When it comes to bundling, we mostly tend to think of a set of 5 t-shirts or a yoga bundle with a few products.
Ever thought of a bundle of t-shirts and a digital style guide? Or a yoga bundle with a yoga mat, bag, and a yoga app subscription?
Digital and physical product bundling is not new. But it is not common either.
While some brands have figured out how to create exciting digital and physical bundles to increase average order value (AOV) and sales, many brands struggle to launch such bundles.
If you’re a Shopify brand that’s looking to offer digital and physical bundles or are wondering how to enhance your existing phygital bundles, read this blog for strategies, tips, best practices, and more.
Benefits of digital and physical product bundling
A bundling strategy focused on combining digital and physical products can not only make your bundles stand out from the crowd and increase consumer interest, it can also be a revenue model that helps grow the AOV and profits. Whether you sell digital on Shopify and want to add physical products to your bundle or the other way around, here are the benefits along with tips:
1. Increases average order value
One of the most significant advantages of bundling is it increases the average order value (AOV). When customers end up buying more than just one product, it has a direct impact on the order value.
Expert tip: Bundle compatible digital and physical products that make customers’ life easier. Make it a bundle that solves problems, increasing its sales potential and AOV.
2. Increases sales and revenue
Bundling physical and digital products together offers upselling and cross-selling opportunities, leading to increased sales and revenue. Upselling and cross-selling bundles also leverage customers’ interests, making it easier to drive sales.
Expert tip: Make it easy for customers to understand the bundle value, how much they will save, and how the products complement each other.
3. Better inventory management
Using an efficient Shopify bundling app can help maximize automation and AI-based inventory management. Bundling physical and digital products requires the inventories of both these products to be in sync. Inventory management teams can
Expert tip: Integrate a smart Shopfify bundling app that has features such as multiple bundle types, automated discounting, marketing and communication features, data analytics, real-time analytics, among others.
4. Enhances search visibility
Bundling two types of products — digital and physical — increases search visibility. For instance, people searching for one of the products will end up discovering the other product and more, via the bundle. This increases the number of people your product listing reaches.
Expert tip: Come up with creative product pairings and clearly explain how the two complement each other. Don’t leave customers confused or wondering how to use the two together.
5. Increases perceived value for customers
When customers get to buy two or more necessary products as one bundle at a discounted price, its perceived value increases. Price sensitive customers look for more than just low prices. They pay more attention to value.
Consider value-based pricing, dynamic pricing, and other strategies focusing on delivering value rather than simply offering the lowest price. Contrary to popular belief, price-sensitive shoppers often look for value rather than the lowest prices.
Expert tip: Experiment with value-based pricing, dynamic pricing, and other strategies when offering bundle discounts.
6. Reduces decision fatigue for customers
When you pair a digital and a physical product that enhance the functionality and usability of the other, customers are bound to feel impressed and satisfied. Paying less than what they would pay if the products are purchased individually, is a key factor in speeding purchase decisions.
Expert tip: Clearly present all the plus points of the bundles, such as comparative price benefits, use cases, and how it will change the customers’ life.
Here’s an example of an innovative strategy for digital and physical product bundling. A graphic novel that comes in both digital and physical form, combined in a bundle. While the digital version gets released first, the physical version is shipped to customers at a later date.
Strategies for digital and physical product bundling
Combining physical and digital products in a bundle is more than just putting together two or more items. Here are the different strategies you can use to meet different business goals.
1. Bundling complementary products
This is one of the most common thought processes when developing bundles. Pairing products and services that are complementary naturally increases the bundle’s utility and perceived value.
For example, smartphones are bundled with digital products or services, such as cloud storage or streaming services. This enhances the capability of the physical product (smartphone) and solves one of the most common problems, lack of storage.
Another example of digital and physical product bundling that complements each other is a physical fitness equipment bundled with workout apps, and nutrition apps.
2. Bundles with experiential components
Based on the industry and product type, you can even create bundles that offer experiences, not just digital components that enhance utility. Adding experiential elements can create emotional connections and engagement opportunities.
