Indroduction
Chances are that as a retailer, you have been looking to or experimenting with product bundles as a way to increase revenue. Product bundling is a key ecommerce growth strategy that any retailer can leverage. For this strategy to succeed, it is important to ensure you are offering the customer the right “bundle” while not compromising on your individual product margins.
In this article I’m going to describe four key bundling strategies and how to implement them to drive sales. I will explore what they are, the key points to remember about each and how to set them up. Additionally, I will highlight best practice examples of well-known retailers leveraging these tactics effectively.
"Ideally you should be bundling products that have a positive synergy together," Harvard Business School professor Vineet Kumar says,"but what we have shown here is that even when synergy is negative, bundling can be profitable." - Forbes
In this article we cover 4 bundling strategies and how to implement them
1. Pre-Built Bundle / Set
Pre-built bundles or sets are the simplest and most pervasive form of bundling products together, often used for gift sets or hampers.
What is it?
Products are grouped together and sold as a package. The bundle is treated as a single SKU and the inventory tracked as one item. This means it's easy to set up in your ecommerce platform, warehouse and ERP. Pre-built bundles typically contain products with no variants or options. The bundle itself however can have size or colour options, as long as each product in it is the same size. For example, if you have three items of clothing, each item should be the same size, but can have different colours like Pepa & Co’s gift sets.
Key Points
- Inventory is tracked as a single item
- Revenue is tracked against the bundle, not the individual items
- Bundles need to be packaged together, either at source or the warehouse
- Easy to setup on any ecommerce platform as a standard product
How to set up?
- Set up as a standard product (with or without variants) in your ERP, warehouse management and ecommerce platform.
- Some minor design and development will likely be needed to present the bundle in the optimal way
Examples of Pre-built Bundles
Here are some best practice examples of well-known retailers using pre-built bundles.
Fortnum & Mason’s Gift Sets & Hampers
Mamas & Papas Pushchair Bundles
2. Virtual Bundle and Group
Virtual bundles allow you to group a set of standard products into a bundle on your ecommerce platform. It’s important to note that standard products that make up the bundle are tracked separately. Often a discount is provided as an incentive against buying the products individually, however the goal is to provide an easy way for the customer to purchase complimentary items together, thus increasing the average order value.
What is it?
Two or more standard products grouped together as a master / parent product in your ecommerce platform. The parent product is then presented to your customer as a single product on your website.
The inventory for each product is tracked separately. Usually the revenue is tracked into your analytics as a single product, however your warehouse and ERP will usually need the revenue attributed across each product in the bundle separately.
There are a few ways products are grouped together:
- A set of products with no options eg a table and chairs that can all be added to the basket with one click
- A set of products where the options or variants need to be selected eg “Get the look” where an item’s size and/or colour needs to be selected
Typically some work will be needed on both the frontend and backend of your ecommerce platform in order to allow virtual bundles.
Key points
- Bundles are set up in the ecommerce platform only
- Each product’s inventory is tracked separately
- Each product is a separate SKU at the warehouse and in your ERP
- You will usually need design and development tweaks
- Revenue is tracked against the bundle in your ecommerce platform and analytics
- Revenue is attributed against each product in your ERP and warehouse
How to set up
Virtual bundles can be supported by each of the four ecommerce platforms we work with, either natively or via an app:
- BigCommerce - has native support for bundling products through the Pick List functionality, which is very flexible.
- Magento - has native support for bundling products through its Bundles and Grouped product types.
- Shopify - can support bundling products through the Advanced Bundle Products app (other apps are available)
- Shopware - Can support bundling products through the Article Bundles extension
Examples of Virtual Bundles & Groups
Here are some best practice examples of well-known retailers using pre-built bundles.
Rodial’s Beauty Kits
Balance Me’s New Mum Kit
3. Bundle Builder
Bundle builders take virtual bundles to the next level and allow customers to select what products they want to buy together. Normally, the objective here is one of the following:
- Allow customers to configure a complex product with many options
- Upselling associated items and accessories eg a seat cushion with a garden chair
What is it?
A bundle builder is a complex product that allows customers to choose different options and products that make up a product. Common use cases are:
- A garden furniture set where you can choose to add cushions, parasols and covers
- Bedroom furniture set where you can select colour and add a bedside table or wardrobe
- A pushchair set that allows you to select a car seat, cot, baby bag, crib all in one package
- A computer that can be customised and extras added
How to set up
Bundle Builders can be supported by three of the four ecommerce platforms we work with, either natively or via an app:
- BigCommerce - has native support for bundling products through the Pick List functionality, which is very flexible.
- Magento - has native support for bundling products through its Bundle product type
- Shopify - currently supports this through the app Bundle Builder
- Shopware - can support bundle builders through the Article Bundles extension.
Examples of Bundle Builders
Lazy Susan’s Garden Furniture Builders
Dell’s PC Customisation
4. Buy Together and Save
Pioneered by Amazon, “Buy Together and Save” groups products together to tempt the visitor to purchase more.
What is it?
A manual or automatic feature that groups together products and allows the customer to purchase multiple products at the same time. This usually works best with products that have no options, for example books or lego sets.
If you have to select options like colour or size, this feature becomes more complex to design and build as it should still be easy to use for the end user.
Key Points
- Pioneered by Amazon with their “Frequently bought together” feature
- Links together similar products either by using an algorithm, rule conditionals or manual curation to present to the customer a set of products
- Usually combined with an incentive (in the form of a discount) if the products are purchased together
How to set up
This is an advanced feature that requires an app, extension or 3rd party like Nosto to implement
- BigCommerce - can be implemented using the “Frequently Bought Together” app by IntuitSolutions
- Magento - there are a number of modules available that offer this functionality for Magento 2: MagePlaza, Amasty and Aheadworks
- Shopify - can be implemented using the “Frequently Bought Together” app by Code Black Belt. See also other frequently bought together apps
- Shopware - can be implemented using the Article Bundle extension
Examples of “Buy Together and Save”
Amazon’s Frequently bought together
Gillette
Conclusion
Overall, product bundling is a very effective way to allow your customers to buy a range of products with just one click while also increasing your average order value. This tactic offers convenience and entices your customers to keep coming back.
No matter what ecommerce platform you’re using, there is always a bundling strategy you can set up. Start with simpler strategies like pre-built bundles or sets and as you get a few successes under your belt, you can then build more complex strategies. This will help you push your business forward, while providing more value to your customers.
Image Credit (Hero): Marissa Grootes
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