Make the Most Out of Product Bundling
As you enter into a new season or unload a new batch of inventory, you may wonder how you can move your previous inventory fast to make room. You may also have an abundance of other inventory that just isn’t moving like you’d like it to, and need a way to generate quick cash flow. Enter the bundle. Product bundling is a proven retail promotion tactic that lets retailers combine two or more products together in a special package deal for the consumer. Customers love a good bundle, after all, just look at the popularity of “value meals” at fast food restaurants. Customers can easily see the advantages of bundling as getting “2 for the price of 1,” but the tactic offers advantages to retailers as well. Here are a few reasons to include product bundling in your promotional toolkit.
Move Inventory Quicker
In-between seasons is the perfect time to use product bundling to move slow or stale stock. It happens with all retailers — seasonal inventory starts to arrive in your store, and before you know it, your shelves are filled with both hot new merchandise and older items.
Your customers want new refreshed stock, and you want to move the old stock quicker so you can keep your shelves updated. Bundle those outdated items to help them along. Your customers will perceive the bundle as a value, and in return, you’ll move product faster than if you sold the items individually. Why let your old product take up valuable warehouse or shelf space when you can package it together?
Taking advantage of product bundle pricing is a quick way to grab customer attention. Find some of your best-selling products and use them as an incentive in a bundle with a less popular product. You can also do the same tactic if you have a line of merchandise, and one piece isn’t selling as well as the others.
You don’t always have to bundle low-selling products together; sometimes a bundle can boost your overall sales even with high performing products. One of the most-cited examples of bundling success is the case of Nintendo in a study on “mixed bundling” (the option to purchase a bundle) versus “pure bundling” (consumers forced to purchase a bundle). Nintendo actually sold more products when it offered the mixed bundle — a video game console and a video game sold together — or the option to buy each individually. When customers were given the option to buy just the bundle, and not the individual option as well, sales went down by 20%. Customers love product bundling as a purchasing option and if retailers want to capitalize on a good sales opportunity, sometimes an optional bundle is just the key. For instance, if you have a wide range of wine products and all of your products sell fairly well, you could enjoy even better profits if allow customers to purchase a wine rack and 2 bottles of fine wine at a reduced price.
If you’re not sure where to start, turn towards a POS that can handle product bundling. A POS bundle system is a great way to quickly sell groups of products and track inventory in one solution. Erply POS has a bundle feature that can be used to combine products at a fixed price for gift baskets and promotional sales, or if you just want to move certain stock along quicker. Each individual item sold in a bundle will be tracked within Erply for more visibility on the success of product bundles.
Get a Better Profit Margin and Limit Risk
Bundles are an excellent opportunity not only to move inventory but also increase your profits. Each of your items has a profit margin. If you have items with high margins, you need to move them quickly to make a return on them. Creating a bundle gives your customers the perceived value of the grouped items as being a money-saving deal without affecting your bottom line. If you have new candles at $20 each and then you get a set of bath bombs in at $15 each. Your customer can be offered a bundle of $40 each — now you’ve sold both for $20 each, making a profit of $5 for the bath bombs, yet not discounting the candles. You’re also limiting the risk of having those candles or bath bombs go stale on the shelf.
A POS bundling system can help you take your bundling strategies to the next level. Bundling products with Erply has the additional benefit of enabling you to be more proactive with your inventory levels. With Erply you can create assembly products, an additional product bundling option to help you track how often individual items sell. If you create a seasonal beauty kit as assembly product consisting of specific two candles, one specific bath bomb, and one specific cream as its inventory components,
Erply will keep track of each individual item’s stock separately from that item’s stock in the assembled product. For every seasonal beauty kit in your inventory, Erply will set aside those inventory components as separate products, specific for the bundle. Using a POS bundle system helps keep your bundles well-stocked and reduces the risk of overselling items that are individual parts of a whole bundle.
Stand Out Among Your Competitors and Attract Customers
It goes without saying that retailers are in a constant stage of competition. If you have goods that are similar to another retailer’s, you’ll want to find an edge over your competitors. Product bundling is an easy way to attract customers to your store with more product variety at better prices. Multiple direct-to-consumer clothing lines have begun favoring bundles as a way to appeal to customers. By pricing their apparel into bundles, the designers have made it easy for a customer to shop for an entire wardrobe as opposed to buying several pieces at multiple retailers. When they shop like this, customers also get to appreciate the brand and its products more, thereby increasing the ability they’ll shop there again since they know they can get all of the “essentials” at once. Retail bundling also makes it harder for competitors to do advance pricing analysis on your pricing strategies.
Finding a POS that can help identify these trends can be a great help when determining what products to bundle. In most cases, you’ll want to find software that goes above and beyond a POS bundle system. Erply lets you create customer groups, allowing you to categorize customers based on what they purchase often. If you own a pet store, you may want to create a customer group for dog owners. Using Erply, you can inform your product bundling strategies by printing invoice reports to see popular (or unpopular!) purchases among your dog owners groups.
Key Takeaways on Bundling
If you are in the retail business and are not bundling products, you are missing out on a golden opportunity. Using a POS bundle system can help your business maximize the benefits of bundles. With the right bundling opportunity, a store can benefit in four key ways:
- Increasing the unit sales volume.
- Offering new channel opportunities, including the option to combine products from different companies that naturally complement each other.
- Increasing overall margins.
- Increase exposure to new customers.
When designing bundles in a POS bundle system, you may want to think about how your products have an impact on your customers’ lives. This strategy was successful for consumer electronics companies in the 2000’s and 2010’s, when they began offering “theater in a box” bundles. These product bundles included everything needed to set up a home theater including cables, speakers, and screens. The value add for consumers was tremendous, since, in addition to purchasing everything at once, they did not have to worry about having the wrong cables, or buying components that did not have the right capacity, or not having a product that was necessary to make the system work. Consider the use case of each item in your bundle, why each particular bundle would appeal to a customer, and how a POS bundle system can be used to push out your bundles to the right audiences.