Product bundling is a strategy that involves creating and selling a collection of complementary products that can help you convert both regular visitors as well as returning customers.
Every e-commerce store owner has a goal – to gain more leads and to earn more revenue.
The store owners follow various ways of meeting that goal, and it varies from one person to the other. Some might prefer to stick to the loyalty programs, while others may want to expand the B2B channels. These two are just two ways from an infinite list of strategies that you can use to increase sales on your e-commerce store.
One of the other ways of helping e-commerce store owners to meet their revenue goals is through product bundling.
But as with other sales strategies, you need to know some rules to bundle the products successfully. Here’s a guide to help you out!
What is Product Bundling?
Product bundling is one effective promotional tactic where an e-commerce store owner offers a group of products under one SKU. It is generally offered at a lower price than the products being purchased separately.
If we look through the customer’s point of view, bundling the products together can show two effects on their mind, those are:
- If the products are chosen wisely, they can fulfill their purpose way better than what they purchased individually
- It encourages a person to buy products by showing discounts
Selling several products in a bundle can help them to increase their average order value. It is such that when you sell more, you eventually generate a greater amount of profit even when the margin is low.
Additionally, when a buyer purchases a bundle, it can help them reach the minimum shipping point. If you remove the shipping costs on the purchase of the bundle, the shoppers will be encouraged to buy the bundle.
Types of Product Bundling in Shopify
There are several types of product bundling that can be implemented in a Shopify store, including:
Group Bundles
Basically, group bundles consist of items that are frequently bought together.
For example, a t-shirt and jeans. This type of bundle usually depends on customer insights and sales data and likewise manual or automatic bundles are created.
Variant Based Bundles
Variant-based bundles are a combination of products that differ in variants. Here is an example of the variant bundle which includes different flavors of energy bars.
Pack Bundles
Pack bundling is like offering a predefined combination of products as a pack. If you’re looking for selling products on a large scale, you must try pack bundles. For example, buy a 12-pack of Coca-Cola at discounted prices!
Mix & Match Bundle
This type of bundle usually focuses on allowing your customers to pick, mix, and match the products on their own. This bundle is considered as an ideal option for those who are willing to learn more about the customer’s tastes, choices, and preferences.
For instance, choose any two t-shirts from the group.
Combo Product Bundling
Combo product bundling is a combination of different products that are displayed as one product as a whole to the customer. This product bundling technique is used on dedicated product pages where the customer scrolls down the page, they find several products as one.
For instance, a men’s grooming kit that contains wax, oil, brush, comb, and more.
Buy One / Get One (BOGO)
BOGO is a type of bundle that offers items at a discounted price or for free when they purchase a product. For example, buy a sausage and get other sausages for free.
Advantages Of Product Bundling
Now, the question that arises is what’s the point of offering bundles on your e-commerce store?
It is one way for the customers to see your products in a different manner, and thus, spend more in the way. Some of the product bundle ideas that you can offer to your clients are combo packages, holiday sets, subscription packages, and giveaways.
There are various advantages of product bundling that e-commerce store owners can experience if they start to offer bundles to their clients. Some of the advantages of product bundling are as follows:
- Increase Average Order Value: The first advantage of creating bundles is to sell more. It helps them to increase their average order value. If we say about it in other words, customers tend to spend more every time they buy a new product.
The reason is that shoppers are encouraged to spend and order more while being received a discount on the bundle. Their motive behind buying products in bundles is that it can help them save money.
For you, as an e-commerce store owner, this might take a hit on your margins, but when sales increase, it will make up for that hit. Additionally, you’ll save more amount of money on transaction costs by giving fewer orders. - Reduce in Inventory: If you’re able to play with your stock, then creating bundles can help you reduce the dead stock by pairing it with bestselling items of your store. This will help you make space for new inventory. Additionally, you’ll develop an understanding of your underselling products.
One thing that you must keep in mind while creating bundles is that think from the user’s point of view. Do not create the bundles just because you have a huge inventory of items. Try to mix-match the products to create a bundle that your customers love! - Simplifies Marketing: As mentioned above, creating bundles under one SKU helps in enhancing efficiency and with that, you can manage your stock much easier than before.
Most importantly, you’ll be able to manage the marketing of products of various products with one identity. Thus, rather than marketing about ten different products, you can target them as one package. It will help you save money on marketing costs by combining the marketing campaigns into one.
Top Product Bundling Strategies
You must put in the effort while creating your product bundles such that it leaves a great impression on the customers. You can even go for a handcrafted box and nice packaging to make your product bundles as bestsellers.
Now that you’re already aware of why product bundles are important to the business, the next question that would come to your mind is “how would I create product bundles” isn’t it?
