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Run a Sale WITHOUT Slashing Prices this January

Howdy,

Before you run off and give all your hard-fought profit away in a slew of price decreases, let’s take a different angle that allows you to sell more and still maintain your current prices, you could even make more than you would normally.

Discounting Upwards

Run a Sale WITHOUT Slashing Prices this JanuarySo many people automatically think “January Sale =  I need to reduce my prices”.

But let’s stuff this idea in the turkey and take a different approach.

And how do we do that?

Simple, it’s called “bundles”

In the article I wrote a couple of days ago called “A Competitive Advantage for eBay & Amazon in Plain Sight”, we learned that bundles or kits are everywhere.

A kit or bundle (I’ll use “bundles” from now on for the rest of this article for ease) is simply two or more products that naturally go together in a single purchase.

Not giving away all your profit

Being in the midst of a building project at the moment, the example I’m about to share with you is specific to what I’ve been doing personally, however keep in mind that this approach will work for any type of product and can work for you too.

Oh and I have a super-simple tip for you on how to get started at the end of this article as well.

When you buy a radiator you only ever get the bare minimum from the manufacturer, that is the radiator itself and the mounting brackets, if you’re lucky the mounting bolts and wall plugs.

But to complete the job you actually need several other parts.

This is the key detail we’re looking for, one or more products that are additionally needed or desired.

These vary depending upon the final application and could include:

  1. The thermostats (note this one as they’re normally a tenner or more a pop)
  2. PTFE tape (the white tape needed to make a good seal on the connections)
  3. Decent wall plugs & screws
  4. Chrome or white plastic covers for the pipe work (also note this one as they have a visually attractive nature to them)

And of course you could go on and include the other tools & materials, such as wrenches, solder, a blow torch, flux, olives and so on… But that would be too much to go into a single bundle as we’re starting to stray too far away from the main purchase.

Note: Did you detect another bundle there? The blow torch, flux and solder! They go together so well!

And back to the radiator.

Let’s say the radiator has a end-user price of £70, the thermostat is £15 and the pipe covers are £10.

These 3 products naturally go together and bought separately would cost the customer £95 plus delivery.

So my point to you is that instead of discounting the radiator and losing out on the additional sales of the thermostat and pipe covers, include them all together into a bundle.

Using this example we’ve:

  • Increased our price from £70 to £95
  • Or more attractively grossed 35.71% more for a single sale
  • And we’ve helped our customer by making it easier for them

We’re up by £25 on the original sale price and that gives us a little more room to manoeuvre when it comes to pricing, however I would still be wary of dropping the price of the bundle by any massive amount.

Instead you have several options available to you:

Offer free delivery

The radiator weighs a ton, so customers envisage that will cost them more for it to be delivered because of it’s weight (so free delivery makes sense here).

However in reality you’re still under the 30Kg weight limit by most couriers and costs you the same amount as a normal delivery. AND you could very likely pack the thermostat and chrome overs into the radiator box too.

Assuming that the courier cost is £5, the actual margin impact to the £95 sale is just 5.26%.

Your customer is happier because they got the key parts they needed, paid you more because of the bundled products and you didn’t lose anything dramatic.

Winners all-round!

Include one of the additional products for free

Pipe collarsLet’s say you include the chrome pipe covers for free.

These had a price of £10, but let’s say they really only cost you £5 landed. As far as the customer is concerned they’re making a purchase of the radiator, the thermostat and getting a free set of chromed pipe covers.

Note: I chose the chrome pipe covers here because these are the “oooo shiny part” of the bundle that really finishes the project off well.

So the bundle price is now £85 (£70 for the radiator + £15 for the thermostat) and the customer receives a set of chrome pipe covers (the “ooo shiny thing”) for free.

Your actual cost hit isn’t the full £10, instead it’s less than this as your cost price of the pipe covers was £5, so instead you have given the customer a freebie, upped your price by 21.43%, included additional products in a single sale (which can help drive down prices because you’re buying more from the suppliers) and you only reduced the overall price by a fiver in the process.

Even more ideas for you

Including a product for free or tweaking the delivery price are two very easy ways of discounting, without giving away all your profits.

