Product Bundling Strategy: How to Boost Your AOV With Kits and Bundles
Last updated on October 3rd, 2022 at 12:02 pm
Kits and bundles help increase average order value (AOV) by literally landing more of your products into consumers’ hands through a single order. When done correctly, they provide convenience and save your customers time and, potentially, money.
They also allow shoppers to purchase the products they need in one SKU. This, in turn, can improve customer loyalty, further raise the average value of your sale, and reduce the cost of shipping per product—all of which add significant value.
To be successful, it’s crucial to plan your product bundling strategy in detail. Whether you sell through your own web shop, via Amazon with FBA, or on some other marketplace, you need the infrastructure, bundle planning, and strategy in place to make it work.
How bundles elevate AOV
Bundles let you sell more products by combining items people frequently buy. Much like Amazon’s “Frequently bought together” section, bundles excel when they rely on data to predict what customers are most likely to purchase in one shopping spree.
Having a bundle available as a single kit increases the likelihood that people will purchase the full set. For example, if you sell a coffee maker, shoppers might not realize you have the filters, cleaners, and a supply of coffee to go with it. If you make a “coffee starter set” though, you can incorporate all of those extras to boost the total value of the sale and entice more buyers.
Of course, pairings have to make sense to both you and the customer. They should include:
- Products customers want to buy together
- An incentive to buy the bundle (e.g., a discount)
- Logistical feasibility (you should have all of these items in one warehouse at any given time)
- Inventory management (you have to be able to manage bundles or kits as part of your inventory)
Analyze and incorporate purchase trends, customer feedback, and other data to fine-tune your bundles and bundle management over time.
Build enticing bundles
The first step in your product bundling strategy is deciding what items to bundle. People need logical reasons to buy products in a set, such as:
- Items that are frequently sold together
- Kits (e.g., camping kits, cleaning kits)
- Accessory packs (all accessories for a certain product, a product plus its accompanying accessories, etc.)
- Complete sets (e.g., book or TV series, collectibles, dishware)
- Starter kits (drinks, home gym, sports nutrition, shaving, etc.)
- Gift packs
- Multipacks (utilities that wear out regularly such as soap, toilet paper, cleaning supplies, crafts supplies, etc.)
- Introductory or trial sets (e.g., bath and body combos, sample sizes, new products)
Remember, you’ll have to ship the items you group together, so consider size and quantity as well as the reasonableness of the pairings.
Make it worthwhile
Another important part of creating a tempting bundle is the pitch. You need an attractive hook or reason for someone to make a purchase, and the larger your product bundle, the more important that becomes.
Discounts are a great way to incentivize bundle purchases, especially since they can sometimes cost you nothing. An easy way to determine a bundle discount is to look at the total cost of pick and pack and shipping for each individual product versus together.
Chron.com estimates retailers spend 10%–40% of a product’s sale price on packaging. On average, packaging starts at around 30¢ and can reach over $18 depending on where you source it. If you opt to ship in bulk, you’ll cut that expense and can discount the item. Those savings extend to order management, labeling, and postal pickup costs as well. You’ll spend less, so you should pass that on as a customer incentive to purchase.
If you have a free shipping threshold, it’s important any bundles or kits you have meet or exceed that minimum. Customers are much more willing to purchase if they have free shipping, especially if buying individual items doesn’t reach it.
According to Invesp, 90% of consumers rank free shipping as their top reason to shop more online, and more than 78% of Amazon Prime members signed up for free shipping. They also found that 58% were willing to add more items to their card to qualify for free shipping, and orders with free shipping were roughly 30% higher in value. All of those statistics point to free shipping being a great driver for bundles, and vice versa.
In some cases, you can encourage sales by offering exclusive items. This is effective for fashion, luxury goods, and collectibles, but less so for categories like food, nutrition, and hardware or general home supplies.
If you add a high-end item to a bundle, make sure it’ll remain unavailable as a regular catalog offering for some time. Many ecommerce sellers join together to assemble bundles that introduce new products across brands, giving people exclusive first looks. However, the sales opportunities for these kinds of bundles are limited by your inventory.
Refine your logistics and infrastructure
One of the most difficult aspects of introducing bundles or kits into your ecommerce store is logistics. For example:
- Are bundles pre-packaged in your warehouse? Or, can you pick and pack from individual items?
- How do you share individual product specifications within bundles? What about images?
- Are bundles sold as a single item or as a list of its components? Is this consistent between the checkout, invoice, and receipt?
If bundles are sold as a list of SKUs…
- Can buyers customize bundles based on color/size/type/etc.? Do you have software to handle that level of customization?
- How are SKUs translated to the warehouse for pick and pack? As a bundle with a bundle code containing SKUs or as a list of SKUs?
- How do you avoid selling bundles if not all products included are available from a single location?
- How does your inventory/warehouse management software update product availability once bundles are sold? As “bundle sold” or by reducing the inventory count of each product included? (Ideally, you want the latter.)
- Do you have real-time/near real-time inventory management tracking in place to avoid products selling out within or outside of bundles as you sell in more than one place?
- Can your fulfillment providers handle bundling products? Or, do you have to prep bundles in-house?
At some point, you’ll need a robust inventory management platform with real-time data synchronization across channels to continue bundling seamlessly.
If you’re unable to collate all of your inventory sources in near real time, you’ll likely have to split it, which will cost more and thus reduce the value of your bundles. What’s more, a lack of real-time data may force you to prep bundles manually to ensure fulfillment can handle the order, products remain together, and prevent overselling through your multiple inventory streams.
Solutions like Flxpoint offer integrations into most marketplaces and inventory sources, near real-time data synchronization across those points, and order automation to streamline most of the process of launching and selling bundles.
Not every bundle will be successful or profitable. So, it’s important to track the sales, profitability, and cost of selling a bundle versus the individual products. Combine those analytics with customer data and feedback to refine your product bundles and kits and improve your profits.
Wrapping up — Invest in your product bundling strategy to boost AOV
Adding bundles and kits to your inventory can boost your average order value. Companies often achieve similar results through tactics like item recommendations and upsells so they don’t have to include a hard kit or bundle in their catalog. However, bundles can add significant value by reducing the amount of time customers have to spend on your site, simplifying their purchasing process, and delivering the items they need—all in a single package.
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