Product Bundling: A Strategic Guide to Increase AOV (+ Examples)

Retailers of all kinds share a common goal: to earn more revenue. Product bundling is an excellent way to increase revenue without developing new products or hosting in-store experiences that require an upfront cost.

Curated product bundles increase the perceived value of an offer, making it feel like a deal to consumers even without a significant monetary discount. They help the customer feel like they’ve got a great deal while boosting the average order value (AOV). 

As with most other sales tactics, there’s an art to bundling products successfully. Here’s what you need to know about retail product bundling, with examples and ideas to increase cart sizes.

What is product bundling?

Product bundling is a strategy for creating and selling a curated collection of items. A retailer can group complementary products in a bundle to be purchased together, like a printer and ink cartridges, or offer a discounted price for bundle add-ons. 

The goal of product bundling is to capture both casual browsers and eager-to-buy shoppers while also increasing basket size.

Types of product bundling

• Pure bundling
• Mixed bundling
• Leader bundling
• Captive product bundling
• Cross-sell and upsell bundling

Pure bundling

A pure bundle contains items sold exclusively in that bundle. For example, the Voduz Hair Spectrum 4 in 1 Curling Tong is sold with detachable barrels you can only get when you purchase the set.

It can be offered at a discount or with added value. In this price bundling format, the retailer selects a few specific items that must be purchased together to receive the discount. Sometimes, the bundle is offered as a general discount when purchasing multiple items, like buy one, get one (BOGO) discounts. 

Mixed bundling 

This type of bundling works by combining products sold separately at a reduced price. 

A good example is Kylie Cosmetics lip kits. These kits consist of a lip liner and lipstick, each of which can be purchased separately, but as complementary products they are bundled together for convenience.

Leader bundling

Leader bundling is a strategy where a popular, high-demand product (the "leader") is packaged with a less popular or new item. It uses the leader's star power to lift the sales of visibility of the other product. 

A recent example is Nintendo’s Switch 2 + Pokémon Legends: Z-A bundle. By packaging their new console with one of the most popular franchises in gaming, Nintendo used Pokémon’s popularity to drive hardware purchases. 

Captive product bundling

This is famously known as the razor-and-blades model. It involves selling a core product (like a razor) that requires ongoing purchases of an add-on (like blades) to function. You’ve likely seen this model with printers too, which often only work with the manufacturer’s own ink cartridges. 

Companies often price the main product very low, sometimes even at a loss. They recover their profits over time through the repeated sales of the high-margin add-ons.

Cross-sell and upsell bundling

Cross-sell bundles involve promoting related products adjacent to other products in a similar group. In physical retail, this is similar to the concept of cross-merchandising. 

With its sophisticated algorithms, Amazon suggests bundles of products that appeal to customers based on past purchases. It may suggest a product bundle if a customer bought an ebook reader in the past that includes a subscription to a digital book library, for example. 

Upselling persuades the customer to upgrade. For instance, if someone is interested in a line of makeup brushes, a bundle that includes brushes, a travel case, and brush cleaning solution would be an upsell.

Product bundling examples

How you choose to put together a bundle will depend on your goals and individual products, but these proven approaches to bundling strategy consistently drive results for retailers. 

Related products bundle

Some products can be sold individually, but work best when combined with others. 

Escalade Sports, for example, has a portable pickleball kit with a net, two paddles, two balls, a carrying case, and a “how to play” guide. Customers can get the full setup and start playing instantly, without buying each item individually. 

Customers can still buy each item separately, albeit at a higher price. If someone loses a ball or chips their paddle, they can buy a replacement without repurchasing the entire bundle. 

Gift bundles

One way to meet customer needs during the holidays is to take a gift-giving approach to product bundles, which makes it easy for shoppers to find and purchase a ready-made gift.

Flower delivery service LVLY uses this approach. The gift section on their website features multiple product bundles at many price ranges, whether customers are shopping for an anniversary, birthday, or Christmas gift.

Gift bundles also merchandise the items together for in-store displays. Hands-on associates can make smart recommendations for shoppers to get in and out of the store quickly.

Subscription boxes

Subscription boxes are product bundles in their own right—and they’re not just for ecommerce retailers. Many brick-and-mortar retailers also have subscription box services.

WineCollective is just one example of a brick-and-mortar shop that has capitalized on an opportunity for product education and curation with subscription boxes. After noticing several in-store shoppers struggling to purchase the right bottle of wine, they took the decision-making out of the shopping process with curated wine bundles.

