HOW MY COFFEE PURCHASE ENDED UP MAKING ME PLAY TENNIS – ALMOST !

My Costco trips are fraught with packages laid out neatly for me to call it my own. Once I went to Costco to buy coffee and ended up buying 2 tennis rackets + 2 tennis ball tubes. All bundled together in one package. Right there, I could see myself on the court playing every weekend. I came home with a grin that quickly turned into something else when I saw the look on my spouse after noticing the package. That moment was priceless! Walk into any retail store today and you’ll find products packaged together in an enticing way. These packages are presented so cleverly to make you feel that my Costco trips are fraught with packages laid out neatly for me to call it my own. Once I went to Costco to buy coffee and ended up buying 2 tennis rackets + 2 tennis ball tubes. All bundled together in one package. Right there, I could see myself on the court playing every weekend. I came home with a grin that quickly turned into something else when I saw the look on my spouse after noticing the package. That moment was priceless!

Walk into any retail store today and you’ll find products packaged together in an enticing way. These packages are presented so cleverly to make you feel that they are a better value than if one of them were bought alone. These bundles are generally of two kinds, one that will provide definite price advantage when bought together and the other where just the products go together well. In the physical world, while this is hugely beneficial, it presents a huge disadvantage because bundling comes with tremendous cost of packaging, pricing and showcasing.

Let’s take a look at the online stores. Online provides an unique opportunity to solve the cost of bundling. It is very easy to bundle products, provide price advantage and showcase them effectively. Imagine having the ability to bundle every product you’ve in the store with other products. This concept is impossible to do in a physical store. And very feasible in online stores. But if you take a look at what is happening today with most online stores, very few products are offered as bundles. The images below are from my sampling of two stores, Banana Republic and Dick’s Sporting Goods. While the pages that lead to this detail page talk about looks (outfit) and such, landing on the product detail page does not offer bundles that would help customer get the whole package together, and maybe save some money in this process.

As always, Amazon does this so well and no wonder they are sitting at top of online retailer list. But even at Amazon, I managed find similar product featured at Dick’s Sporting Goods without a bundled offering. In this case, I will assume it is done deliberately.

But here is the iPad product that is offered with the bundled products, more than one, without any price advantage:

And for books, Amazon does it very nicely to highlight the series (contextual bundling) when I looked at the To Kill a Mocking Bird book:

IMO, every product you offer to the customer should be offered with a bundle. Why aren’t retailers doing this? Here are some reasons I could come up with:

  • Bundling is seen as work that requires manual effort. Obviously, merchandisers cannot match every product in the catalog with others manually. You’d need an army of merchandisers
  • Technology is limiting and cannot offer bundles easily
  • Bundling is not business a priority for your business

and the list would go on. While there are so many reasons, but none are as compelling as getting it done that will provide bottom-line benefits. Here are some ways to achieve this:

  • Make bundling your business priority. Without business conviction this is not going to happen.
  • Provide incentives for creating bundles for products. Start with a category and expand throughout your catalog. Note – some categories may not make sense for bundling
  • Measure the effectiveness and make sure this does provide benefits to your business
  • Automate it. Customers are already buying things together. Use that knowledge to automate creation of bundles like “Frequently Bought Together”, the way Amazon does

And you want to become a bundle ninja, here are some things for you:

  • Have many options of bundles for each product
  • Provide more than two items in a bundle
  • Based on customer context, offer bundles that is relevant – personalization
  • Provide options for customers to look at all bundles for a product

I would love to hear from you on your reasons for and against providing bundled products in your online store.

And finally, do not forget to have fun bundling while I worry about what to do with the two tennis rackets hanging in my garage over a cup of coffee. I am living a Costco dream.

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