A six-point framework for designing a product bundling strategy for your Shopify store
Reporting & Analysis
Product bundling is a strategic win-win for DTC brands and customers, boosting sales, AOV, and loyalty. Utilizing customer data to back bundle creation and selecting complementary products enhance the appeal. Analyzing purchases through tools like Airboxr's Buyers by SKU Hop aids in identifying popular combinations. Pricing strategy, bundle name and merchandising are key factors to consider when creating a bundle. Metrics like sales revenue, AOV, and bundle penetration rate can be used measure product bundling performance.
Product bundles are a smart move for DTC brands because it benefits everybody. For businesses, product bundles are a great way to boost sales which in turn increases average order value (AOV). It also increases profits, saves marketing costs, clears slow-moving inventory, and also builds customer loyalty. For customers, it's a way to save money, shop conveniently, and discover new products. It's a win-win for both parties. In a competitive market, using bundles can set your brand apart and increase the number of returning customers.
They boost sales and profits while making customers happier. Bundling related products offers shoppers convenience and better value, encouraging them to spend more. It's a win-win. Plus, it builds loyalty by simplifying the buying process meeting specific needs. In a competitive market, using bundles can set your brand apart and increase the number of returning customers.
💡 Product bundling is a marketing strategy that intelligently combines multiple related or complementary products into a single package or bundle. This approach provides customers with convenience, cost savings, and a comprehensive solution to their needs. Meanwhile, businesses can leverage this strategy to increase average order value while controlling marketing and distribution costs.
In this article, we will talk about a six-point framework to design your product bundling strategy.
Selecting customer segments to design bundles around
Let's start with the most important part of a product bundling strategy: the customer. Customer segmentation is critical for DTC brands aiming to create effective product bundles. It involves dividing your customer base into distinct groups based on shared characteristics, behaviors, and preferences. You can tailor your Shopify product bundles to meet the unique needs of each segment, thereby boosting the appeal and effectiveness of your offerings.
For example, let's take a look at Amazon's approach. They do this by segmenting their vast customer base by factors such as buying history, browsing habits, and location. This allows them to create highly personalized product recommendations and bundles. For instance, if a customer frequently buys gardening tools and outdoor furniture, Amazon might suggest a "Gardener's Paradise" bundle, including gardening tools, outdoor seating, and accessories. According to a study by McKinsey, 35% of Amazon sales come from product recommendations, including bundle recommendations. Another study by Forrester states that this type of product bundling has a success rate of 50%-60%. This is evidence of how effective product bundling strategies can be when carried out effectively.
Using your customer data to inform your product bundles
One way in which you might want to build a customer segment is by identifying which customers bought a certain product and studying their shopping habits. This is where you can use your store data to your benefit, and learn your existing customers' purchasing preferences.
You can use Airboxr to do this. Run our Buyers by SKU Hop, which automatically analyzes your orders to create a customer segment of people who purchased a particular item in your store. Not only does it show your list of customers, but it also shows a vital piece of information - namely, which other items the customer purchased together in the same order as the SKU you're looking up. This gives you an indication of which products are currently already being bought separately, so you can determine if the product you're looking at should be bundled with any other product.
Analyzing purchases bought together by specific customer segments is one of the product bundling strategies you should be using in your store. Understanding your target audience through segmentation empowers DTC brands to design bundles that resonate with specific customer groups, increasing the likelihood of sales and customer satisfaction.
Selecting complementary products for your Shopify product bundles
Product selection is the next critical part of designing a product bundling strategy. Complementary products, those that naturally go together or enhance each other's value, should be at the core of your bundle creation strategy. We already see it in action with popular brands around us.
Starbucks: Starbucks is a master at creating complementary product bundles. Their "Morning Essentials" bundle combines coffee beans, a French press, and a coffee grinder. These items are naturally linked, enhancing the customer's coffee experience and driving sales of related products.
Microsoft: Microsoft's Office 365 bundle is another standout example. It includes Word, Excel, PowerPoint, and more—all software that complements each other seamlessly. Customers get a comprehensive suite of productivity tools, increasing the bundle's appeal.
Apple: Apple's "Pro Apps Bundle for Education" bundles together all the creative apps that a student might need.
McDonald: McDonald's Happy Meals is an example of product bundles. Instead of selling a burger, soda, and french fries separately.
So how do we create product bundles?
The good news is that if you have been running a store for a while, you already have the data needed to identify which two or more products to bundle together. To do this, you need to answer three questions:
How often are two specific products bought together? If a high proportion of your sales are already being bought together, then it’s worth considering building a bundle with them.
What’s the likelihood that a specific second product will be purchased in the same cart as another product?
Does adding a product to the basket increase the likelihood of another specific product being purchased? If so, you should probably bundle them together.
This may sound like a lot—and it often is—but Airboxr can help you conduct this analysis with a single click. Just create a free account by installing our Shopify app.