In both examples your order value went up, not down and kept any reductions in price to way under 10%.

However don’t think for one moment that these are the only two options available to you, here are some more ideas for you:

  1. Offer free shipping on orders above X value
    That bundle maxed out at £95, tantalizing close to a £100 threshold for free shipping. What other products would also be a temptation to the customer? Radiator covers or a clothes rack for example?
  2. A promotion code for future purchases
    In my mind, customers are not real customers until they have been back for more.
  3. Retargeting previous customers
    You could use a bundle like this contact your existing customers who have purchased similar products, maybe those who bought your blow torch, flux & solder kit for example :)
  4. Buying stock to specifically sweeten the deal
    The wild-card that I didn’t suggest above was to include another product as a sweetener. Say a set of screwdriver bits or a fluffy toy or a handbag or some makeup or a ruler or a…. (you fill in this part)

Upwards, never downwards

So many other businesses will start slashing their prices and giving away their hard-earned profit margins. Don’t be like everyone else, think smart and discount upwards rather than downwards.

Bundling products will work for any type of product whether you’re selling keyboards & mice (don’t you also need a mouse matt?), a dress (how about a matching handbag or necklace?) or even a humble radiator.

Picking products that naturally go together is easy, infact that tip I mentioned at the beginning of the article is also in “plain-sight” too.

Your customers are telling you what you should be making bundles for!

Take a few minutes to look back through the orders you have received in past 6-9 months, specifically look at the orders where customers bought more than one product from you.

Notice any trends? Bundle them.

How can you use bundles for your business? Do you already use them? Or have you thought of another method to discount upwards that I didn’t cover in this article?

Let me know in the comments box below, I’d love to hear your thoughts.

As always to your continued success,

Matt Ogborne

This article was originally posted here & here.

A Competitive Advantage for eBay & Amazon in Plain Sight

Howdy,

For any product based business there is a competitive advantage hiding in plain sight, it’s so obvious when you spot it and lethal when you implement them into your business.

As you’re about to find out, kits (also known as bundles) are lethal.

Kits help your customers, kits help you sell more products, kits help you increase your average order value and kits also help you gain an advantage over your competitors.

So what are Kits?

Kits are simply bundles of products that are put together with products that would normally be bought at the same time.

The best way of showing you how they work is you give you an example.

One of my tasks for today was to buy a network cable testing kit and a pokey-thing to push down the wires into network cables (a punch tool), so straight onto eBay and I filtered to UK only sellers.

You can take a look at the eBay category here http://www.ebay.co.uk/sch/Cabling-Tools-/51169/i.html and below I’ve included a screenshot of the page I could see.

Notice how 2 of the top 4 items are actually for more than one product?
eBay Kits Example

If we take the upper item as an example, this listing contains the following tools:

  1. A punch tool
  2. Cable test tool
  3. A crimp tool & stripper

That was me sold. The listing had everything I needed, a UK seller and promptly went off and purchased it.

Make things easy for your customers

Making kits of products aren’t just confined to networking tools, it works in any category on any site. Bundling products together “just makes sense” when done right, there are 3 simple reasons for this:

Firstly it helps your customers.

So using my purchase as an example, that eBay listing had everything I needed in one go.

The seller had taken the time to put everything I would need (bar the cable, which I already had) into a single listing and made it super easy for me to make a single purchase.

No waiting around for separate deliveries, one purchase, one delivery and job done.

This genre of product & related eBay categories is a brilliant category set to use, because if you dig a little deeper you’ll find many businesses have already caught on to this and are making listings that contain cable, sockets, wall plates, jacks, cable ties, punch down tools and even including the screws needed!

The word we’re looking for here, is “convenience”.

It makes the purchase more convenient for your customers to buy a bundle of related products in one go, rather than buying separately.

Note: Are you already thinking of two products that you have that would go together nicely? If you are, jot them down on a piece of paper and keep it to hand so when more spring to mind, you can record them quickly.

You sell more.

Instead of, sorry “as well as” (woohaa that was a close shave there, always do both!) listing each product separately, putting products that naturally go together into a single listing, means that the price goes up, yay!

