A study by the National Bureau of Economic Research found that product bundling can increase profits by up to 30% by attracting new customers, increasing customer loyalty, and ultimately driving sales. This substantial increase highlights the profound impact bundling tactics can have on a business’s bottom line. So, let’s understand what product bundling is and how it can increase the profitability of your e-commerce businesses!

What is Product Bundling?

Product bundling refers to a strategy where multiple products or services are combined and sold as a single package, often at a discounted price or with added value, to incentivize customers to make a purchase. This strategy is used to persuade customers to purchase more by grouping complementary or related items together. 

The Man Company’s 30-Day Men’s Grooming Kit is an example of a product bundle. Instead of selling shampoo, moisturizer, face wash, and other grooming products separately, they are sold as a combination, which attracts more sales due to the combined value and convenience it offers to customers.

Types of Product Bundling

There are several bundling strategies to group products together, and some of the most commonly used strategies include:

Pure Bundling: This strategy entails offering products or services solely as a bundled package. Customers cannot purchase the items individually. 

Mixed Bundling: Mixed bundling allows customers the option to purchase bundled products as well as individual items separately. 

Price Bundling: This approach involves offering a bundle at a single price that is lower than the sum of the individual items, encouraging customers to perceive it as a great deal. 

Key Benefits of Product Bundling

Product bundling in e-commerce offers numerous advantages that significantly contribute to the success and profitability of businesses operating in this competitive landscape.

1. Increased Sales and Revenue

Increasing the Average Order Value (AOV) is a critical metric for e-commerce businesses aiming for sustainable growth and profitability. Product bundling serves as a powerful strategy to achieve this goal by enticing customers to spend more per transaction. 

Offering bundled products at a discounted price compared to purchasing each item individually motivates customers to perceive greater value. This encourages them to add more items to their cart to take advantage of the bundled offer, thereby increasing the order value and ultimately increasing the sales and revenue for your business. 

2. Expanded Opportunities for Cross-Selling and Upselling

Cross-selling involves recommending complementary products or services to a customer based on their primary purchase, aiming to enhance their overall shopping experience. On the other hand, upselling encourages customers to consider purchasing a more advanced or premium version of the product they are interested in, emphasizing superior features or benefits.

Strategic bundling of products opens expansive avenues for both cross-selling and upselling. By crafting bundles that pair high-demand items with compatible or supplementary products, businesses can seamlessly integrate cross-selling opportunities into the customer’s purchase journey.

3. Improved Inventory Management

Excess inventory management is another significant advantage of product bundling, which allows businesses to strategically move surplus or low-selling SKUs by combining these items with more popular or high-demand products. By packaging these less liquid items into bundles with more sought-after goods, businesses can increase the appeal of these slower-moving items to customers. 

This stock rotation approach not only helps in reducing excess stock levels but also prevents potential losses due to obsolete inventory. Bundling facilitates a proactive strategy to clear out inventory, optimize warehouse space, and improve cash flow by converting stagnant stock into revenue-generating bundles. 

4. Cost Efficiency and Reduced Overheads

Product bundling not only drives sales and revenue but also offers significant cost-saving opportunities for e-commerce businesses. Bundling leads to streamlined marketing efforts and packaging, reducing the expenses associated with individual promotional campaigns and separate packaging materials. 

Efficient inventory management through bundling minimizes holding costs for excess stock, optimizes warehouse space, and lowers storage expenses. Consolidating products into bundled shipments reduces shipping and fulfillment costs per unit, optimizing logistical expenses. 

Challenges in Product Bundling

Despite the numerous benefits, product bundling does come with its own set of challenges that businesses need to address:

1. Determining the Right Products to Bundle

Identifying the optimal combination of products for bundling requires a deep understanding of customer preferences, buying behavior, and market trends. Choosing the wrong combination can result in low demand or insufficient perceived value.

Solution: Partnering with a technology provider equipped with robust inventory management and analytics tools can help identify the best products to bundle. 

2. Pricing Strategies and Profitability

Developing pricing strategies that balance customer appeal while ensuring profitability is also challenging. Incorrect pricing models can affect profit margins and hinder the success of bundling initiatives. 

Brands like WOW Skin Science encountered a substantial challenge with their BOGO (Buy One Get One) scheme due to Goods and Services Tax (GST) overpayments, significantly impacting their profitability within the bundled offering. In this scheme, the GST was being charged on the MRP of both products, including the free item. This resulted in higher tax payments, which affected the company’s profit margins. 