Got too many options? For instance, maybe have four special flavors all of which could go together? Try out a Build Your Bundle option on your store, like CanDo does.
CanDo protein bars allows users to design their own bundle from scratch.
Should you use an app to design product bundles on Shopify?
While I suggest doing this analysis on your own to truly understand your customer behavior and take more strategic decisions, you could also use apps on the Shopify store to create these bundles for you. You can use the analysis above to design your bundles and use Shopify’s product bundles app to showcase your bundles.
Other apps you can use include the following:
Designing a pricing strategy
Determining the right pricing strategy for your product bundles is crucial to their success. It's a balancing act between offering value to customers and ensuring profitability for your DTC brand.
Here are some examples.
Sephora Value Sets: Sephora, a cosmetics retailer, creates beauty sets by bundling various makeup and skincare products. These sets often offer a slight discount compared to purchasing the individual items. This strategy encourages customers to explore and purchase complementary products, driving higher sales and introducing customers to new products.
Blue Apron Meal Kits: Blue Apron delivers meal kits that contain pre-portioned ingredients and recipes for cooking meals at home. The total price of their bundles typically reduce the per-serving cost for customers, making the kits an affordable option.
Naming your bundles
Making your bundles fun is a creative rather than a strategic exercise. I’ll let the legendary Nik Sharma explain it in his words.
Make your own bundle name, don’t make it very generic—a New York City apartment bundle if buyers of your cookware are coming from NYC, call your skincare bundle an anti-aging bundle instead of a premium skincare bundle, call your supplement bundle an Olympic weightlifters’ bundle instead of simply “protein pack”.
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Also the description of your bundles should be easy to read and understand. The goal of product bundles is to make it easier for shoppers and therefore the description should be broken down to make it simple to understand to your typical customer.
Merchandising your bundles
Merchandising product bundles and effectively showcasing them on your Shopify website is crucial for capturing customer interest and driving sales. Here's a detailed guide on how to do it effectively:
Compelling Imagery: Use high-quality, visually appealing images that clearly display the bundled products together. Show different angles and provide zoom-in options so customers can examine the bundle closely.
Bundle Name: Craft a descriptive and enticing name for the bundle. Make it concise yet informative, conveying the value or theme of the bundle.
Pricing Display: Display the bundled price prominently, showcasing the potential savings compared to buying items individually. If you offer a discount, clearly indicate the percentage or amount saved.
Limited-Time Offers: Create a sense of urgency by adding a countdown timer or indicating that the bundle is available for a limited time. This can motivate customers to make a purchase sooner.
Customer Reviews: If applicable, include customer reviews and testimonials related to the bundle. Positive feedback from previous buyers can build trust and confidence.
Here are some great product bundling examples we've seen in the wild, that do a good job of merchandising on their websites.
Kylie Cosmetics promotes ready-to-go kits that put together complementary products you will need to solve a problem comprehensively.
La Roche Posay promotes an anti-aging bundle here and highlights the savings in the Buy button.
BeardBrand dedicates entire landing pages to bundles and even puts Bundles on their top navigation.
Outdoor gear company RUX showcases an all-in bundle, also includes bundles prominently on their top navigation.
Measuring the impact of bundles
Measuring the performance of product bundles in sales involves tracking various key metrics to assess their effectiveness and impact on your business. Here are the essential metrics to consider when evaluating bundle performance:
Sales Revenue: This metric is of paramount importance as it directly reflects the financial impact of product bundles on your business. Tracking sales revenue helps you assess the overall success and profitability of your bundled offerings.
Average Order Value (AOV): AOV is a critical indicator of whether bundles are effectively increasing the amount customers spend. A higher AOV suggests that bundles are successfully encouraging customers to purchase more, contributing to increased revenue.
Bundle Penetration Rate: Monitoring the percentage of customers who purchase bundles in addition to standalone products is essential. A rising bundle penetration rate indicates growing interest and adoption of your bundled offerings among your customer base.
Airboxr can help you measure the sales revenue for each product over time—so you can compare the sales of the products before and after bundling to determine if bundling led to an increase in overall sales. Try it out here.
Designing product bundles is a great strategy to improve average order value (AOV), especially during sale season. It's always best to start with learning what your customers want - that is, looking at specific customer segments on your store and seeing what buyers are purchasing together. From there, making selections on products to bundle, setting names and prices for them would come easily. Experiment with merchandising these bundles on your online store, and always measure the effectiveness of your choices with a proper analytics setup.
This isn’t a strategy in isolation, however - it should be part of a greater overall marketing strategy. To have a more holistic view of opportunities to increase revenue, combine your product bundles with customer segmentation and cross-sell analysis. Don’t simply look at what products are bought together, but also what products are bought after. Do people who buy bundles go on to buy more expensive products later? Or do they only look for discounted sales?
By implementing your product bundling strategy within your greater marketing plan, you can deliver long-term and sustainable sales for your brand.