Jul 31, 2024 | 5 minute read

Combining bundling and subscriptions to increase average order value (AOV)

Could bundling be the biggest untapped opportunity for merchants in the subscription business? A recent report from the Subscription Trade Association (SUBTA) estimates that eCommerce subscriptions account for $300 billion in annual revenue, with subscriptions as a whole expected to grow by 50% in 2024. This growth isn’t necessarily limited to new subscriptions. Once consumers subscribe, they are more likely to add on or bundle additional products or services. For example, in the beauty industry alone, the average order value (AOV) of subscriptions is up 12% year-over-year.

While certain industries, such as streaming, have embraced bundling subscriptions with complementary services, retailers may want to take note. A report from Recurly suggests allowing customers to personalize subscriptions contributes significantly to retention: 28% of companies offered ways to personalize subscriptions, resulting in $2.2 billion in incremental revenue.

Most subscription-reliant businesses in this economy need to rely on retaining and adding value for loyal customers. Allowing them to customize their own subscription bundles may be one of the best ways to do so. Let’s look at some of the current challenges toward implementing a subscription bundling strategy today, and how composable commerce can help ease this process.

Simplifying bundling and subscriptions

While many legacy commerce players have plugins for bundling, it’s extremely difficult to offer customers options for personalizing their bundles or adding services to subscriptions. For many merchants, that requires custom development to make building work alongside existing commerce systems. Bundles are often static and difficult to change, making it hard for merchandisers or consumers to make changes.

To solve these problems, we’ve just announced a new bundle builder capability in Elastic Path Product Experience Manager, our product merchandising, catalog management, and commerce PIM product, that makes it much simpler to create and manage bundles. Instead of having to add individual product SKUs to a bundle, you can now simply add products to a bundle from a preset menu.

Watch our new bundling capability in action

Customers can also add a recurring subscription to their cart alongside a one-time purchase in a single transaction. While that may sound simple, customers typically have to complete two separate transactions for subscriptions and one-time purchases. Knowing that milliseconds of friction can result in cart abandonment and a loss of conversions, we’ve streamlined the checkout process — all while making bundle-building much easier on the merchant side.

Another option is to offer your customers the option for dynamic bundling, or giving them a choice of which items they’d like to add to their bundle, rather than forcing them into a rigid set of items preconfigured for them. Using our dynamic bundling capabilities, you can select a category of products from which your customers can choose, and set the parameters (such as minimum number of items, pricing, and product imagery).

In addition, Elastic Path Subscriptions, our subscriptions product, helps you quickly set up subscriptions for your customers. We’re making it easier to set up custom subscriptions either through our intuitive user interface or the Elastic Path API. The goal is to integrate with the commerce technology you already use, including other Elastic Path products, so efforts like bundling and subscriptions become much simpler to manage.

If you haven’t thought of combining bundling and subscriptions, it might be time to try. It’s all about making things more convenient for loyal customers, while increasing your AOV in the process.

Want an easier way to experiment with things like promotions, subscriptions and bundling? We can set up a free trial store for you for six weeks.