Build-your-own bundles

Some retailers have experimented with a mix-and-match bundling tactic, allowing shoppers to create their collection of goods. 

This may seem counterintuitive to building product awareness, but you can still encourage product discovery by allowing customers to choose from a set group of products, limiting their choices to the items you want to promote.

This tactic isn’t limited to online retailers, either. A retail store owner could take a similar approach by hosting a build-your-own gift bundle event or allowing in-store associates to help shoppers build their bundles, with in-store gift wrapping available.

Buy one, get one bundles

HiSmile, a retailer that sells teeth-whitening products, sells flavored toothpaste online. New customers might not know which flavor they like best, so it introduced a bundle that contains over 10 different toothpaste flavors to give potential customers a chance to try each one and discover their favorite. 

The product bundling strategy has proved fruitful for HiSmile. Now, over 80% of orders are bundled products, which has increased the retailer’s average cart size by 4x.

Inventory clearance bundling

Product bundling doesn’t have to be customer-driven. Sometimes, you’ll have dead stock you can use to squeeze revenue through bundling. 

A clothing retailer could bundle three slow-moving items, like sandals and sunglasses, with a popular item, like a dress, and offer the bundle at a lower price. This encourages customers to save money by buying the bundle.

Similarly, a food retailer might want to bundle products nearing their expiration date. For example, customers could get a “meal deal” bundle that includes the sandwich, drink, and snack for a discounted price. 

The psychology behind effective bundling

There is strong marketing psychology behind a product-bundling strategy. Here’s the evidence to support it. 

Simplifying customer choice

One of the main reasons bundles are so effective is that they solve the problem of choice overload. When a customer is faced with too many options at once, they are more likely to walk away without purchasing.

A famous jam study demonstrated that customers were more likely to make a purchase when presented with six varieties of jam than when offered 24 options.

Now, this doesn't happen every single time. Research shows that choice overload is more likely to occur in specific situations, like when:

• You're in a hurry.
• The options are very complex and hard to compare.
• You lack clear preferences. 

This is where product bundling excels, by combining multiple decisions into one. So, instead of weighing the pros and cons of several different options, the customer only has to make one choice: to buy the bundle or not. 

Real-world field research supports this. Studies in grocery stores have found that well-designed bundles increase how much people buy, even with no discount involved. The simplicity of the choice is valuable on its own.

Increasing perceived value

Bundles also create the perception of value and savings. This works because of a concept called mental accounting. 

Customers get two different kinds of satisfaction from a purchase.

1. Acquisition utility: The value a customer gets from owning the item itself
2. Transaction utility: The happiness a customer feels when they receive a great deal

Bundles are a great way to boost transaction utility. When combining items under a single price, it creates a feeling of getting more for less. You stop analyzing each item’s price and instead focus on the total savings of the deal.

How you present the bundle also makes a big difference. The items should be complementary—meaning they make sense together, like coffee beans and a coffee maker. 

Research also shows that the perceived quality of the items matters. Discounting a lower-quality item when bundled with a premium one can actually boost the appeal of the whole package, as long as the items fit together well.

How to create product bundles

1. Understand your audience
2. Decide which products to bundle
3. Calculate the bundle price
4. Name your product bundle
5. Build the bundle in your POS

1. Understand your audience

You can’t just group items and sell them as a package—you must carefully curate your selection to sell product bundles in your retail store. It all starts with a solid understanding of who you’re selling to. 

A complete view of your customer, inventory, and sales data can show you the items customers already tend to buy together, and what they want from future bundles. You can do this by unifying your data into a centralized platform like Shopify. 

For example, when brainstorming product bundle ideas, you can use Shopify to:

• Read customer feedback surveys
• Monitor which products customers click in marketing emails
• Reference notes created by retail associates off the back of in-store conversations 
• Track inventory commonly purchased together both online and offline

elph ceramics is one retailer that turned to Shopify POS to unify customer and inventory data across store locations and their ecommerce website. 

“Before unifying our online and physical stores with Shopify, capturing customer data was a challenge,” explains Sophie Rankine, cofounder of elph ceramics. “Now, we can collect our customers' contact information in a way that feels authentic and create profiles in just a few clicks at checkout.” 

These unified customer profiles give elph ceramics extra insight into who their customers are and what they want from the brand, which has helped increase the retailer’s retention rate by 30%. 

