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How to use product bundling to gain a competitive advantage.

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MyFBAPrep

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Competition is fierce in the ecommerce industry, and the pool of rivals continues to widen. 

Sellers have to find increasingly creative ways to gain an edge over the competition. One of the most common, but effective, ways to differentiate and remain competitive lies in product offerings — sourcing the best products and offering competitive prices.

However, you can only lower prices so much, and eventually, you'll find yourself up against sellers with the same products as you. What can you do then?

Bundle.

You already know your customers love your products, so why not bring them more of what they love in one simple purchase through product bundling? Read on to learn everything you need to know about bundling, how it helps you gain a competitive advantage, and why it won't force you into pricing wars against your competition.

What is product bundling?

In its simplest form, product bundling is the process of combining two or more items to create a single product offering. It’s a brilliant sales and marketing strategy that allows you to sell more, offer greater value to your customers, and stand apart from the competition.

There are two main types of bundles:

1) Pure bundling: You offer two identical products as a pack instead of selling them separately to create a unique buying opportunity for your customers with lower costs and greater value. This allows you to move twice the inventory of a single product, which is especially helpful as you approach peak seasons for certain product offerings (such as sunscreen in August).

2) Mixed bundling: You offer multiple different, but complementary items within one pack. Customers can choose to buy these items separately, however, they’ll save money by purchasing the single bundle. This allows you to sell a larger quantity and selection of products than if you sold each of them separately.

Are there any rules or restrictions?

Most ecommerce platforms, like Amazon, require bundles to be composed of "highly complementary products," such as shampoo and conditioner, two bottles of toothpaste, or a sunscreen, post-sun, and burn cream combination pack.

In some instances, you might be able to get away with simply aligning products based on brand name (e.g., an Estee Lauder moisturizer and mascara) even if the two products don't necessarily relate.

As a rule of thumb, your bundle should deliver value to your customers. This is usually demonstrated by the slightly lower price per item, along with the ease and convenience of two or three items bundled together to save the customer time searching for each product separately.

Tip: Take a look at items that are commonly purchased together to find out which bundles would best serve your customer base.

How product bundling can set you apart and grow your business.

The main objective of product bundling as a strategy is to create a set of products that provide more value together than apart. Executing bundles well means happier customers, and more ROI for your business.

1. Easy one-click purchase

Consumers are overwhelmed with options for individual purchase, and searching for more than one item only exacerbates this issue.

Let's pretend you're a consumer looking for a wireless keyboard, a mouse, a dongle, and a stand for your laptop. Dozens of sellers offer each of these products on their own, and several others have the same brand names. Chances are, the prices are all pretty similar as well. You could add each one to your cart, hoping to get all black or all white items after scrolling to find the same ones. Or, you could find a bundled offering of all four products and purchase with a single click. What would you do?

A unique combination of products in a single bundle enables a one-click purchase for customers, saving them time scouring the internet for everything they need. 

2. Unique product listings (a standalone offer)

If you sell Coppertone sunscreen, your listing is competing against dozens of other listings selling exactly the same thing.

A quick search for Coppertone SPF 30 sunscreen in November yielded 43 product listings, with about half of those being almost identical. Guess which listings caught our attention? Duo-packages and bundles of more than one bottle of sunscreen. These unique listings not only stand out in search results, but also look more appealing because the price per 100mL is lower, too.

While it's unlikely your customers will search for SKUs in Amazon, know that your bundled offering creates a unique product listing and product code. If you and twenty other sellers use the same manufacturer barcode for your products, your items blend in with the masses.

However, if you have a unique bundle that includes that manufacturer barcode as part of a set, your new, special barcode will stand out. This gives you an edge when competing for the buy box and coming up in search results for those items.

And, in the case of pure bundle offerings, your two-XYZ offering next to a single-XYZ offering will immediately demonstrate value to online shoppers.

3. Deliver value instantly

All consumers love to score a great deal. In most cases, it's why they shop on Amazon to begin with. The ability to deliver value instantly to your customers is of the utmost importance to help set yourself apart from the competition.

As mentioned above, in pure bundle offerings, a customer can immediately spot the value in buying a bundled package as opposed to single items — especially in the case of high-usage products like toothpaste or face cream — through the lower price per item or per volume. However, value isn't always measured in dollars and cents.

Bundling common-use items like pens or notebooks can save your customers time and energy spent searching for these items separately with the ease of one-click purchasing. And the added convenience of a single package delivery means everything arrives at once, so they're not left waiting for items to trickle in from multiple warehouses.

There’s also value simply in discovering unique offerings that meet your needs as a consumer.

4. Introduce new products

Product bundling is also an excellent strategy to introduce new products to your buyers.

If you have a best selling item and have just launched a new complementary product, offer a bundle that will encourage your customers to try that product for the first time.

For example, if you’re known for your shampoo and just launched a hair mask, you can provide a bundle of two of your best selling shampoos that comes with a free hair mask sampler.

