Product Bundling Meaning, Benefits and Examples

Product bundling is one of the oldest retail tricks in the book, and for a good reason. Why go a long way around when you can get multiple products in one easy package? Companies have realized bundling is a great way to offer customers more value for their money and drive up their average order value. Just look at the success of the Happy Meal! The classic combination of a burger, soda, and french fries has been popularized by bundling them together, making it easier than ever to enjoy a complete meal. It may be an old trick, but bundling remains one that businesses everywhere swear by to this day. So what is the meaning of bundling, and how does it benefit business? Well, stay right here and “bundle” up for this blog.

What is Product Bundling?

Product bundling is bundling multiple items to get customers to buy them together for one price instead of individually. This bundling gives customers an incentive to purchase more than they normally would at one time, resulting in an extra benefit for businesses. It's also a great way to encourage items that might be overlooked if purchased on their own, boost sales, and combat price-gouging. Bundling can be done through various mediums depending on the industry and the target audience.

Get More for Your Money With Upsells and Cross-sells

Businesses can leverage upsells and cross-sells to move more products while simultaneously providing customers with added value.

• The purpose of an upsell is to convince the customer to upgrade or purchase a slightly more expensive version of what they originally intended to purchase.
• Similarly, cross-sells promote similar products within the same group; "would you like fries with that?"

Benefits of Product Bundling

Bundling helps you do much more with your existing stock. Let’s look at the advantages of product bundling and how it can benefit your business.

1. Increase Sales and AOV
   ‍A bundling strategy can be a great way for businesses to increase their profits and the amount sold over time. As demonstrated by studies from Harvard Business School, bundling products can help businesses get customers to buy more than one item during a single purchase while still offering them discounts. This means they’ll get more value for each order while you keep your average order value high. 
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   For example, an electronics store might offer discounts when customers bundle televisions and soundbars together - a win-win situation! Not only do customers enjoy the convenience of making fewer purchases, but they end up with the best deal possible.
2. Decreases Marketing and Distribution Costs
   Not only do bundling strategies enable you to sell more of your products together and get more bang for your buck, but it also leads to decreased costs in marketing and distributing. Instead of promoting each product separately, bundling multiple items together removes the need to market each item individually. And with only one warehouse bin taking up less storage space, distribution costs are also lowered.
3. Reduce Inventory Waste
   Inventory waste can be a major problem for businesses, causing money to be spent on holding costs without receiving any return. But with a bit of bundling magic, you can help reduce it! By bundling slow-moving or stagnant items with popular ones, customers will see the bundle as an amazing bargain and snatch it up. This helps clear out your dead stock before it becomes a problem, frees up your warehouse space, and decreases the amount of money you would have to spend on inventory holding costs. Bundling isn’t just an opportunity for thrifty shoppers; it’s also an important tool for reducing surplus inventory and keeping your business running smoothly. So if your shelves are cluttered with products that won’t move, bundling is the solution you’ve been looking for.
4. Increase Product Awareness
   Product bundling is one of the best strategies for increasing product awareness. By bundling items together, you are giving customers more value with every purchase and encouraging them to become familiar with additional products they wouldn’t have otherwise considered. For example, bundling items in themed sets or offering discounts on popular pairs makes it easier for customers to try something new while recognizing a good deal.
   
   Furthermore, bundling introduces customers to different product lines they might not have been aware of and encourages them to try items outside their comfort zone, potentially leading to higher sales returns in the long run. In short, bundling can be a great way to increase product exposure for both businesses and consumers alike.
5. Boost Customer Loyalty
   Offering bundles is a great way to increase customer loyalty, as bundling creates more opportunities for shoppers to find something they love (and then return for more). As a bonus, bundling helps ensure that customers get their money’s worth – by bundling multiple items together, buyers can save money and still receive high-quality goods and services. So why not bundle up your bestsellers into one convenient package and reap the rewards with increased customer loyalty?

Types and Examples of Product Bundles

Several different bundling techniques are used to group products:

• Mixed bundling

A mixed bundling strategy involves offering customers the option of buying a bundle as well as the option of buying individual items. Offering mixed bundling at a lower price than if the items were sold separately will incentivize users to purchase the bundle.
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Fast food combos are examples of mixed bundling – you can purchase each item individually or as part of the combo for a single price.

• Pure bundling

Pure bundling refers to grouping products that are only available when sold together.
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For example, whenever you purchase cough syrup, you also get a small plastic cup, which you would never buy separately.

• Same products

When a customer orders multiple of the same product, bundling is a smart way to offer a discount. Customers are encouraged to buy in bulk upfront by same-product bundling, similar to a subscription model.
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For example, many direct-to-consumer (DTC) brands that sell essential or personal care products (e.g., toothpaste, paper towels, or hand soap) do well with this bundling strategy.

• Excess inventory

In addition to being an effective marketing strategy, product bundling is a convenient way to eliminate old, unwanted inventory and make room for new items. Your bottom line can be negatively affected by slow-moving products. So pairing a popular item with a product that isn't performing as well can entice customers with the prospect of a good deal.
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For example, bundling a last-season computer mouse with brand-new keyboard is easy because customers need both to use a computer.

Popular Examples of Product Bundling

1. Gifting product bundles: Gift bundles are aimed at shoppers who want to give a bundle of complementary products together to a loved one.  
2. Subscription boxes: Subscription bundles provide complementary value by adding products or services that enhance an existing subscription.  
3. Build your own bundles: With custom bundles, you can choose from a wide range of products, as well as single items.

Product Bundling Best Practices

• Offer a discount on the bundle so that customers can see the value.
• Show the cost of a bundle side-by-side with the cost of individual products.
• Analyze where bundles fall within the customer journey.
• Use holiday emails to highlight bundles.
• Observe vertical industries - how are they priced and what's included?
• Examine other websites' upselling tactics.

Get the Most out of Bundling with ShipHero's WMS

When it comes to bundling meaningfully in your eCommerce business, understanding what bundling is and how to integrate bundling into your warehouse management system is key. With bundling strategies like pick kit and build-kit, you can customize how you store and manage the pieces of your bundles or kits.
ShipHero's warehouse management system provides a comprehensive solution for integrating bundling goals into your inventory management strategy, giving you powerful automation tools with one-click integrations and dedicated client support. Put simply, ShipHero is here to make sure that your kits and bundles add up!

Product Bundling: Your Secret to a Better Bottom Line

Product bundling is one of the oldest and simplest tricks in retail, yet so often overlooked by customers. However, bundling your products can be a powerful way to boost sales, increase customer loyalty, and earn extra revenue - if done right. With bundling, you can create custom product packages tailored to individual customers’ needs and promotions that reward shoppers for bundling multiple items together. In addition, bundling can help draw attention to slow-moving stock or be used for product awareness initiatives.

All these strategies can help to make your store stand out from the crowd and give you an edge in today's competitive market. So why not put bundling at the center of your selling strategy? With these tips in hand, you can create custom bundles that will increase sales, loyalty, and awareness for your store – and, who knows, maybe even earn you an extra buck. Thanks for reading!

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