EcommerceMar 20, 2022

What is Product Bundling? And How to Use It?

Boran Özgül
Content Marketing Specialist
an example of product bundling - multiple products bundled together.

Since the dawn of commerce, merchants have always looked for ways to increase their sales. Discounts, upselling and cross-selling techniques, psychological tricks, and many other techniques have been invented to achieve that goal. Product bundling is one such technique you can use to increase your sales.

This article will explain the method of product bundling and will discuss the benefits it can create for your business. We will also provide some tips regarding product choice when creating your bundling strategy. 

First, let’s start with a definition. 

What Is Product Bundling?

Product bundling is a technique where several individual goods or services are sold together as a combined package. The price of the combined package or “bundle” is lower than the total price of each individual good. The main goal is to increase the number of items sold in one purchase while providing customers with a good discount.

Common examples of product bundles are shaving kits, value meals at restaurants, skin-care sets, or make-up sets. Companies mainly sell products that are complementary to each other, or products that are usually bought together. 

Which Products Can You Bundle?

The best approach you can take in order to create product bundles is to put goods that complement each other or can be used together in the same deal. Your product bundles should make sense. Putting together unrelated products, like car accessories and hair conditioners will not be a good strategy. As the person who will be interested in one product might be uninterested in the other.

Multiple clothing items on store shelves.

Start with what your customer might need to use with a certain product you are selling. For example, putting a toothbrush and a toothpaste in the same bundle makes sense, as someone who will use one will need the other. Same with a smartphone and a power bank, or a desktop computer and a keyboard. 

You can also learn what products you should bundle directly from your customers. With help of customer data and sales analytics, you can find out what each customer buys. Then, you can track which products are usually bought together, or bought by the same individual in close intervals. If there is a certain pattern, you can create a bundle for it! For example, if shoppers are buying a certain shampoo with a certain conditioner, you can bundle them together.

Advantages Of Product Bundling

Product bundling is a great pricing strategy, as well as an excellent way to upsell and cross-sell a wide range of products. 

Creating specialized product bundles will increase the sale volume of each individual purchase, as well as improve customer satisfaction and loyalty. If customers find out that they can come back to your store, and reliable find bundles they are interested in, they will definitely take notice.

The three main benefits you will reap from a good product bundling strategy are increased sales volume, improved customer experience, and savings on marketing and shipping. We will explain each entry in detail below.

Increases sales volume

Each shopper has a specific price they are willing to spend on a product, we call the difference between that price and what they will actually pay consumer surplus. The main benefit of product bundling is getting the maximum amount of customer surplus. This way, customers will feel like they are getting everything much cheaper, much easier.

Now, when customers feel like they are getting everything for a steal, they are more likely to spend more money. A product bundle is offered at a discounted price, but it will still make your customers buy more. The profit you get from each individual product might be lower, but as the customers are buying more, your sales volume will increase.

A sale sign on a store shelves.

One other metric we need to discuss is the average order value. 

This metric is a significant variable for the growth and success of any e-commerce business. It signifies the average amount customers spend on each individual order. Bundling strategies will increase your total revenue by improving your AOV. 

Improves customer experience

Product bundling increases customer loyalty by providing them with a simpler, more streamlined customer experience. With a good strategy, your customers will have the option to choose products or services that are grouped together with their needs and wants in mind. They will definitely appreciate the ease of being able to buy complementary products at a discounted price.

Product bundling will also remove the need for customers to spend their time deciding which product to buy. Options are great, but having too many of them will create what we call analysis paralysis, where a person is unable to take action because they are overwhelmed by all the options available. 

By having already grouped together bundles, your customers can buy multiple products they need or might need in the future at the same time. This way the time they need to spend on analyzing their options will be less.

Save on marketing and shipping

Product bundling will most likely save you a great amount of money on marketing and shipping since the key aspect of bundling is to sell more items in a single order. When a single person buys several goods in the same transaction, you will be able to ship multiple products together, which will definitely be cheaper than distributing them individually.

Someone packaging a product.

When a large purchase is made by a single individual on your site, the pressure to market your business will also decrease. Selling multiple products in the same transaction means that the customer is most probably buying a product that has not been marketed to them by you. So you will be selling some items without marketing costs.

You will also have the option of bundling deadstock items with popular items. So instead of creating a discount campaign or marketing strategy just to get rid of your underperforming products, you can use product bundling to get your investment back.

Final Remarks

Including product bundling in your sales strategy is one of the best things you can do for your business. Anything from food to digital services can be sold in a bundle. 

It is also possible to experiment with this strategy. You can allow your shoppers to create their custom bundles, or you can use an algorithm to create custom bundles depending on shopper behavior. 

When done properly, you will boost your sales and increase customer satisfaction at the same time. 

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