Solution: To overcome these types of challenges, businesses require precise systems for calculating prices within bundled products. Leveraging the expertise of their robust technology provider, WOW Skin Science implemented a customized invoicing solution where GST was levied only on the product with an MRP value, excluding the item with zero MRP. This tailored approach effectively eliminated the GST overpayments while alleviating the tax burden on the company. 

3. Managing Inventory Effectively

Efficient inventory management is essential for successful product bundling. Ensuring sufficient stock levels for all components of the bundle, coordinating multiple SKUs, and avoiding stock outs or overstock situations can be challenging. 

Solution: Brands need to employ robust inventory management systems that provide real-time visibility into stock levels for each bundled component. Emerging brands like NUA successfully addressed these challenges by leveraging the right inventory management software. Whether creating comprehensive period kits or bundling regular SKUs with freebies, NUA’s adept use of appropriate inventory management solutions has proven instrumental in streamlining its bundling operations.

Let’s Make Selling Easy!

As a strategic tool, bundling strategies have shown remarkable potential in not only enhancing sales but also elevating customer satisfaction and driving profitability. The diverse range of benefits highlights its pivotal role in modern business strategies. However, navigating the challenges of product bundling requires robust technological support. Businesses can leverage innovative warehouse and inventory management systems to overcome these hurdles. 

Ultimately, the right use of bundling tactics can pave the way for business growth, optimization of resources, and a competitive edge in the dynamic realm of online retail. Embracing the power of product bundling stands as a key driver for sustained success and profitability in the e-commerce ecosystem.

The post Product Bundling for Efficiency and Profitability – Types, Benefits, and Challenges appeared first on unicommerce.com.

The e-commerce industry in the Philippines is no exception, as its rapid growth demands efficient and effective inventory management solutions. While business owners in the Philippines are well aware of the benefits of automation, budget constraints can sometimes hold them back from making the switch. However, failing to address these inventory management challenges can limit a company’s ability to stay competitive in a rapidly growing industry

So, let’s unveil some of the most common inventory management challenges faced by companies in the e-commerce industry in the Philippines and solutions to overcome them.

Top Inventory Management Challenges in the Philippines

• Inconsistent Tracking
• Inefficient Warehouse Management
• Data Inaccuracy
• Limited Inventory Process Visibility
• Manual Documentation
• Overstocking and Understocking Issues
• Insufficient Order Management
• Expanding Product Portfolios
• Inventory Loss

Though every company can have its set of holdbacks, here are a few challenges that might be the common ones among all:

Challenge #1: Inconsistent Tracking

When you have tons of inventory to manage, it’s quite natural that the tracking can become tough, and there’s a huge room for errors in tracking products in the warehouse. Talking about the holdbacks, there are high chances of late and wrong product deliveries due to inconsistent inventory tracking, which can be responsible for depleting the brand value and gaining low ratings on social media as well, ultimately resulting in tarnished brand value. 

Challenge #2: Inefficient Warehouse Management

As said earlier, inventory management isn’t ever a piece of cake; thus, managing warehouses to accommodate new stocks can be a cumbersome process. In case you’re operating on a manual process, there can be a few steps, including scratching a plan, allocating spaces, and then heading to management. The process will take generous time and resources, which can increase your budget. Without an automated inventory system, it’s nearly impossible to have efficient warehouse management.

Challenge #3: Data Inaccuracy

Managing large amounts of data associated with a vast inventory can be extremely challenging without automation. Manual data management becomes even more complex and prone to errors. Having a system to back up your process and incorporating the right tracking to have the data in sync can be done only through an e-commerce solution. This can later avoid data inaccuracy and keeps stuff ready to use for further purposes.

Challenge #4: Limited Inventory Process Visibility

Customers have come to expect transparency and accuracy in their e-commerce experiences, including real-time tracking information. Inadequate inventory tracking can result in delayed deliveries, which can lead to customer frustration and a switch to competitor products. Inaccurate inventory management can severely impact customer satisfaction and loyalty. 

Challenge #5: Manual Documentation

Manual inventory management can be a difficult task, especially when it comes to tracking inventory, managing reports, processing purchase orders, and handling invoices. Inaccurate documentation can result in incorrect order allocation, causing missed or delayed deliveries that can have a significant impact on operations and customer satisfaction. 

