Forrester’s research states that upselling and cross-selling contribute to around 10–30% of eCommerce revenues. Interestingly, product bundles significantly increase Average Order Value (AOV) by 20-30%, as customers spend more per transaction when they perceive a better deal.
Customers that leverage product bundles have 2.7x higher lifetime value (LTV). This is because they are usually introduced to a broader range of products, increasing the likelihood of repeat purchases.
Okay, that’s interesting. But what are e-commerce product bundles? What are its benefits and do you set them up on your Shopify store? In this blog, we’ll discuss all this and more.
What is Product Bundling?
Product bundling is an e-commerce marketing strategy where multiple complementary products are sold together in a single package.
It’s a win-win situation: customers get more value, and companies earn higher average order value (AOV) while exposing their range of products to buyers.
Common examples of product bundling include meal combos in fast-food restaurants, beach kits with frisbees and towels in one bag, or shampoo and conditioner sets.
Some brands only offer certain best-sellers as part of bundles to encourage customers to try other items. This works well for catching both the scrollers and the shoppers.
There are different types that product bundling can take such as upsells (offering a premium version) or cross-sells (suggesting related items). This can be easily implemented using Shopify apps like Appstle Bundles that provide merchants with tools necessary for effective execution so businesses can create attractive packages that make sense from a customer perspective thereby improving sales on their online store.
Benefits of E-Commerce Product Bundling
According to McKinsey, 35% of all Amazon purchases come from the product recommendation section, which often includes the “buy it with” bundles.
Product bundling is a great way to grow your business and give customers something they can touch. The key is to find the right mix of products that will benefit both parties involved – this means more sales for you and better value for them.
Benefits of product bundles for customers
- Cost Saving: Usually product bundles deliver better worth than buying single units.
- Convenience: Buying several related things at once saves the time and energy required rather than making separate purchases for each item.
- Simplified decision-making process: Pre-assembled sets help reduce the paradox of choice which often leads people to make no decision at all due to being overwhelmed with so many options available in the market.
- Product discovery: Customers get introduced to other items that they may not have thought about before but which go well with what they are already buying or using.
- Enriched experience: Some bundles can solve more customer problems than individual parts would do separately thus giving them complete satisfaction in terms of meeting their needs fully as identified during the purchase process analysis stage.
- Value perception: Even without significant discounts, bundles can create a perception of getting more for your money.
- Gift-buying ease: Bundles simplify gift shopping by offering pre-selected combinations suitable for various occasions.
Benefits of product bundles for business
- Sales and revenue growth: This marketing strategy can put more goods in the hands of customers thereby increasing overall sales volume. According to a study by the National Bureau of Economic Research, product bundling can increase profits by up to 30%.
- Higher Average Order Value (AOV): By combining multiple products, businesses can increase the amount spent per transaction.
- Inventory management: Packaging together slow-moving items with fast-moving ones helps prevent dead stock.
- Improved product awareness: Not-so-popular or new products gain visibility when sold alongside bestsellers.
- Competitive advantage: A good combination of products could make a business different from others thus attracting customers looking for value deals.
- Simplified marketing: It is cheaper to advertise a package than individual items separately.
- Customer loyalty: When people are satisfied with useful sets, they buy from the same seller again and become loyal to that brand name.
Common Types of Product Bundling for Shopify Stores
It is commonly assumed that bundling is just simply adding 2+ products in a pack and your sales will magically multiply. But there are so many different kinds of product bundle types – each with its use case and benefits. Let’s look into these.
1. Pure Bundles
These are all-or-nothing packages. Businesses use them to showcase a complete product line or solution.
For example, a skincare brand might offer a bundle with cleanser, toner, serum, and moisturizer, available only as a set.
This strategy can boost sales of less popular items and encourage customers to try a full routine. It’s particularly effective for products that work best when used together.
2. Mix-and-Match Bundles
This approach puts customers in the driver’s seat.
A clothing store might offer “Any 3 shirts for $50.” Customers enjoy the flexibility to create personalized sets, while businesses benefit from increased sales volume. It’s an excellent way to clear varied inventory and satisfy different tastes.
The key is to set a threshold that encourages larger purchases while still offering value.
3. New Product Bundles
This strategy uses established products as a launchpad for new ones.
Did you know using an upsell product bundling strategy can be 68% more effective than trying to grab a new customer?
For instance, a tech company might bundle its new wireless earbuds with its popular smartphone.
