Offering deals is an essential part of running an ecommerce business. Although you might earn a lower profit margin per item, you would receive higher sales and potentially a larger customer base, which benefits your store more in the long run. One popular method that store owners use for promotion is bundling. In this blog post, we will introduce its benefits as well as how you can implement this strategy to position your brand.
What is bundling?
Bundling is a subcategory of cross-selling, where companies offer two or more related products and/or services to customers. This is a common strategy in the ecommerce world and called differently depending on the marketing goals, namely package deals and gift sets. In particular, all items are often sold together under one Stock Keeping Unit (SKU), typically at a lower price compared to the combined costs of the individual items.
What are the benefits of bundling?
Higher sales and average order value (AOV): Bundling encourages customers to purchase more items because it offers discounts in price and convenience to buyers.
Greater customer satisfaction and loyalty: Since you offer shoppers higher perceived values at a lower cost (i.e. more products at a cheaper price), they are more likely to be happy with their purchases and to revisit your store in the future. Besides, bundling delivers a more convenient shopping experience to customers and simplifies their decision making process (e.g. suggesting related products that they might need but do not realize, adding multiple products to cart at once).
Reduced overhead costs: Offering bundles to customers helps you to save many costs, such as fulfillment costs and average shipping fees per item. In addition to administrative costs, it also helps to bring greater return on your customer acquisition and retention efforts because buyers tend to spend more at your store.
Improved inventory management: Pairing slow-selling or deadstock items with trendy ones is a good stock control practice, which would save you storage costs and create space for more profitable products.
What are some common bundling strategies that you could consider?
Mixed bundling - This refers to grouping of products that go well or are often purchased together based on past data. Some examples include shampoo and conditioner, water bottle and straw, or sports outfit and work-out equipment.
Same products - As the name suggests, this tactic is a great way for sellers to offer consumers bulk discounts. Same-product bundling is especially common in essential products such as toothpaste and soap.
Pure bundling - This applies to products that are only available for purchase in bundles. Oftentimes, they cannot be bought as individual items. The two main subcategories under this include:
Joint bundling: This is the typical strategy that we see in bundling practices when two or more products are sold at a discounted rate compared to their individually combined prices.
Leader bundling: Discount is offered on a primary (leader) product with purchases of secondary products
What should you do to put bundling into action?
Experiment, collect, and analyse data
Despite the benefits of product bundling, not all bundles are created equal. Some bring you a large volume of sales, and some do not work at all. This is why data analytics plays an important role as it helps you to find patterns, such as products that are purchased together or those with complimentary functions/features. If you have just started and have not obtained much data, you can conduct some external research and make some inference. Moreover, you should also A/B test to find out which bundles bring high impact to your business. Overtime, you would gain more insights and have a better understanding about the best practices.
Consider customers’ perspectives
When choosing which items to put in sets, you should put yourselves in consumers’ shoes. For instance, you should try answering the following questions:
- Would the complementary items really help or enhance the usage of the primary product?
- Would the discount make the bundles much more enticing to purchase?
- Are there any other items that you can add to or replace the existing ones in certain bundles to create greater value for your customers?
Take into account upcoming festive seasons
Holidays are the perfect time to sell gift sets, a popular type of bundle. Selling themed gift sets drives impulse purchases and attracts new customers to your ecommerce stores. For this to work effectively, you should carefully analyse different holidays and pick those with high impact and plan promotional and marketing campaigns ahead of time.
Plan ahead logistics arrangements
If you intend to continuously create new and update existing bundles to position your brand, promote products, and attract customers, you need to invest in logistics to make the process more efficient. This is especially crucial in transitional periods such as peak seasons or upon arrival of new inventory at the warehouses. The help of a reliable dropshipping agent would come in handy at this point since not only do they implement good inventory management practices but they fulfill the orders containing special bundles in a professional manner as well. For instance, they would collect and pack the individual items of bundles together and ship the parcels out all in once. As a result, you would be able to keep better track of your business operations and make your customers satisfied (e.g. fast and affordable shipping with quality products).
In conclusion, bundles deliver a simpler yet more fulfilling shopping experience to your customers and help you promote your products more effectively. However, you should keep experimenting with different types of bundles and analysing purchasing behaviors. This is a perpetual process that takes much effort, but it helps to maintain a sustainable growth for your ecommerce store.
Do you feel like you are juggling multiple roles within your business? Let us help you with tedious logistics matters so you can focus on growing and scaling your business. Contact Xianchao Logistics today to get all the support you need. With 30+ years of experience in logistics industry and 5+ years in dropshipping sector, we strive to solve your pain points, ranging from product & supplier sourcing to ecommerce order fulfillment, or branded packaging & private labelling to quality inspection & product certification. Please feel free to reach out to us if you need to know any details about partnering with us.
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