To help you out in that query, we have put down some strategies that you can follow while creating product bundles for your e-commerce store.
1. Place Complimentary Products Together:
The bundles perform best when you put together products that people purchase together. To make your bundles bestsellers, put yourself in the place of your customer and think what all products you’ll buy at the same time.
For example, if you’re selling make-up products online, you should make bundles that include foundation, concealer, primer, lipstick, eyeshadow palette, blush, and highlighter.
Customers like to buy items that complement each other, thus placing products that complement each other.
2. Sell Items Separately:
Doesn’t matter the kind of bundles you create, thus ensure that you sell your products separately as well. It isn’t always necessary that a customer wishes to buy a bundle when they are looking to purchase only a product.
A home décor store focused only on offering bundles and ignored the factor of offering products separately as well. This resulted in them in decreased revenue of 20%. For them, it was more like a decrease in millions of units of sales.
The sole reason behind it could be that customers prefer to go for bundles only if they believe they’re getting a discount as opposed to getting each item separately. It wouldn’t prove to be of great help to them if they don’t have an individual product to make the price comparison.
3. Use Recommendations:
One of the best ways of selling your product bundles is through e-commerce recommendations. Statistics prove that almost 35% of the purchases are through recommendations, and half of them are bundles.
You can apply this same strategy with other e-commerce platforms like Shopify product bundles and Woo commerce product bundles. Your sales greatly depend upon the themes and apps you use while creating bundles.
You can even create posts on social media and tell about how much they save after buying these bundles and what benefits it gives when you buy all the products at once.
4. Pair Products Smartly:
Your first step while product bundling is to pair expensive and cheap products together. This way, you can attract the set of customers who would have otherwise ignored you. Additionally, it will increase your profit margins.
If you’re pairing low and high-value items for creating your bundles, ensure that it offers good overall value to the customers in terms of experience and price. Otherwise, your customers might feel that they are being bluffed and you’ll lose out on a lot of customers.
If you wish to put low-value products in your bundles, ensure that you emphasize more the advantages of the combined products. For that, you need to write good descriptions about how well these products can go together and tell them how they can be a profit after buying.
5. Keep Bundles Nice & Simple:
There are loads of information all over the web today. And thus, make sure that you make your customer’s tasks easy by giving them the necessary details about the bundles and converting them into sales.
Do not create complicated bundles as it will put off your customers and will also affect your brand adversely. Regardless of the fact if your product bundle is perfect or not, if your bundles aren’t simple and nice, then it is most likely to be ignored.
Therefore, consider investing your time in product bundling, that is, appealing to the customers, and you can even add a call to action to make it look more inviting.
Upselling VS. Cross-selling
Both cross-selling and upselling are sales techniques that are intended to boost sales in an e-commerce store. But these are applied in slightly different ways, which are mentioned below.
- Upselling: The practice of upselling involves encouraging a consumer to buy a more expensive model of a product or to add more features or services that increase the price of the product.
Making the sale more profitable is the aim. An upsell might propose a consumer upgrade to a more powerful model of a laptop, for instance, if they are purchasing one. - Cross-selling: Cross-selling is when you suggest other products that complement the product the customer is already interested in or has purchased. The goal is to sell more products overall.
Using the same laptop example, a cross-sell might be to suggest a laptop bag, a wireless mouse, or a pair of headphones.
Both strategies can be effective ways to increase sales, but they work best when the suggestions are relevant and beneficial to the customer. Instead of just selling more for the sake of selling more, it’s about improving the customer’s experience and value.
Best Practices for Upselling on Shopify
On Shopify, upselling may be a potent tool for boosting sales, but it’s crucial to do it properly. Below mentioned are some best practices for effective upselling:
1. Create Urgency
When employed as part of your Shopify upselling strategy, creating a sense of urgency can push buyers to make a choice about their purchase more quickly. Here’s how it works:
- Limited Time Offers: Offer an upsell at a discounted rate, but be sure to specify that it is only valid for a short period of time. The fear of missing out on a good deal can encourage customers to purchase the more expensive item.
- Low Stock Alerts: The fear of missing out can motivate customers to buy immediately, and they might be more likely to choose an upsell item if they know it’s in danger of selling out.
- Exclusive Deals: Offering exclusive deals to specific customers can create a sense of urgency. This may encourage your customers to take advantage of the upsell offer before it’s gone.
- Flash Sales: You can use flash sales to encourage upselling by offering a higher-priced item at a significantly reduced price.
2. Understand Your Customers
Understanding your customers is the foundation of any successful sales strategy, including upselling. In Shopify, understanding your customers means knowing their needs, preferences, and purchasing behaviors.
Here’s why it’s important:
- Personalization: When you understand your customers, you can offer personalized upsell recommendations. This might be based on their previous purchases, browsing history, or other data.
