing bundled curation of must-have items for loyal customers. This is the ultimate bundling strategy – a product customers automatically “order” time after time.
Communicate Deal Savings
Do the math for customers. Emphasize the enhanced value from bundled pricing compared to buying individually. But don’t make it all about price. Remember: 1+1=3. The value of a bundle also lies in the combination of the products that are included. What can they do with the bundled products that they wouldn’t be able to do with a singular product?
A/B Test Product Combinations
You probably won’t get your bundles right the first time. Use A/B testing to identify which product combinations work best together. Think of it like solving a puzzle; you need the right pieces. How do you find them? By testing different pairings, you can spot the winners.
Keep Bundles Simple
It can be tempting to create multi-item elaborate bundles just to attract more customers, but this strategy can often backfire. Overwhelming customers with complex bundles can turn them off. Instead, keep bundles simple. The simpler your bundles are, the easier it is for customers to recognize the value and choose which one is the right fit for them.
Mastering product bundling is a game-changer in ecommerce, offering more than just increased sales—it's a strategy to enhance inventory management and deepen customer relationships. By skillfully combining products, brands can unlock significant growth, clear slow-moving stock, foster loyalty and introduce customers to new favorites
But bundling is not without its challenges, particularly in inventory and fulfillment. Effective bundling requires a thoughtful approach, balancing customer value with operational efficiency.
Consider implementing bundling as a key part of your ecommerce strategy and watch as it transforms your online presence, driving both revenue and brand loyalty to new heights.
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