What are product bundles?

Product bundles are several individual goods or services that are sold to consumers as one combined package. Sometimes called "package deals," product bundles are generally made up of complementary items or, less frequently, similar items. When retailers offer multiples of the exact same item, this is generally referred to as a "multipack," not a product bundle (1). Examples of product bundles would be a fixed-price meal at a restaurant or a beach kit that includes sunscreen, sand toys, flip flops and towels as one saleable item.

Some retailers only sell certain inventory items as part of a product bundle rather than offering them as either individual or bundled items. For retailers who sell the same items both individually and as part of a product bundle, the bundle tends to cost less than if a customer were to purchase those items individually. Making the savings explicit is one way to entice the user to purchase the bundle, though they might have intended to only purchase a single item on the site.

Bundles may be marketed as distinct items at any point in the online shopping experience, including the homepage. Or they can be automatically generated by online tools when a customer tries to complete the transaction, as in an "add this and save" promotion offer.

Product bundles can be especially popular with customers who appreciate the bundle's discount. They also appeal to customers who value speed or simplicity over the ability to tailor their product options. For online retailers, product bundles are appealing for several reasons:

• Bundling can effectively increase average order value, by selling more without incurring higher transaction costs.

• Bundling makes it harder for customers to price-comparison shop and bounce to the site with the absolute lowest price point.

• Bundling can encourage cross-selling if the product bundle includes items from new categories

1. "Product Bundling Policy"