- Relevance: By understanding what your customers need and want, you can ensure the upsell products you offer are relevant. This not only increases the chances of the upsell being successful but also enhances the customer’s shopping experience.
- Trust & Loyalty: Customers appreciate when businesses understand their needs and provide relevant suggestions. This can build trust and loyalty, which are key to customer retention and long-term success.
- Improved Conversion Rates: When you understand your customers’ needs, you can tailor your upselling strategies to meet those needs, leading to higher conversion rates.
- Predictive Analysis: Understanding your customers can also help you predict future buying behaviors, allowing you to plan your upselling strategies more effectively.
3. Offer Relevant Suggestions
Offering relevant suggestions is a critical aspect of successful upselling on Shopify or any eCommerce platform. This practice involves recommending products that align with the customer’s needs, preferences, or the items they have already chosen.
Here’s a deeper look at how it works:
- Complementary Products: If a customer has a product in their cart, consider what complementary products or accessories could enhance their use of the initial item.
- Data-Driven Recommendations: Use customer data to make personalized product recommendations. This could be based on their browsing history, previous purchases, items they’ve liked or saved for later, and more.
4. Create Value Bundles
Creating value bundles is a strategic way to upsell products on Shopify or any other eCommerce platform. This strategy involves grouping together related products and offering them at a slightly reduced price compared to what customers would pay if they bought the items separately.
Here’s a closer look at how it works:
- Related Products: The products in a bundle should be related or complementary to one another.
- Add Value: Bundles should add value to the customer’s purchase. This could be in the form of a discount, convenience, or the added benefit of products that enhance the use of the main product.
- Incentivize Higher Spending: If buying the bundle offers a significant saving compared to buying the items individually, customers may be more inclined to choose the bundle.
- Showcase Products: By bundling a less popular item with a best-seller, you can increase the visibility and sales of the less popular product.
5. Limit Choices
Limiting choices is a strategic move when it comes to upselling on Shopify or any eCommerce platform. Here’s how limiting choices can be effectively applied in upselling:
- Curated Options: When you offer to upsell products, don’t overwhelm customers with too many choices. Instead, curate a small selection of items that are most relevant to their current purchase.
- Simplicity: Too many choices can make the buying process complicated and confusing, potentially leading to cart abandonment. By limiting options, you can make the buying process smoother and simpler.
- Relevance: With fewer options, you can focus on showcasing the most relevant and value-adding products.
- Optimized Inventory: Limiting upselling options allows you to better manage and control your inventory. You can focus on promoting items that you have in abundance or high-end items that yield higher profit margins.
Cross-Selling Strategies on Shopify
Implementing cross-selling strategies on your Shopify store can help increase the average order value and enhance the customer shopping experience. Here are a few strategies to consider:
1. Product Bundling
Product bundling is an effective cross-selling strategy that involves offering a set of complementary products together at a slightly discounted price compared to buying them individually.
On Shopify, you can use this strategy to encourage customers to spend more by showcasing the value they get from buying the bundle.
For instance, you might combine a face cleanser, toner, and moisturizer if you sell skincare items. This not only offers customers a comprehensive skincare solution, but it also makes buying easier.
Customers perceive bundles as a value deal and convenience, and businesses benefit from an increased average order value.
2. “Frequently Bought Together” Suggestions
“Frequently Bought Together” suggestions are a common and effective cross-selling strategy on Shopify. This feature presents customers with a selection of items that previous buyers have often purchased together with the product currently being viewed.
For example, if a customer is looking at a laptop, the “Frequently Bought Together” suggestion might display a laptop case, a mouse, and a keyboard.
This tactic gives customers helpful suggestions they would not have thought of, optimizing their shopping experience and raising the likelihood that they will add more goods to their cart.
3. Upsell at the Checkout
Upselling at the Checkout is quite straightforward: when a customer proceeds to the checkout with their chosen items, you present them with a suggestion of additional, complementary products that could enhance their purchase.
This last-minute recommendation capitalizes on the customer’s readiness to buy and can successfully increase the average order value. For example, if a customer is checking out with a new phone, suggesting a phone case or screen protector could be a relevant upsell.
The key is to ensure the upsell items are relevant, reasonably priced, and offer genuine value to the customer’s primary purchase, making this strategy beneficial for both the customer and the business.’
4. Personalized Recommendations
Personalized recommendations are a customer-centric cross-selling strategy employed in Shopify stores.
The product suggestions are especially suited to each customer’s likes and needs by drawing on information from their browsing history, recent purchases, and things in their cart.
For example, if a customer regularly buys a specific brand of coffee, recommending a complementary product from the same brand, like a coffee filter, could be a smart move.