2. Decide which products to bundle

The products you choose to bundle will be determined by which bundle type best accomplishes your goal.

Let’s look at how to choose bundled products:

1. The buy more, save more bundle is typically applied to your entire online store or select product lines you carry. This bundling technique is particularly useful for driving sales of stagnant inventory. Most often, you will choose the items for this bundle based on your slowest-moving inventory category. 
2. Quantity discount bundles are intended to sell multiples of the same product. Here, you choose which replenishable items you want to promote. You could pick the replenishable items based on bestsellers to increase AOV. You could also experiment with seeing if quantity discounts help move stagnant replenishables.
3. Leverage data. Because prepackaged kits are most effective for products that are complementary or meant to be used together, select items that your point-of-sale (POS) data tells you are commonly bought together. For instance, if you have a history of customers purchasing socks with shoes, that’s a solid indicator that you can sell a bundle.

Don’t overdo it with the bundling strategy. Pick one or two approaches and lean into those to ensure you’re not overwhelming your customers.

If you’re still unsure where to start, analyze your sell-through rate and inventory turnover ratio to discover which products or categories stagnate. Calculate a SKU or category's contribution to your total unit inventory and compare that to its contribution to your total unit sales. 

📌 Pro tip: Shopify POS creates these inventory management reports for you. The ABC analysis report, in particular, shows which products generate the most (and least) revenue for your brand across every sales channel you’re using.

3. Calculate the bundle price

Calculating your bundle’s pricing can be straightforward if you’re not offering discounts. 

To calculate the bundle price, you first need to know your gross margin on each product in the bundle. To calculate the gross margin dollars of a product, subtract the cost of goods sold (COGS) from the retail price.

Once you know your cost baseline, you can choose a discount that works for your brand or decide whether to stick to a no-discounting strategy.

 A few rules of thumb for discounting: 

• For brands with average margins of 50% or higher, shave 10% to 20% off the subtotal.
• For businesses where average margins are 50% or less, a discount rate between 5% to 10% typically will suffice.

It’s also worth testing your bundle pricing strategy over time to see what performs best. Is your conversion rate higher when promoting a percentage off instead of a cash discount?

4. Name your product bundle

Naming your bundle impacts how you draw attention to your new offering. 

An excellent best practice is to name the bundle based on the benefit it provides a customer. For instance, Manscaped’s skincare bundles are all named for what they do. The men’s shaving kit bundle is called the “Ultra Smooth Package.”

Calling attention to the overall benefit of the bundle tells customers from the get-go why they should purchase all of these products together rather than just one of them.

You could also give your bundle a descriptive name that helps the customer recognize the use case. Jones Road Beauty, for example, has a product bundle named “The Beach Vacation Kit,” which includes cosmetics that help the customer get a sun-inspired holiday look.

5. Build the bundle in your POS system

Long checkout lines deter people from buying. Instead of having retail associates manually add products to the cart and type in a discount code, use the Shopify Bundles app to let your team ring up orders in a few clicks.

The bundle app lets you create product bundles that customers can buy in-store or through your online store. You predetermine the price (including any applicable discount), and inventory quantities are automatically updated in real time whenever you sell a product that’s part of a bundle.

How to sell product bundles in retail

Many techniques help companies sell product bundles, but let’s take a look at some of the best practices retailers have developed over the years.

Display the bundle discount prominently 

If your bundle is intended to offer a discount or value-add, it’s important to display that information prominently on your product page and within your marketing efforts. Making the discount a key part of the bundle reminds shoppers they’re getting a deal.

Retail signage should sit alongside bundled or bundle-able products, so customers recognize the deal. You should train your sales associates to mention the bundle as an option whenever a customer is looking at one of the individual items.

Use your bundles for gift guides

Retail store owners can spotlight gift bundle displays by their registers with shoppable displays, so customers can grab everything they need in one swoop. For example, if someone pops in during the holiday season, you could position discounted bestseller product bundles beside the checkout line to encourage impulse buys. 

You could also create a gift guide landing page on your online store, which you can then promote via email, social media, and in-app. This helps raise awareness of your bundles across multiple sales channels. 

Upsell your product bundles at checkout

Offering a bundle at checkout can help a customer pull the trigger on multiple items. It’s also a smart move for ecommerce stores to increase profit margins and optimize their shopping cart experience. 

At a brick-and-mortar, this retail activation might involve the sales associate mentioning that if the customer adds one more item to their purchase, they get 15% off everything. Online, it can be presented as messaging during the checkout flow. 