Challenge #6: Overstocking and Understocking Issues

Overstocking and understocking are two significant issues that businesses face when managing their inventory. In a general supply chain process, new stocks are ordered once the old/existing ones go bleak or maybe about to finish. In the case of inefficient inventory management, there are huge changes in overstocking or understocking materials, which can cut your profit margins, while manual management can lead to inaccurate records, missing items, and higher budget allocation for re-ordering.

Challenge #7: Insufficient Order Management

With tons of orders pouring in, you must have a strong order management system to help you fight the insufficiency of products. For instance, if the customer has ordered five pieces of a particular order and post-purchase you find lesser pieces available, ordering more will take time, and thus your order delivery duration will extend, leading to insufficient order management. Additionally, incorrect SKU mapping can also cause problems with order management. An incorrect SKU mapped to a product can result in inaccurate inventory tracking and fulfillment errors, leading to delays and, ultimately, unsatisfied customers.

Challenge #8: Expanding Product Portfolios

Expanding a product line or setting up a new warehouse requires strong and effective management of inventory stocks. Having it done manually can surely lead to mismanagement; why so? This is because the inventory managers are required to have order tracking, maintain shipping details, and have an eye on the currently available stocks to allocate the same for rising customer demands. Having an automated system can be the right way to expand product portfolios.

Challenge #9: Inventory Loss

Wastage in inventory is often overlooked until it shows up as losses on the balance sheet. Poor inventory management can result in damage or defects during the product life cycle. Inefficient tracking can lead to missing inventory, causing further losses if not noticed. These inefficiencies can significantly impact the bottom line.

Read how brands like Ellana and Edamama solved their inventory management challenges in the Philippines.

As a business owner, you require robust software to manage complex logistics and seamlessly integrate with your existing business processes. However, choosing the right inventory management solution from the hundreds available can be challenging, particularly with the need to master a range of features that require training and ongoing support.

But what should be kept in mind while finding the right solutions to overcome the above-listed challenges? Here’s what you need to know!

Choosing the Right Inventory Management Solutions in the Philippines

• Integrations
• Multi-location Sync
• Extensive Dashboard for Reporting
• Product Barcoding
• Product Bundling

A comprehensive inventory management system is crucial for any business. The right solution can provide valuable insights into your stock, enabling effective management and identification of any potential obstacles to success. This can help ensure timely deliveries and maintain customer satisfaction.

When choosing an inventory management solution, it’s important to consider the following essential features:

Integrations

Having an inventory management system in place is not enough for a successful business. It’s important to ensure that all necessary integrations are in place, including an ERP solution, a comprehensive point-of-sale system, accounting software, and strong logistics.

This should also include integration with leading marketplaces, websites, and carts such as Lazada, Shopee, Shopify, and Magento, and with logistics providers such as J&T and Ninjavan, and with ERP systems like SAP, Infor, and Microsoft.

Multi-location Sync

Having your presence on a single channel isn’t enough to grab the eyeballs; make sure you have omnichannel visibility with a marketplace sync. This includes a strong presence on both digital and offline channels.

An inventory management system can facilitate efficient omnichannel operations, such as centralizing inventory across online and offline channels, optimizing inventory allocation for a higher return on investment, and improving inventory turnover while reducing working capital. The system can also allow for effective order routing based on inventory availability.

Extensive Dashboard for Reporting

An all-encompassing report dashboard is crucial for monitoring and analyzing business performance, including metrics such as growth, profitability, loss, holdbacks, customer feedback, data usage, and more. These dashboards also provide real-time data synchronization and inventory updates on marketplaces.

Not only do these updates help you avoid loss of sales and delays in delivery, but they also lead to improved customer satisfaction. Ensure that you have access to a comprehensive dashboard that presents all of this information in a single, easily-readable view.

Product Barcoding

Barcoding software is an essential tool for reducing data entry errors, automating internal processes, and ensuring accuracy and efficiency in inventory management. The use of barcode software often integrates with digital documentation and reporting features, allowing for a more streamlined and efficient workflow.

Integrating a mobile barcoding device can significantly enhance inventory accuracy and speed up back-end processes, reducing manual labor and shifting towards a more paperless documentation process.

Explore our platforms:

• Integrated logistics management system
• Automated payment reconciliation system

Recommended read:

• Inventory Management challenges & solutions
• What is Warehouse Management System
• Logistics Vs Supply Chain Management
• What is Order Management

The post Maximizing Efficiency in Manual Inventory Management in Philippines: Challenges and Their Solutions appeared first on unicommerce.com.