Not only do you gain a higher average order value, you’re also getting through more products, more quickly (which means you order more frequently from your supplier(s) and thus potentially savings to be made there).

At no point so far have I mentioned that you should discount the pricing because you’re putting two or more items into a kit.

When you start to spot these on eBay, Amazon or on websites, when you look more closely, you’ll frequently spot that some kits have a higher price than what they would be when bought separately.  

The first reaction is always to push the price down, however, do keep in mind that customers will pay for convenience and that because there is now more than just one product in the listing, that the final delivery weight & dimensions go up. Thus you’re likely to be paying more for the delivery to your customer.

A huge tip here is to price upwards when you first start creating your own kits.

It’s all about making profit at the end of the day, so go upwards first. If a customer queries it (which they won’t and I’m adding this line to reassure you), just say it costs more to pick & ship them together.

Other Considerations

I felt it important to highlight a couple of considerations when it comes to kits, because it’s not all champagne and roses.

Firstly factor in that it will take extra time to create the kits.

This is as simple as picking two separate products at picking time in the warehouse. In more complex kits, this could mean many separate picks and even the pre-building of kits to speed up the dispatch process.

Not all multi-channel software supports the creation & stock control of kits.

For example ShipWorks, an American shipping tool didn’t manage bundles from Magento properly for a while. So do check that they are supported in the software tool you’re using.

Quantity is and is not a kit.

Let me explain this one a little further.

According to Amazon, you’re not supposed to make kits of products based just upon quantity. However, this loosely interpreted even by Amazon themselves, such as these batteries, they’ve separated quantity out into separate ASIN’s, it’s the same product, just packaged in different boxes (in multiples of packs of 4 too!).

Note: And yes this does mean a new barcode (EAN, UPC etc..) and ASIN for Amazon, which means a separate product.

The same for eBay too, but many products come in packs, say a dozen or more. If you’re going to create an eBay listing that has quantity as a variation option, don’t call it quantity (eBay won’t let you do this anyway), instead call it something like “Pack Size”.

Side note: I’m thinking of a mastermind webinar we did a couple of weeks back on researching products to sell on eBay. “gold tea lights” was the product suggested by one of the sellers who attended. We soon worked out that while tea-lights are sold in packs, weddings were a consideration, several times a month customers would buy loads of them.

So packs of 12’s would be a pain for those types of customer, so one of the suggestions was to make wedding packs for 48, 72, 96 and more. This pushed the pack value above £100 in several cases.

Gain an Advantage

Kits are all about convenience for your customers and if you haven’t already, you’ll start to spot them being used everywhere.

Manufacturers cottoned on to this a long time ago, this is while you’ll find assortment packs. Using washers as an example here (yes you guessed it, I’m a bloke so most examples here are tool related) you’ll find O-ring’s rarely sold as packets of just 1, they’ll be in assortment packs. Higher value and more convenient for someone like me & you.

For me, buying the cable tester and punch tool together, saved me from multiple purchases, most likely from multiple sellers and means I get one package delivered.

The seller I purchased from, they gained an advantage by selling the tools separately and (note the AND here!) together in a kit. They doubled or more their chances of making a purchase by doing this.

Creating unique kits of products that go well together gives you an advantage over your competitors.

They won’t have the same kits as you for a while at least (well until they cotton-on to how successful you’re going to be with them! Which could be weeks or months, while you’ve been nailing them in the meantime).

Here are a couple of examples to get your creative juices going:

  • A Nerf gun and an extra pack of darts (maybe two extra packs of darts)
  • A dress and a matching handbag
  • A set of pliers, bull-nose, pointed and nippers
  • Drain rods and attachments
  • Sanding pads in multiple grits
  • A whiteboard rubber and a set of marker pens
  • A fancy dress outfit, a wig, a mustache and face paints

Think about your products, how could you create a kit of two or more products, that naturally go together?

If you’re already using kits, how have you found their success for your business?

Let me know in the comments below.

As always, to your continued success,

Matt

Co-Founder of UnderstandingE & Founder of WidgetChimp