Benefits of product bundles

Product bundling is a win-win for both retailers and consumers. Let’s look at why it’s become such a popular tactic amongst retail and ecommerce businesses.

Increase average order value

By increasing the perceived value of a single transaction, bundling directly encourages customers to purchase more items at once, leading to a measurable lift in AOV and overall revenue.

Harvard Business School’s Vineet Kumar detailed the power of product bundling in a case study of Nintendo. Other retailers known for increasing their sales and AOV from bundling include:

• Intimacy lubricant brand Coconu saw a 20% increase in AOV since implementing bundles.
• Direct-to-consumer dog food brand Maev’s bundles resulted in a 15% increase in AOV and a 20% jump in units per transaction.

Encouraging shoppers to purchase more items typically leads to a higher transaction amount, which is an efficient way to boost revenue. Bundling also reduces marketing and distribution costs, since customers discover products more easily and order all of them at once.

Simplify purchase decisions

While bundling can mean discounts, it can also be used to build upsells into a package, blurring the focus around the price of individual items. 

For example, when you purchase a new smartphone, you also receive a charger in the box. The charger isn’t free, of course—the manufacturer builds the cost into the phone’s final ticket price. Phone retailers know if customers had to purchase a charger separately, many wouldn’t.

If you find that customers are often put off at the thought of having to purchase yet another small item to complete their set or experience, consider bundling those items to remove that obstacle to purchase.

Increase product awareness

Product bundling gives customers the chance to try a product they wouldn’t have typically purchased as a standalone item.

For one example of this, we can look to LoveSeen, a false eyelashes retailer. They sell a starter kit bundle that includes lashes, lash glue, and tweezers.

Most people don’t try lash tweezers because they’re not entirely necessary to apply lashes. However, when included in the product bundle, customers can see how easily lash tweezers make the application process easier. They may even discover that they would purchase another pair individually in the future. 

Sell excess or slow-moving inventory

Bundling slow-moving inventory with popular products can help move stagnant items. When you bundle a more stagnant product with a popular one, you create a new product offering, which helps freshen up your surplus or overstocked inventory. 

Say, for example, that you’re running a home furnishing store that’s invested $5,000 into a new collection of bathroom towels, but you’re struggling to sell them. The price is too high—you bought them for $5 per unit, but customer feedback shows they’re only willing to pay $6.

Instead of admitting defeat and losing money by selling the towels at cost, incorporate them into a bundle. You could pair the towels with a bestselling bath mat, toothbrush holder, and towel rail to give customers an all-in-one bathroom setup. 

Boost customer loyalty

Offering product bundles can also help boost customer loyalty. Bundles give buyers the chance to try multiple products at once, which means more opportunities for them to find items they love (and then buy them over and over again).

Potential risks of product bundling 

While product bundling is a great way to drive sales, it doesn’t come without potential challenges.

Diluting your profit margins

The biggest risk in bundling is that the discounts needed to sell a bundle will cut into your profits. 

To make a bundle tempting, you usually have to offer it at a lower price than the cost of buying everything separately. The problem is, this can lower a customer's willingness to pay (WTP) for each item inside. 

Research shows that once people see a product as part of a cheaper package, their perceived value of it can drop. If you don't sell a lot more bundles to make up for the discount, you could end up making less money overall. 

To avoid this, calculate your margins carefully and price your bundles accordingly. You could even test different discount levels to see what customers respond to. 

Cannibalizing sales of individual products

One risk of bundling is cannibalization, when existing customers shift to buying a cheaper bundle instead of the more expensive single item. In this scenario, the bundle ends up replacing a purchase the customer would have made anyway.

Retailers can avoid this by ensuring that you are bundling items that are complementary (meaning they go together well) rather than substitutes (one could replace another). Some examples would be bundling bestsellers with slower-moving products, or designing “starter kits” for new shoppers.

Creating bundles customers don’t want

Finally, you can risk putting together a bundle that nobody is interested in.

People get more upset about having an item taken away from a bundle than they feel happy about having a low-value item added in. Stuffing your bundle with cheap filler products to make it seem bigger can actually backfire and make the whole package less appealing. 

Create product bundles for your store today

Product bundles are a great way to increase your products’ perceived value and improve your store's customer experience. Use them for gift-giving occasions, dead stock, product awareness, and other creative ways to drive more in-store sales and improve your marketing strategy.