When running a business, your marketing efforts and sales plans may differ occasionally. Sometimes it’s best to design sales and offers, sometimes the best way to go is increasing prices in bundles, and sometimes you just have to stop everything and watch where the market takes you.
Product bundling and discounts are among the most popular methods for increasing sales and introducing new products to customers. Ecommerce requires a lot of knowledge and experience, especially when it comes to product discount settings and different kinds of bundle promotions. What is the best strategy for product bundle discounts, and how should it be done? Do all customers react to discounts the same way? How will sales discounts affect your ecommerce business? These are all questions that we are going to answer in this article.
Do all customers react to a product discount the same way?
“People love discounts” and that’s a fact. You can understand this on black Fridays and long queues in front of stores for seasonal discounts. But there is a vital question you need to ask yourself before starting discount campaigns and bundle promotions: does every customer group react to all types of discount schemes the same way? Well, It’s not always universally beneficial or appropriate for all shops and industries. The effectiveness of discounts largely depends on various factors, including the target market, the type of product, and the overall business strategy.
Discounts are often successful in industries like retail and consumer electronics, where price sensitivity is high. For example, Black Friday sales can significantly boost revenues for electronics retailers by attracting price-conscious consumers. However, discounts in luxury markets (jewelry, designer Haute Couture, or High Fashion) can harm brand perception. A high-end fashion brand, for instance, might avoid frequent discounts to maintain its exclusive image and ensure customers associate their products with prestige rather than affordability.
Customer response to discounts also varies by demographic and socioeconomic background. Price-sensitive customers, often found in lower income brackets, are more likely to be attracted by discounts. In contrast, wealthier consumers might prioritize quality and brand reputation over price reductions. For example, a middle-income family might eagerly await grocery store discounts to maximize their budget, whereas affluent customers may ignore such promotions in favor of premium products.
Wave Connect is an innovative platform that facilitates seamless communication between businesses and their customers, enhancing engagement through tailored pricing solutions.
Read More: What are the best types of discounts in bundle making?
The most popular types of product discounts in Shopify stores
Shopify stores provide merchants with lots of discounting options, different tools, and possibilities to design product discounts. Here are 4 types of discounts that are used the most in these stores:
Percentage Off (Fixed)
Percentage-off discounts (also called fixed discounts) are one of the most popular methods used by Shopify stores, both in single products and bundles. This type of discount is straightforward for customers to understand. For example, offering 20% off selected items can quickly attract attention and boost sales. Many Shopify app options allow store owners to set up these discounts seamlessly, making it a hassle-free way to entice more customers to purchase.
Buy One Get One (BOGO)
BOGO deals are highly effective in increasing the average order value. This type of discount encourages customers to buy more by offering a free or discounted item with the purchase of another. Shopify stores often use bundle apps to manage BOGO promotions efficiently. These deals are particularly attractive because they provide immediate value, which can significantly drive sales and clear out inventory.
Free Shipping
Free shipping is a powerful incentive that can reduce cart abandonment rates. Customers often hesitate to complete a purchase due to high shipping costs. By offering free shipping on orders over a certain amount, Shopify stores can encourage customers to spend more to qualify for the offer. This type of discount is easily set up using various Shopify apps, making it a popular choice among online retailers.
Volume Discounts
Volume discounts reward customers for buying in larger quantities. This approach not only boosts sales but also helps in moving more inventory. For instance, offering a discount that increases with the number of items purchased can entice customers to add more to their cart. Shopify bundle apps can be particularly useful in setting up and managing these discounts, ensuring a smooth shopping experience for customers.
Further Reading: A Complete Guide to Automatic Discounts
Why are discounts a big deal in product bundling?
Product bundling is all about giving the customer an added value, a value that wouldn’t be available otherwise. Many times this is “perceived value”. This means that by bundling two products and selling them in a package instead of separately, you’ll affect the perception of the buyer, and they’ll become instantly interested in the package, thinking it’s a better deal. Here are some reasons why bundling works very well with product discounts:
Higher Sales Volumes
Discounts on bundles encourage customers to buy more items at once, boosting the average order value (AOV). This strategy can move more inventory and increase overall sales for you, especially if you sell fast-going small products. For example, a Shopify store might offer a “family pack” of snacks with a discount, prompting customers to purchase in bulk rather than just a single item.
Customer Loyalty and Retention
Providing discounts on bundled products can enhance customer satisfaction and loyalty. Customers appreciate getting more value for their purchases, which can lead to repeat business. A Shopify app can help manage these bundles and track customer preferences, ensuring targeted and effective discounts.
Efficient Inventory Management
Bundling and discounting slow-moving items with popular ones can help clear out inventory that might otherwise sit unsold. This tactic ensures that all products contribute to revenue generation. For instance, a fashion retailer on Shopify could bundle last season’s accessories with current season clothing at a discount, ensuring all items move more quickly.
Try our Shopify Bundle App
4 Effective Product discount examples
To better understand the concept of discount and their effect on bundling and sales, here are some well-known examples:
1. Amazon Prime Day
Amazon Prime Day is a highly anticipated event where Amazon offers substantial discounts on a wide range of products exclusively for Prime members. This annual sales event showcases the power of combining discounts with bundling. For example, Amazon often bundles its Echo devices with other smart home products, offering significant savings. A bundle that includes an Echo Dot and a smart plug might be discounted by 30%, enticing customers to buy both items together. This strategy not only boosts sales but also increases the adoption of Amazon’s ecosystem of devices.
2. Black Friday Deals by Best Buy
Best Buy is renowned for its Black Friday deals, where the retailer offers deep discounts on electronics and appliances. A notable example is the bundling of gaming consoles with additional accessories and games at a reduced price. For instance, a PlayStation 5 bundle during Black Friday might include the console, an extra controller, and a popular game, all for a price significantly lower than if purchased separately. This type of discount attracts customers who are looking to maximize their savings while acquiring multiple items, thereby driving higher sales volumes for Best Buy.
3. McDonald’s Extra Value Meals
McDonald’s Extra Value Meals are a classic example of product bundling with discounts. By bundling a burger, fries, and a drink at a discounted price compared to buying each item individually, McDonald’s increases the perceived value of the meal. This strategy encourages customers to spend a bit more than they might have if they were only purchasing a single item. The success of this approach is evident in its widespread adoption across fast-food chains, making it a familiar and effective example of how discounts can enhance bundling.
4. Sephora’s Beauty Insider Program
Sephora’s Beauty Insider Program offers exclusive discounts and bundle deals to its members, effectively driving customer loyalty and repeat purchases. For example, during the program’s sales events, members can receive a discount on a curated bundle of skincare or makeup products. A popular bundle might include a cleanser, toner, and moisturizer at a 20% discount for members. This approach not only incentivizes customers to purchase more products but also enhances their loyalty to the Sephora brand by providing exclusive value.
