Perfecting product bundling to drive your eCommerce business

“Would you like fries with that”? So it goes, when we think of driving additional income for any business, McDonalds approach to point of sale cross sell has become part of everyday business vocabulary. McDonalds is proof that a simple, repeatable prompt from the its frontline workforce, can deliver an enormous impact to the bottom line as reported by TNW.

But McDonalds too has been grappling with change and the world’s transition to digital. It’s not just fries that McDonald’s has perfected in the cross sell. The Covid-19 pandemic has driven acceleration of changes to McDonalds business model, some of which are likely to remain permanent. If there was any doubt in where they see the future heading. McDonald’s purchase of AI company Dynamic Yield in 2019, signified that AI and Machine learning would be their next weapon in pricing, bundling and providing contextual sales triggers.

As McDonalds has proven in perfecting their meal bundles and point of sale triggers, satisfying customer demand (often latent) and preferences with precision, should be a truly scientific exercise no matter how simple it is in the actual delivery of the message. Perfecting these triggers, product combinations and bundles requires continuous testing and feedback and a relentless focus on optimization which can be accelerated now by machine learning.

In the world of eCommerce, product bundling has become a whole lot more interesting due to the myriad of APIs, digital services and subscriptions customers can now be offered. Online retailers and wholesalers have an ever increasing opportunity to generate ancillary/affiliate income streams, around their core offerings. Blending physical products with digital products into hybrid bundles is commonplace today.

These offerings can have a dramatic impact on perceived customer value, repeat purchase intent, as well as margin and profitability of an online business and lifetime value of the customer.

Consider Apple’s very latest announcement with the launch of Apple One. Amidst declining rates of device refresh for their flagship iPhone range, Apple has made a bold statement in their transition towards more subscription based revenue – a bundling of up to six digital services accessible through Apple’s range of devices. Consider Forbes staggering statistic that 70% of Americans with incomes of $150,000 or more, have an Amazon Prime membership. Apple is rarely first to the game, but a they have shown repeatedly they have achieved near mastery in perfecting and improving the experience. Apple One appears almost compelling value for most of Apple’s devoted customers, but better still, may be it’s biggest attack yet on the likes of Netflix, Spotify, Dropbox, Peloton and Strava.


So here’s 8 tips to grow your eCommerce business through intelligent product bundling:

1. Combine physical goods and digital services
   If you’re in the business of selling physical goods, find out what related digital services matter most to your customer.
   
   
2. Research and understand the full value chain in the product vertical
   There’s every chance you may be capturing only a small portion of the value chain your customers participate in.
   
   
3. Leverage the surrounding digital ecosystem
   It’s quite possible there are APIs and affiliate marketers that you can plug in to your site or conversely, inject your products into theirs.
   
   
4. Create a subscription based product and drive repeat purchases
   Everyone can learn from Apple, Amazon, Spotify and Netflix.
   
   
5. Perfect the bundle
   Customers will often respond positively to a bundle offer, because they perceive greater value. The key is finding what combination of products and services delivers that perceived value.
   
   
6. Rethink your packaging
   Use the myriad of creative way to drive repeat sales through packaging design, inserts, offers and coupons.
   
   
7. Experiment with AI/machine learning
   Even if you’re a small player, this technology is accessible to all now. You don’t need to be a tech giant to apply this to your business.
   
   
8. Test bundling offers at different points in the sales journey
   Customers will be more or less willing to respond based on which point in the customer journey the trigger is made.
   
   
9. View shipping as part of your bundle
   In the eyes of most online customers, the shipping cost is part of the bundle. Incentive buy more with a free shipping bundle that will usually increase average sales and gross margin.
   
   
10. Use customer insight
    Collect feedback and don’t be afraid to ask your customers what they would value in a product bundle.

David Lynch is Group CTO for bolttech.