5 Best Reasons for Bundling Products on Amazon FBA [PROFIT BOOST]
Does bundling products on Amazon FBA really work? Can I really increase my product sales with bundling – enough to matter? This is one of those ideas that sounds too good to be true, as cliché as that sounds.
I’m going to lay out the steps with the positives and negatives of doing this. Yes, there are both in this scenario, but if you follow along, the positives can outweigh the negatives.
Upside to Bundling Products on Amazon FBA
Higher Ticket Values When Bundling Products on Amazon FBA
Having higher tickets (orders) is a big win for a couple of reasons, mainly increasing sales numbers and net profits.
You are not always guaranteed to sell a customer multiple products or for them to order more than one of a single item. With bundling, you can entice your customers with multiple products or create the ease of ordering from you with reduced cost to them because of a bundle.
|Amazon Listing||Product Charges (2018)||Profit|
As you can see from our 2018 sales for one of our brands, this added an additional $33,000 to our bottom line; that’s a 26% increase in profit. Also, the profit margin is higher for the bundles, and I’ll explain below. These numbers are only Amazon data; we have additional revenue from other sales channels we implement this strategy on.
Reduced Fees When Bundling Products on Amazon FBA
With the changes in Amazon year after year, fees are the one thing you can predict – assume they are going to keep increasing.
There was a time where if a customer ordered multiple of the same product, Amazon gave you a break in the pick-and-pack fees; this is no longer the case. Now, you get a pick-and-pack fee charged for each item no matter the quantity.
On another of our brands, we looked at the sales data and were seeing that customers ordered three and sometimes even seven of the same SKU. In response, we created a 5-pack and 10-pack bundle.
Real Fee Savings Example
|Amazon Listing||Pick and Pack Fee|
|Singles 10 Units – Pick and Pack||$31.90|
|Bundle: 10 Pack – Pick and Pack||$5.64|
This increased margin goes straight to the bottom line.
Increased Visibility Through Ads and Keywords When Bundling Products
As you probably know, you can advertise individual listings and ASIN’s as well as target specific products with any ASIN, including your own.
By adding additional bundle listings, you have now created other visibility potential that can be used to your advantage. Specifically, cross-selling products or up-selling. For example, take a customer searching for watches for a gift. With bundling, on the same listing, you can advertise matching sunglasses or a wristwatch bundle, which are things the customer may not have thought of or known was possible. Now you have increased profit potential and brand awareness.
New listings also give you the opportunity for more keywords that can be used as another way to increase visibility and search results.
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Reduced COGS When Bundling Products on Amazon FBA
As I stated above, sales can increase because of bundles; an additional benefit is lowering your cost of goods with larger orders from the manufacturer.
This is not always the case, but negotiations can be done as purchase orders increase to lower your product cost. Don’t overlook this step as it may be the most profitable time spent.
Downside of Bundling Products on Amazon FBA
Increased Inventory Demand
As you start ordering more stock, you’ll begin to see your capital being used and held in inventory. This creates new pressures on your company with the reduced capital and the extra labor in predicting order volumes.
One of the most costly things in a business is running out of stock – you can’t always sell something you don’t have and this will lead to a decrease in sales momentum.
Navigating the seasonality or influx of new orders is a time-intensive process that can require calculating new manufacturing orders weekly, if not more often. If sales increase by 25% and you don’t have safety stock built-in, you will possibly run out of inventory before the next shipment is completed. But who wouldn’t want a 25% increase in sales, right?
How to Bundle Products on Amazon FBA and How We Can Help
I started Viable Shipping initially to support my four brands, and then it turned into a full-scale logistics company for many of my friends and now beyond. We are now doing daily fulfillment, importing, exporting products, and managing inventory for the last several years. With 15 years of database programming and being a Sr Data Analyst for Chase and Citi Bank, I took my knowledge and applied it to our business.
Navigating the tricky side of inventory, I could never figure out why companies or people I met were having issues keeping up with the ever-changing sales and cost of products. I took for granted that analyzing data doesn’t always come so easy and how time is limited.
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Put a Plan in Place for Bundles
If you plan on or are currently selling bundles, the complexity of mapping sales back to parent SKUs for sales velocity, COGs, and reorders can be intense. We utilize software and internal databases we custom-built to support the brands we manage, so they don’t miss a beat.
Our processes keep products selling while not having excess inventory to keep cash flow in check. Every customer has their own unique needs, but the principles are the same; Stay in stock and sell more.