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You are here: Home / Digital Marketing / Bundling products to increase Average Order Value
Bundling products to increase Average Order Value

Bundling products to increase Average Order Value

posted on June 19, 2021

Product bundling is when you combine two or more products and sell those together as a bundle.

When you go to the supermarket and see three bars of soap bundled into one package. On top of the bundle, you might also see some text that reads “Save X Cents or Dollars”.

Well, that’s the most basic example of how retailers increase their average order value through bundling.

On an eCommerce store, product bundling is one of the most effective ways to increase conversion rates. Not only does it allow them to increase the price of each order, but it also helps clear out items that, otherwise, would be categorized as “slow-moving” and “non-selling” products.

This post is all about how bundling can help you increase the value of your orders. But before we begin, we need to establish some background. Let’s discuss the essentials of product bundling.

Product Bundling: What It Is and How Brands Use the Concept

what is product bundling, and how brands use the concept

From the introduction, you might have gained an idea of what a product bundle is. Basically, in a product bundle, products are combined in a single package rather than being sold individually. Body spray sets, the soap bundle from the introduction, meals, and cosmetics are common examples of product bundling.

A frequently used strategy when it comes to product bundling is mixing the best-selling product with a common product. That way, the average value of the order increases while also selling out the product that would be hard to sell individually.

The Psychology of Product Bundling

how Product Bundling works

You might be wondering if this is an old-timey sales method to increase sales. It is, but it also offers value to the customer. Again, take the example of the supermarket soap.

If you compare the price of separate bars of soap with the bundle, it’s clear that you’re getting more value for your money with the bundle.

Let’s see how you can use the concept of product bundling in your marketing strategy to improve your bottom line.

Look at the case of Nintendo, Their sales shot up significantly when they started to offer bundles of their products (games and consoles). Surprisingly, their sales declined by 20% when they were offering only bundles and not the freedom to purchase individual games and bundles.

There’s a “freedom of choice” scenario at work here. When Nintendo customers were given both options, they felt free to purchase whatever they like based on their preferences. The same was not the case when they had only one option at their disposal.

When you consider all this, it should be clear that having a mixed bundle along with the “freedom of choice” can give out more sales for your business. It also helps you understand the mindset of the consumers.

Another important thing you need to consider with your product bundles is value. As it stands, when you add a popular product inside your bundle, you’re increasing your chances of selling that bundle.

Why the Average Order Value Matters?

why average order value matters

The modern eCommerce world is competitive. I would go so far as to say that it’s cut-throat. Everyone is looking to get a piece of the pie with businesses going so far as to spend thousands of dollars to bring in more customers.

If you already have a sizable eCommerce audience, then using the average order value can be advantageous to you.

Let’s put this statement on for size and take the example of WooCommerce. With a simple plugin, you can add a shopping cart to your store, and bingo, you have a product bundle ready. It’s a lot easier than most conversion rate strategies.

Increasing AOV through product bundling

Now, how exactly can you persuade your customer to purchase product bundles from your store?

Why should they buy a bundle when they can purchase an individual product for less price? Besides value addition, there are several other strategies you can use to sell your bundles effectively.

Get Rid of Aging Products

Get Rid of Aging Products

If you have inventory that’s getting old, then you need to sell them ASAP. Bundling is a great way to sell them out before they add to your spoilage costs.

Compared with selling them individually where they wait to get past the expiration date, this is more effective. You can offer discounts on the product bundle to make the purchase economically viable for the consumer.

Promote New Products

Promote New Products image

If you’ve ever purchased a bundle and stumbled upon small product samples, then you’ve purchased a promotional bundle.

This is usually seen in bundles of cosmetic products. With the main products, retailers would also add a miniature pack of new products for customers to try out. If the promotional product offers some value to the product, then it means that the next time they come to purchase, they’ll purchase the larger version of the sample product – thus increasing conversions for your store.

Saving Money on Marketing

Saving Money on Marketing image

Considering how much marketing costs are already incurred by companies, product bundling helps reduce the costs of marketing. Instead of marketing a single product, you get to market several of them in a single bundle. All of that for the cost of one product.

Also, product bundling saves the resources and time needed by marketing and production teams to effectively sell the product.

The X and Y Strategy

Another good strategy you can use to improve the AOV for your website is the buy x get y offers. With the help of this bundling method, you can move the items that are not being sold from your inventory into the hands of the customer.

One of the most common product bundling types that massively helps in increasing AOV is the buy x and get y offer. This potent product bundling type can help you to sell your slow-moving products and also helps in promoting the newly launched ones. You see tons of examples of the x and y strategy in everyday life with “Buy One Get One Free” all around you.

Complementary Products Should Be Sold Together

Within your product categories, you have products that are usually purchased together. For example, conditioner and shampoo. Now, if the conditioner sales are down, you can combine it with the shampoo and sell them together as a bundle.

That way, you’ll be clearing out all the conditioner inventory in your store. In general, it’s good to give audiences the choice of choosing a regular product while also giving them bundles.

Conclusion

For a long time now, businesses have been using product bundling as a means to sell more and keep the flow of inventory smooth. With the eCommerce landscape as it is today, it’s important, now more than ever, to sell in bundles to convert more customers while also selling more.

Besides the strategies we’ve mentioned in this post, there are other ways you can increase conversion rates through your bundles by making them more appealing and branding them with your labels.

When done right, they can take your business to new heights.

Filed Under: Digital Marketing

About Tooba Harris

Tooba is an ecommerce enthusiast and writer. Her main areas of interest are e-commerce, WordPress and digital marketing. She enjoys reading and writing about e-commerce and loves to educate people about it. Her work has been published in many popular websites across the internet.

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Mohan
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Mohan
1 year ago

Just testing the Comments Plugin 🙂

Last edited 1 year ago by Mohan Dhanwani
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