By using bundles strategically, you can upsell and cross sell buyers across your different product lines and items, creating more loyal customers who have tried (and can rave about) all of your different offerings.

5. Increase average order value

Your product bundling strategy should cater to your buyers, but as a result, it’ll help grow your business as well. Offering bundles helps to boost your AOV so that each sale generates a little more ROI for your business. Across multiple purchases, those bundles and extra dollars add up.

You can then take that ROI and invest it back into finding the best bundles your buyers are most interested in, creating an even better buyer experience.

How to incorporate product bundling into your strategy.

Now that you understand how bundling is an effective strategy to help you build your business, break apart from the competition, and inspire customer loyalty, you're ready to implement it as part of your strategy.

Resist the urge to start bundling anything and everything you can. Instead hone in on developing your strategy, from sourcing your products for bundling all the way to fulfillment.

Start where you're at

Before you bundle anything, take a look at where your ecommerce business stands presently. A great place to start is by reviewing your best-performing products and identifying the low-hanging fruit there.

Perhaps your best-selling products are a particular shampoo and conditioner. Are customers currently buying both of these products at once? If so, bundle them! Perhaps the shampoo sells at a higher rate than the conditioner, meaning that a two-shampoo, one-conditioner offer will be highly appealing.

If your best-selling product is a particular package of AA batteries, perhaps it's time to pure bundle with a two-pack offering. Whatever your best-performing product, turn it to your advantage.

Similarly, if you have an item that doesn't sell so well and you'd like to move more of it, you can add this item to bundles to clear that inventory. Maybe it's a wet brush or comb you can tack onto that shampoo and conditioner bundle; perhaps it's a less popular battery type or an atypical pack size that would do better as part of a bundle. The key here is to review your data, understand your customer's preferred products, and act accordingly while being mindful that this item will truly provide value to your customer.

While you do this, also take note of what the competition is offering. This will give you a sense of what product bundles are currently in market for a jumping-off point, as well as determine whether or not particular bundle types make sense. If no one else is doing something similar, it could be for a good reason. (But that's no reason not to test.)

Optimize your bundling and kitting prep

Once you've determined what items to bundle, it's time to figure out how to bundle them correctly and prepare them for fulfillment. This is where a prep and fulfillment partner can help add value to your business and optimize your logistics.

Bundles sold on Amazon must be prepackaged and prepared for fulfillment, complete with their unique FNSKU and in compliance with Fulfillment by Amazon (FBA) packaging requirements. A partner like MyFBAPrep could handle the task of assembling your bundles for you, and go a step above to ensure the packaging is handled expertly, right down to the inclusion of custom inserts and managing nuances around size or product type.

Remember that bundles sold on Amazon are required to contain complementary items; you can’t include an arbitrary item in a bundle just for the sake of it. Beyond being nonsensical and going against Amazon's seller guidelines, this can lead to customer dissatisfaction when they receive a product that doesn't align with the rest of their bundle, or isn't of value to them.

Create your unique product FNSKUs 

When you’ve determined your unique bundles, you can then create unique FNSKUs for Amazon. FNSKUs are Fulfillment Network Stock Keeping Unit numbers, and they're unique to FBA. The FNSKU makes it possible for FBA fulfillment centers to keep track of your inventory easily, even if another seller has the same product for sale (though this is less likely to occur in bundling situations).

You have to create new products for sale on Amazon to produce FNSKUs. To do this, you need to make a listing in your Amazon catalog and then set that product to FBA (not Fulfilled by Merchant, or FBM). Amazon will automatically assign an FNSKU to your product, which you then export and affix to your products before sending to a fulfillment center.

If you’d rather skip this step, a 3PL partner like MyFBAPrep can handle it for you.

Don't forget seasonality

Bundles are a great way to offer special promotions throughout your seasonal calendar. For example, pure bundles of multiple sunscreen bottles might be a hot commodity in June, but the promotion would fall completely flat in November. Similarly, a two-pack of winter gloves likely won't fly out of the fulfillment center during the warmer months, but would make a great stocking stuffer leading into the winter holidays.

Testing out bundle types and configurations at different seasonal peaks can let you rotate your stock and provide new and exciting promotions for your customers.

Wrapping up — Use product bundling to stand out and boost your AOV.

Bundles are an effective strategy for ecommerce sellers to both differentiate their product offerings and wow customers by delivering exceptional value and unique shopping experiences. With a little trial and error and a good look at your existing data, you can easily create new product offerings without needing to return to the drawing board or source alternative goods for sale.

Perhaps most importantly, bundling can help you avoid the dreaded price wars with your competitors so you don’t race to the bottom on pricing and undermine the value of your own offerings.

With a few exceptional bundles tailored to your customers' needs and behaviors, alongside a partner that can package your bundles quickly and efficiently, you'll be able to leave the competition in the dust.

Download the Linnworks Total Commerce Guide to Automation.

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