This level of personalization makes the shopping experience more engaging and relevant, increasing the likelihood of additional purchases.
5. Post-Purchase Emails
Post-purchase emails are a strategic cross-selling tactic used by Shopify store owners to continue engaging customers even after they’ve completed a purchase.
After a customer makes a purchase, a follow-up email is sent to them with recommendations for related products. For instance, if a customer has bought a digital camera, a post-purchase email could suggest buying a camera case or a memory card.
This strategy not only provides customers with useful recommendations but also reminds them of your store, encouraging them to return for more purchases.
What is the Average Order Value or AOV?
Average Order Value (AOV) is a crucial eCommerce indicator that shows how much money customers typically spend on each order or transaction in your online business.
Understanding and tracking AOV can help businesses identify trends, optimize pricing and product offerings, and implement marketing strategies to encourage customers to spend more per transaction.
Increasing AOV can have a direct impact on a store’s profitability and overall success.
How to Calculate Average Order Value?
An important indicator for comprehending your consumers’ purchasing patterns is average order value (AOV). It reveals the typical amount of money spent by clients on each order.
To calculate AOV, here’s the formula:
AOV = Total Revenue / Total Number of Orders
For instance, if 200 orders were placed and your store produced $10,000 in revenue last month, your AOV would be $50 ($10,000 / 200 = $50).
Three More Ways to Increase Average Order Value
Volume Discounts
Volume discounts are a pricing strategy where the cost per unit decreases as the quantity purchased increases. This strategy’s main objective is to encourage customers to make larger single purchases, hence raising the Average Order Value (AOV).
Here’s how volume discounts work:
- Quantity-Based Discounts: When a consumer purchases a specific number of the same item, you give them a discount. For example, “Buy 2 shirts, get the 3rd at 50% off,” or “Buy 5 coffee packs, get 20% off your purchase.”
- Spend-Based Discounts: You offer a discount when a customer’s total purchase reaches a certain amount. For instance, “Spend $100 and get $10 off your order.”
- Tiered Pricing: This is a variation of quantity-based discounting where the per-unit price decreases as the customer purchases higher quantities. For instance, purchasing five bottles of lotion at once lowers the cost to $8 a bottle from a single bottle that might be $10.
However, it’s important to ensure your volume discount strategy still aligns with your overall profitability goals. Offering discounts can increase AOV and overall sales, but the discounts shouldn’t significantly erode your profit margins.
Free Shipping Threshold
Setting a free shipping threshold is a strategy where you offer customers free shipping if their order total exceeds a certain amount. By enticing customers to add more items to their shopping carts, e-commerce businesses may raise the Average Order Value (AOV) and increase sales.
Here’s how it works:
- Setting the Threshold: Determine an order value above your current AOV that will trigger free shipping. For example, if your current AOV is $40, you might offer free shipping on orders over $60 to encourage larger purchases.
- Promotion: Promote the free shipping threshold clearly on your Shopify store. Make sure customers are aware of the promotion, particularly when they are checking out, and can see how much more they must spend to receive free shipping.
- Cart Reminders: Remind clients how much more they need to spend in order to receive free delivery as they add goods to their cart. This can motivate them to look for additional items to add to their cart.
Loyalty Programs
Loyalty programs are a marketing strategy where you reward customers for their repeat purchases, thereby encouraging them to continue buying from your business. These programs can incentivize customers to spend more during each purchase, increasing the Average Order Value (AOV).
Here’s how loyalty programs can work:
- Reward Points: One of the most common types of loyalty programs is a points system. Each dollar a customer spends results in one point, which can subsequently be exchanged for discounts, free merchandise, or other benefits.
- Tiered Rewards: Some loyalty programs offer tiered rewards. The more a customer spends over time, the higher their tier and the better their rewards. This can encourage customers to make larger or more frequent purchases to reach the next tier.
- Exclusive Offers: Loyalty program members can be given access to exclusive sales, products, or discounts. These exclusive offers can encourage members to spend more to take full advantage of their membership benefits.
- Personalized Promotions: You can give loyalty program members personalized promotions based on their purchase histories, enticing them to buy more of the goods they adore or to try new goods depending on their preferences.
In a nutshell,
Product bundling is considered one of the best marketing strategies across every niche and industry, and both online and in-store owners take full benefit of it. So, if you’re selling products online, you must think about how you can incorporate this strategy into your marketing plans.
And of course, the main challenge that comes here is that it must ensure its success in the long run and not only for the time being.
Obviously, great products are the nerves of every online store. Still, you need to know what your potential customer wants and how you can maximize your profits while delivering their required product to them.
We hope that our product bundling strategies prove to be of great help to you and if you need further assistance from our end, do not hesitate to reach out to us!