How Product Bundling Helps Consumer Electronics Sell

For a company looking to increase its sales efforts, product bundling is one of the most flexible strategies available. Companies in industries ranging from telecommunications to fast-food chains use product bundling and kitting to encourage customers to buy more products. The practice can create powerful sales results for all types of businesses.

Makers of consumer electronics, in particular, have enjoyed success when implementing product bundling strategies. Product bundling helps consumer electronics sell by combining multiple electronics and accessories that consumers are likely to purchase together. This guide will lead you through the benefits and approaches to product bundling so you can positively impact your business’s bottom line.

Product Bundling Basics

First, what is product bundling? Product bundling is the practice of selling multiple products together in one listing, or bundle, sometimes at a discount compared to the price of the items individually. These products are packaged, shipped and sold as a single unit, and they usually have something in common.

Perhaps one of the best-known examples of product bundling is meal deals at fast-food restaurants. These meal bundles allow customers to buy a sandwich, fries and a drink for a lower cost than each of those products separately. Successful bundling follows the same logic of grouping together items that customers want to purchase all at once. In the consumer electronics industry, a retailer may offer a bundle of products that includes a computer with select software already downloaded.

Product bundling involves creating a master SKU that lists all the SKUs for the items in the bundle. A master SKU allows you to offer more products on your selling channels without increasing the inventory SKUs you need at the warehouse.

Product Bundling vs. Kitting

Some companies distinguish between product bundling and kitting by labeling groupings of identical items as a bundle and groupings of usually-separate items as a kit. However, the two terms are generally interchangeable. Bundling can include similar or complementary products. When used together, kitting and bundling are part of a complete product bundling strategy.

Benefits of Product Bundling

The rewards your company stands to gain from product bundling are well worth the extra effort spent organizing warehouse inventory. Consider the following product bundling benefits:

1. Increased Sales Opportunities

Product bundling allows companies to increase their average order value. Amazon masterfully uses this strategy by offering online shoppers a “frequently bought together” recommendation, encouraging customers to bundle items they would not have otherwise considered. This suggestion is compelling: an estimate from McKinsey found that 35% of purchases on Amazon come from those recommendations.

Bundles provide a streamlined shopping process that lets customers get what they want more efficiently. Especially if you allow customers to mix and match what comes in their bundle, you give them a convenient and satisfactory shopping experience. If you can find the sweet spot where customers want to purchase all of the items in your product bundle, you have the chance to earn more of their business.

2. Convenience

Besides the potential to increase sales and average order value, companies benefit from the convenience of product bundling. Packaging and shipping individual products is a more complicated process. With bundling, you can quickly package the items into one box designed to accommodate the bundle and promptly ship it to your customers.

3. Reduced Packaging and Distribution Costs

As mentioned above, selling more product bundles enables your company to cut packaging costs by packaging multiple items together. You may be able to save on materials like boxes, infill, labeling and postage. Kitting effectively can also cut down on packaging items individually.

Fast shipping is vital to your warehouse operation. The consistency of knowing the same products are always shipped together helps streamline the order fulfillment process. With a pre-set weight for a product bundle, you can also save time by not constantly weighing packages containing differing items.

4. Reduced Inventory

Unbought merchandise adds to holding costs and creates waste. Product bundling can help you move stagnant inventory out of the warehouse by encouraging sales of lesser-known items. For example, by bundling a less popular video game with other sought-after games, you’ll likely sell more of the lesser-known game, freeing up warehouse space for other products.

Strategies for Product Bundling

Choosing a product bundling strategy takes careful thought. For example, a 2012 study introducing the idea of the “presenter’s paradox” found that customers were willing to pay more for a bundle of products including just an iPod Touch MP3 player and a cover than for the same iPod Touch, cover and an additional free song download. The paradox is that customers average the value of all items in a bundle rather than totaling their value.

The takeaway is to get customers to focus on non-price attributes of items in a bundle, like the speed of a computer or the effectiveness of noise-canceling headphones. Highlighting the overall value can encourage customers to go with the bundle by making them less likely to categorize items in terms of price.

A study examining the bundling of Nintendo games and consoles found that pure bundling — offering items only in a bundle instead of selling them separately — decreased sales considerably. Conversely, selling items individually and in bundles increased sales. Many customers also held off on buying gaming bundles because they reasoned that new updates to the consoles would take effect over time, so they waited for a more advanced product.

Based on studies of this nature, pure bundling is not ideal in the consumer electronics market. Instead, choose a mixed bundling approach that offers individual items as well as product bundles. Customers then have the flexibility to choose what works best for them.

Other bundling strategies include the mix-and-match bundle mentioned above. Cross-sell bundles, which bundle a higher-priced item with an accessory or complementary product, are often used in the consumer electronics market when retailers include items like a computer case with the sale of a laptop. Giveaways and samples are also great ways to satisfy customers with complementary products that they may later buy individually.

Product Bundling With Finale Inventory

Finale Inventory understands the appeal of product bundling and the positive impact it can make on your company’s bottom line. Successful product bundling begins with efficient warehouse inventory management. Inventory software can make it easier to create and manage bundle sales.

You should consider several factors when choosing inventory management software. Finale Inventory’s serial number tracking software helps you set up ID numbers for both the parts of a bundle and the parent bundle itself. You can then increase your product listings by bundling products into a new listing. The software will also help process orders and update inventory accordingly, tracking the SKUs of the individual items so your inventory is always accurate.

Choose Finale Inventory for Efficient Inventory Software

Product bundling is a flexible way to increase your product listings, satisfy savvy customers and move inventory out of your warehouse. A smart bundling strategy can increase the cost of your average order and help you sell more products.

Finale Inventory offers inventory management and serial number tracking software to help you stay on top of product bundle sales. Make your bundling strategy as efficient as possible with Finale Inventory’s software. Schedule a demo or register for a 14-day free trial today.