For instance, luxury brands often bundle digital elements, such as behind-the-scenes access, personalized digital experiences, exclusive content, bundle ebooks with products, and one-on-ones with celebrities with physical products.
3. Convenience and efficiency bundling
Many times customers experience limitations with products. As a solution, they may have to buy digital products that make it easier to use the physical product. Thus, bundling for convenience and efficiency makes customers’ lives easier.
For instance, software companies bundle hardware with software that is pre-configured for use with the physical hardware. This also removes technical complexities. Moreover, customers do not face the difficulty of looking for the right software and making separate purchases.
Here’s an example of a physical and digital bundle. The Bose Sound Bar is a physical product that can be operated with the digital app
Digital and physical bundling best practices
To ensure maximum returns and engagement, here are some best practices and tips to apply to your eCommerce hybrid bundles.
1. Pricing bundles strategically: Convey clear value proposition through your bundle pricing. Ensure profitable margins for your Shopify store.
2. Implement tiered bundling: Allow customers to choose from different tiers based on their requirements for physical and digital products.
3. Integrate digital and physical product fulfillment: Coordinate physical inventory and digital delivery systems. Create a system that ensures both digital and physical elements are delivered based on customer expectations.
4. Having backup alternative products: When one component of a bundle becomes unavailable, you should be able to offer an alternative or modify the bundle to ensure customer satisfaction.
5. Communication and onboarding: Communicate the real value of the bundle to customers so that they know how to maximize the usability of the bundle. Explain physical product set up and digital activation while onboarding customers.
6. Using data analytics: Track and analyze which digital and physical product bundling strategy is working. Track various metrics such as customer satisfaction score, customer lifetime value, etc.
Digital and physical bundling industry wise use cases
In this section, we explore how various industries are applying digital and physical bundling strategies to maximize sales, engagement, and customer satisfaction.
Technology
Technology and electronics brands can easily create digital and physical product bundles. For example, every physical electronic product can be paired with a complementing software that enhances the purchase value for customers and for the brand. Moreover, such bundling can also create a recurring revenue potential for brands, as customers may need to upgrade the software or digital elements.
Examples of digital and product bundles:
- Gaming console bundled with game subscriptions, digital content, etc.
- Smartphones paired with cloud storage, streaming services
- Kindle bundled with ebook subscription
Fashion
Fashion products such as clothes and accessories can be bundled with digital styling services, stylings apps, and virtual fitting technologies. Such bundles not only increase engagement but also increase the potential for offering personalized experience to customers.
Here’s what you can bundle:
- Curated subscription box service including physical products and digital styling advice
- Physical products with digital fashion magazine subscriptions
Health and wellness
One of the industries that leverages bundling well is the health and wellness sector. Brands offer lifestyle solutions via bundles, such as fitness equipment with nutrition or progress-tracking apps, coaching sessions, etc. This helps increase recurring revenue.
Here are a few examples:
- Fitness equipment with nutrition apps, workout tracking software
- Health supplement subscription with health tracking app
- Bundle ebooks with products
Education
Bundles for education, training, coaching can include physical books, ebooks, progress tracking apps, certification tracking systems, and more. Education digital and physical product bundling creates a more engaging experience for learners, students, and teachers.
Here are some examples to create education hybrid bundles:
- Physical books and papers with digital learning apps and tools
- Physical products with digital tracking systems, apps, and tools
- Books with online courses, mentorship programs, and digital resources
Wrapping up: How to set up digital and physical product bundling on your Shopify store?
Depending on your product type and industry, you can set up digital and physical product bundles on your Shopify store by trying out various strategies, discounting methods, and bundling options.
However, start with one or two such bundles, rund A/B tests, monitor their performance, optimize, and then take your bundling strategy forward.
By using smart Shopify bundling apps, you can easily launch and manage your physical and digital bundles. Also, real-time analytics features in the bundling apps can help take bundling strategy in the right direction.
If you’re looking for a smart bundling app, you’re in luck with Appstle Bundles & Discounts. The app offers comprehensive features to set up, manage, and optimize bundles.
Install Appstle Bundles & Discounts App on your Shopify store today.
