No matter how different, some things in life just go together. Whether we’re talking spaghetti and meatballs, bacon and eggs, or wine and cheese. Pairs like these are always perfect in our minds.
Wondering what all of this has to do with your ecommerce business?
Enter product bundles.
What Is Product Bundling
Product bundling is the term referring to two or more individual goods or services combined together to be sold as a package, typically at a discounted price.
A few examples of product bundling are shampoo kits, extra value meals at food chains, and clothing outfits.
Brands use these bundled packages to sell complementary products they want people to buy using the leverage of best-selling products.Ideally, individual products could be bundled either as upsells or cross-sells.
Upsells – The goal of upsells is to encourage custopmers to upgrade their purchase. This is done by suggesting the same type of product at a higher quality or quantity. A good example of this is “Buy One, Get One” offers at fast food chains.
Cross-sells – Cross-sells aim to promote related products as additions or accessories under the same category. An example of this is cross-selling an LED light bulb with a lampshade. According to Baymard Institute, only 32% of websites succeed in providing enough information to attract product page cross-sells.
In other words, most ecommerce websites fail to use bundled offers effectively to drive sales. The catch is, product bundling only works when you plan it out right. Its high potential gains are tempting, making you want to jump right in.
However, it is crucial that you use the right personalization tools and set the right strategy in place before you get in on the action. Before we jump onto case studies and how you can best implement product bundling for your ecommerce business, here is a breakdown for six advantages of product bundling.
6 Advantages of Product Bundling
1. Boost AOV (Average Order Value)
If you are in the ecommerce business, chances are you spend a good sum of money and time acquiring new customers. You not only invest heavily in marketing, but also do so in creating the right UX (User Experience) to convert visitors into customers.
And what a bummer it would be if all this effort went to waste, especially when a customer converts but does not deliver profits large enough to achieve your financial goal. Offering bundled packages is one of the best ways to tackle this and increase your AOV. Your customers will be willing to spend more for every order when they get a better bang for their buck.
2. Reduce Inventory Waste
Dead stock is a problem every ecommerce business faces at one point or another. It usually accumulates as a result of struggling to sell a certain set of products due to low demand. Mixed bundling helps you clear out your inventory before running out of storage space.
You can implement that by combining less popular inventory with better selling products that customers buy faster:
3. Enhance Customer Experience
When done right, the convenience product bundles offer is a huge plus for the customer. Your visitors will enjoy the ease of readily seeing which products go with which. With the continuously decreasing attention span of customers, you will want to make the shopping experience as fast and smooth as possible.
Incorporating product bundling in your ecommerce store is therefore a win-win strategy for both your online store and prospective clients. Your clients will find better deals fast, and you will close a sale faster and win a happy, hopefully recurring customer.
4. Simplify Marketing
Marketing 10 items individually requires coming up with a story and running a campaign for each. On the other hand, packaging them all into one offer means you can market them all as one product.
Think about how fast food chains almost never market drinks, but rather just slide them into menus with other side and main items. The same applies to your ecommerce store. This will translate into easier advertisement and an easier time coming up with new stories for marketing.
5. Learn More About Your Customers
Product bundling maximizes customer choices. Your customer gets exposed to more products and more categories as they go through your store. Bundling will help you leverage products with more potential than you may have accounted for, and vice versa.
You will be able to stay on top of market trends by observing where most of the money is spent, all while dumping outdated products that no longer attract customer attention. Plus, you will have a better idea of the budget the average customer is willing to spend on your ecommerce store, in addition to information to help you create narrower targeting for advertisement.
6. Use as a UVP (Unique Value Proposition) Against Competitors
With the rapid rise of new ecommerce stores, standing out of competition is harder than ever. In a saturated market, you can easily lose customers to competition if your ecommerce store lacks an efficient UVP. That’s where product bundling comes in very handy. You can use pricing to your advantage by coupling a main product with a cheaper accessory or addition. The price will slightly increase, and you will stand out from the competition by offering a bonus your customer wants.
For example, if you are selling furniture, you can pair a footstool in mustard yellow (addition) with an armchair in mustard yellow (main product).
Use Cases – Product Bundling Done Right
How McDonald’s Uses Product Bundling to Increase Sales
McDonald’s Happy Meals are a popular example of product bundling. From a single purchase, customers receive an all-in-one package with French fries, a beverage, a toy, and a hamburger.
In the product bundling example of Happy Meals, buying the whole package at a predefined price tag ends up costing customers less than purchasing each item à la carte.
McDonald’s aims to encourage higher priced sales by offering a low-priced set of products to customers who were initially willing to order only an item or two.
In fact, almost all of McDonald’s lunch items are part of menus; whether we’re talking french fries, drinks, or main items (hamburgers, chicken wings, sandwiches, etc).
Here is a product bundling example you can find at McDonald’s:
McDonald’s benefits greatly from packaging their items. AOV (Average Order Value) increases, inventory overstock is reduced, and customers are happier for getting more for their money.
How to Leverage Product Bundling to Upsell and Cross-sell on Your Online Store (+ Product Bundling Case Studies)
Despite being a brick and mortar business, McDonald’s product bundling strategy is something you can use for your online ecommerce store. The right implementation is key for successful product bundling. Tools like Nosto’s Dynamic Bundles allow you to select products and categories to work together or separately as a bundle.
Below are the three proven approaches you can take, along with several product bundling case studies for inspiration.
1. Match Categories with Viewed Items
Matching categories with currently viewed products is an effective and easy to set up way to leverage bundling. With a single click of a button, your customers get to pick options that match their currently viewed item; all while remaining on the same page.
Atkin and Thyme, a high-end furniture and accessories business, use the Nosto Dynamic Bundles feature on their Magento website to match viewed items with complementary items within the same set.
By adding the “Complete the Look” section on their product pages, Atkin and Thyme have succeeded to increase AOV by 6.5%.
2. Match Products and Categories Within a Bundle
Products can be hand picked manually to be included in a bundle as static items–but it gets more interesting; you can additionally create dynamic products within the bundle to match with the static items added. In this example, the bundle includes three static items and two dynamic products from the selected category named “All accessories”.
The three static products enlisted first remain the same, while the last two items change based on customer behavior and product relationships.
Already a Nosto customer? Get started with dynamic bundles.
3. Handpick Certain Products to Work Together
The simpler approach to go about product bundling is to select exactly which products you want to match with which.
This strategy is especially relevant when you have good insight about customer behavior and which complementary products go best with certain items. Do it Center, an international home goods retailer, uses this product bundling approach on their Shopify online store.
Under “Buy them Together”, an item suggestion (white folding chair) is displayed to match the main product (white foldable table). The equal colors and build of the products make the bundle of two a rational combination for the customer. This product bundling strategy along with the implementation of other automated personalized features have enabled Do it Center to boost their conversion rate by 85%.
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