This tactic leverages customer trust in existing products to promote new offerings. It can significantly boost initial sales and awareness of new items, helping them gain traction in the market.
4. Cross-Sell Bundles
These bundles connect the dots between related products.
An outdoor gear shop might package a tent with sleeping bags and a camping stove.
By offering complementary items together, businesses increase average order value and provide a more complete solution. It’s like suggesting the perfect sides to go with a main course, enhancing the overall customer experience.
5. Gift Bundles
Designed to make gift-giving easier, these curated sets often revolve around themes or occasions.
A spa-themed bundle might include bath oils, scented candles, and a plush robe.
They save shoppers time and decision-making stress, especially during busy gift-giving seasons. These bundles often come in attractive packaging, adding to their appeal as ready-to-give presents.
6. Inventory Clearance Bundles
This is a smart way to move aging stock.
A kitchenware store might bundle last season’s placemats with discounted cutlery sets. It helps businesses free up warehouse space and recover some costs on slow-moving items.
For customers, it’s an opportunity to snag deals on products that might otherwise be out of their price range.
7. Buy-One-Get-One (BOGO) Bundles
BOGO offers are straightforward and highly attractive to bargain hunters. A beauty store might offer “Buy one lipstick, get another 50% off.”
As per a survey by AMG Strategic Advisors, 93% of customers prefer Buy-One-Get-One (BOGO) bundles.
This strategy can quickly boost sales volume, introduce customers to new products, and create a strong perception of value. It’s particularly effective for products with higher profit margins or those nearing expiration dates.
8. Tiered Bundles
This approach caters to different customer needs and budgets.
A software company might offer Basic, Pro, and Enterprise packages with increasing features and support levels. It allows customers to choose their ideal price point while encouraging upgrades.
For businesses, it’s a way to capture different market segments with a single product line.
9. Subscription Bundles
These create ongoing relationships with customers.
A gourmet food shop might offer a monthly “Chef’s Selection” box of ingredients. Subscription bundles provide predictable revenue for businesses and convenience for customers.
They often include an element of surprise or curation, keeping customers engaged and looking forward to each delivery.
How To Get Started With Product Bundles
Now that we’ve looked into the benefits and types of product bundling in e-commerce, let us dig into how exactly can you set it up in your Shopify store. Here’s a step-by-step breakdown –
1. Analyze Your Product Catalog
Start with taking in all the data about your inventory and sales reports to find out which items sell most. You can then quickly analyze and recommend other products that would go well together.
2. Get Into The Heads of Your Customers
Don’t just go with your gut feeling. Use your sales data to identify common buying habits and preferences among customers.
3. Set Out the Purpose for Bundling
To get the maximum results out of your product bundling strategies, you need to have a clear goal to work towards. Decide whether you want to increase sales, dispose of stock or launch new product lines. This will help you immensely in outlining the right pricing and bundling strategies
4. Select the Bundle Type
Based on your goals as well as your product mix, choose the most suitable bundling strategy. You can choose one of the types mentioned in the previous section. Remember, the type of bundling you choose will be heavily dependent on your goals and objectives.
5. Determine Pricing Strategy
Find out at what discount level customers will perceive value while maintaining profitability.
6. Design bundles presentations:
Craft compelling product descriptions and visuals to showcase your bundles effectively.
7. Implement in your Shopify store:
Start using a trusted application like Appstle Bundles to manage your bundles seamlessly and with ease. This app lets you create different types of bundles, set up discount rules, and manage offerings effectively.
8. Test and Launch
Begin with a few bundled items and closely monitor their performance rates.
9. Promote Your Bundles
Make sure people get to know about these new packages through all available marketing channels you use such as email marketing, social media networks as well as search engine optimization techniques.
Best Practices For Product Bundling: Everything You Need To Know To Boost Sales
- Understand your customer/client: Utilize data analysis to identify consumer purchasing patterns and tastes.
- Ensure that the items go together: Make pairs of products that make sense together. For instance, makeup brushes with foundation or woolen socks with mufflers.
- Maintain value perception: Offer a clear price advantage over individual purchases.
- Do not make them complicated: Don’t confuse customers with excessive choices or intricate bundles.
- Show savings: Clearly state the worth and savings made on the purchase of such bundled products. An easy to do this is to show savings in percentage.
- Offer customization opportunities: Let customers change bundles as they want them so that they suit individual needs.
- Test different combinations: Constantly experiment using diverse product pairings in order to see the best combination.
