Product bundling is not a novel marketing approach, even at brick-and-mortar stores. It has recently gained popularity in the world of e-commerce.
Combining at least two or more goods into a single unit increases the market average order value and revenue per customer.
Product bundling is a fantastic approach to compete with other retailers while providing your customers with utmost satisfaction.
Pricing is one metric that accompanies product bundling. Your bundle will not sell by itself if the client does not see any benefit from it. You’d be more willing to buy it if you knew there was something in it to gain.
To trigger your customers to buy after you have offered them a sumptuous bundle is to give a discount with pricing. Hence, that tells us that pricing is a vital part of product bundling. Good product bundles with better prices sell the most.
Although pricing is not the only means to trigger your customers to buy a bundle, free shipping also does the sales magic. But in this article, let’s deal with pricing and product bundling.
Price Bundling/Product Bundle Pricing
Price bundling and product bundling can be tagged the e-commerce twins. They go hand in hand.
Price bundling is a sales approach where retailers create a combo of several items (at least two) and offer it to consumers at a discount.
With price bundling, retailers bid to sell more and also give customers the package for a lower price than what it would originally cost when those items are purchased individually.
For example, Lexia is an online fashion store and has created a package deal of a dress and a Gucci shoe for $123. This is a product bundle. The latter cost $85 and the former, $50. The price for the package deal shows that Lexia has offered about a 7.5% discount.
Price bundling does help boost average order value and sell lagging products in SKU. Other ways a good price bundling can help your store increase average order value are;
1. Move slow-selling products in SKU
Bundling can help you sell less successful products faster. When you have a product staying too long on the shelf or in SKU, you can create a bundle based on the customer’s search to fit a fast-selling item and this less successful item into a single unit.
2. Meet customer satisfaction
Nothing excites a customer as getting a discount offer or free shipping, they are definitely jumping on buying that item. Bundle pricing comes with discounts and sometimes free shipping. This would trigger customers to buy the product and increases your average order value.
3. Increase revenue per customer
As you increase your average order value, revenue is also going up. Items that are bought are paid for. You sell more and gain more. Each time a customer buys a bundle, the revenue you get from their purchase increases compared to when they just purchase an individual item.
This makes price bundling a two-edged sword. It’s always a win-win for the buyer and the retailer.
4. Promote and sell a new product faster
Price bundling is the fastest way to sell a new product. You create product awareness when you mix a product that is new with other popular products.
This way customers get to know the value and benefit of this new product and this can create a strong selling base for such an item.
5. Reduce marketing expenses
You can reduce promotional costs and, in some cases, packaging costs when items are in a bundle.
When you have a new product to market, instead of incurring an additional cost of advertising, you can have a bundle of the product with a high-selling product in the same category. For example, 3 kg Soft Laundry Detergent (high selling product) + 500g Liquid Toilet Wash
6. Keeps customers in control
A self-customizable bundle makes your customers feel they are in charge. Having such a bundle increases customer-brand loyalty.
When customers can pick their own items in a bundle or are offered varieties to pick from in the bundle, some customers can end up buying more quantities than the retailer expects. On the other end, the average order value goes up.
– Gives brand misconception
When it comes to bundling, the customer benefits the most because they are buying for less. However, if not done in a way customers would feel the bundling is about them, it can give the brand a wrong face.
Customers might think you are trying to push the items in the mix off your SKU. Ensure each time a bundle is made it is valuable to the customers.
– Restricts customers with a single purchase
Now that you have multiple products as a single unit, some customers who want to purchase an individual item might feel they are not prioritized.
In some cases, when the items are not available individually, such customers might be restricted to purchase the item. This can however be a way to sell your bundle too.
– Revenue reduction
Price bundling comes with cutting down on the original price. This would reduce the expected revenue that a product in-store should bring in for your company.
– Buying an unwanted or unused product
Some mixed bundles leave customers ending up buying items they do not need. One great way of selling a new product is price bundling, you are letting down the price to increase sales.
On the customers’ end, they might be buying an item they would not use. To tackle this, offer customers the chance to customize their own bundle.
When creating a price bundle, ensure you can offer your customers a mix-match they are looking for and a value they won’t be able to resist with a bundle.
Two things to note when creating a price bundle;
– Know what your customers want
– Put a high-selling product as the main product in the mix.