Who doesn’t love the pure delight of unwrapping meticulously curated products that are put together to make the perfect combo!

Product bundles are a great way to boost sales and gain a competitive edge in the market. Customers love product bundles, especially one that is put together well. As a business, it is not only important to find the right mix of products but also to ensure availability of each product that's part of the bundle. Here’s where technologies like AI and ML work their magic to accurately predict demand and plan inventory efficiently in a matter of just a few clicks. 

Here we’ll understand product bundles in detail and what goes on behind the scenes to enable their seamless demand and inventory planning.

What is Product Bundling?

Product Bundling/Inventory Kitting is the practice of putting together different products that are often complementary, into a combo or hamper. These bundles are usually sold at a relatively lesser price enticing more buyers. This strategy has been gaining popularity in recent times as they are a great way for businesses to maximize their order values while enhancing customer experiences.

Here are more reasons why you should be doing it too!

Increase Average Order Value

A product bundle that is put together well adds value to the customer by bringing together the products that they want for a reduced price.  Eventually, this helps increase the average order values by motivating them to buy bundles/combos rather than the individual products.

Clear Out Excess Inventory / Slow Moving SKUs 

Product bundles give you an opportunity to liquidate excess inventory and clear out SKUs that are usually slow moving. This can be done by smartly combining high selling products with underselling products. This also lets the customer look at these slow moving products through a different lens and encourages them to give it a try. 

Make the Most of Seasonal Sales

Businesses can bundle products that have seasonal peaks to simplify shopping for customers. And holidays/clearance sales are the most suitable time for bundling products that have seasonal demand. This can invoke a sense of urgency or FOMO among the customers motivating them to make the purchase. 

Reduce Shipping/Marketing Costs

Bundling individual products into single packages makes it easier to distribute and market them. You can also save a lot on shipping and packaging costs when you send products in bulk while you are actually boosting your sales revenue. 

Well, hope that’s enough reasons for you to try your hands at Product Bundling strategy. 

However the real question is, how does one plan inventory for these product bundles? 

While planning inventory for product bundles, it’s important to take into account the demand for individual SKUs and the bundles as well. This process is simplified by AI & ML algorithms which have the capability to predict demand and plan inventory for product bundles seamlessly, even when there are multiple bundles. Let’s now understand this in detail with the case of Sarah.

Sarah owns a DTC food brand and she has put together a few product combos as the festive season is approaching. She uses Kronoscope, an AI powered demand and inventory planning tool to intelligently plan supply for her product bundles. Let’s find out what happens behind the scenes,

Step 1: Parent SKU and Child level SKU mapping

Kronoscope establishes the Parent - Child SKU relationship from the data fed on Product Bundles.

Parent SKU is the final festive hamper that’s available to the customer on the website/store. The Child SKUs are the relevant individual products that make up these hampers.

In our case, the parent SKUs are the festive hampers. The child SKUs include Chocolates, Cookies, Wine, etc.  All these child SKUs are mapped to their relevant parent SKUs to form product bundles. One child SKU can also be mapped to multiple Parent SKUs.

Step 2: Demand forecasting

The demand is forecasted for both the hampers and the individual SKUs as the child SKUs can also be sold as individual products. Hence, the system provides forecasts by taking into account the demand drivers at the individual as well as the product bundle level.

The demand forecasts at Hamper levels are now converted to Individual SKU levels,

55 Units of Hamper 1 translates to,

78 Units of Hamper 2 translates to,

Step 3: Automated Purchase and Replenishment plans

Once the demand forecasts are made, the system automatically creates purchase plans by taking into account the demand split for each SKU and recommends a purchase order quantity that is comprehensive of all demand prediction numbers.

This plan can then directly flow into your Order Management System essentially automating the entire process. On the front end, this algorithm translates to a few clicks on the mouse simplifying inventory planning even when there are multiple product bundles. With Kronoscope, businesses can rest assured knowing that they will be able to maintain availability levels and hit service targets for their product combos even during seasonal peaks or holiday promotions.

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Book your free consultation to know more about Inventory Planning and Product Bundling with Kronoscope.