- Leverage seasonality: For vacations, seasons and special occasions create timely combos.
- Use attractive packaging: Make bundled products visually appealing, especially for gift bundles.
- Implement dynamic pricing: Adjust bundle prices based on demand and inventory levels.
- Provide detailed descriptions: Clearly explain what’s included in each bundle and its benefits.
- Offer deals for limited periods: This can be done through time-bound discounts on package deals which creates an atmosphere of urgency necessitating an immediate decision by the customer since these packages are only available within a specified period or while stocks last.
- Launch using bundles: You could introduce your new products alongside already established favorites through this method.
- Monitor performance: Regularly analyze bundle sales data to refine your strategy.
How To Measure The Success Of Product Bundles
Crafting a high-converting product bundle requires you to dig into the data. Numbers rarely lie. A close eye on conversions and sales metrics can reveal your overall sales growth and conversion rate of specific bundles.
To evaluate the effectiveness of your product bundling strategy, focus on these key metrics:
- Average Order Value (AOV): Track changes in AOV after implementing bundles. An increase suggests successful bundling.
- Bundle vs. Individual Sales: Compare the performance of bundled products against their individual counterparts.
- Conversion Rate: Monitor how bundle offers impact your overall conversion rate.
- Customer Lifetime Value (CLV): Assess whether bundles are contributing to increased CLV over time.
- Inventory Turnover: Evaluate how bundling affects the speed of inventory movement, especially for slow-moving items.
- Customer Feedback: Gather and analyze customer reviews, ratings, and survey responses about bundle offerings.
- Repeat Purchase Rate: Measure if customers who buy bundles are more likely to make repeat purchases.
- Profit Margins: Ensure that while offering value to customers, bundles maintain healthy profit margins.
- Bundle-Specific Metrics: Track the performance of individual bundles to identify top performers and areas for improvement.
Common Challenges Merchants Face With Product Bundling
Although e-commerce product bundling is a sure-shot way to increase your sales in most cases, it comes switch its own set of challenges and roadblocks. In this section, we’ve briefly outlined these challenges, so you can avoid them for maximum profitability.
Let’s dive in.
- Inventory Management: Balancing stock levels for bundled items can be tricky. Mismatched inventory can lead to bundle unavailability or overstocking of individual components.
- Customer Expectations: Bundles may create unrealistic expectations about product value. Customers might expect similar discounts on individual items or become resistant to non-bundled pricing.
- Pricing and Profit Margins: Finding the sweet spot between attractive discounts and sustainable profits is challenging. Overly aggressive bundle pricing can erode margins, while insufficient discounts may fail to attract customers.
- Bundle Flexibility: Offering customization in bundles can complicate operations but may be necessary to meet diverse customer needs.
- Cannibalization: Bundles might reduce sales of high-margin individual products, potentially impacting overall profitability.
- Tracking Performance: Accurately measuring the success of individual products within bundles can be complex, making it difficult to assess true product performance.
Trends To Watch Out For in E-commerce Product Bundling
The future of product bundling is moving towards more personalized and flexible offerings. Personalized bundles are growing popular, tailored to individual customer preferences based on their purchase history and browsing behavior. These smart bundles use AI and machine learning to suggest highly relevant product combinations.
There is also a rise of build-your-own bundles, which allow customers to design personalized packages that best fit their needs. This strategy can increase customer satisfaction as well as average order value.
Subscription bundles are becoming increasingly popular, offering customers convenience and regular value while providing businesses with predictable recurring revenue.
Tools like Appstle Subscriptions are making it easier for e-commerce businesses to implement and manage these subscription bundles, allowing them to stay competitive in this growing trend. As bundling strategies continue to evolve, the focus will be on creating more dynamic, customer-centric offerings that balance value, flexibility, and profitability.
Set Up Product Bundles In Your Store in Under 5 Mins!
We’ve already discussed the amazing benefits product bundling can have on your bottom line as well as customer satisfaction. It’s time to leverage these benefits in your Shopify storefront.
Lucky for you, setting up product bundles on Shopify stores just got easier. Introducing the Appstle Bundles app!
With Appstle Bundles, you can:
- Easily create, manage, & customize bundles, quantity breaks, & discount options
- Choose from many bundle types: classic, combo, mix & match, advanced, & more
- Smartly upsell with multiple discount types and conversion-optimized templates
- Seamlessly integrate with subscriptions & recurring orders, & other Shopify apps
- Benefit from hands-on 24x7x365 migration and post-installation support
