How to Gain a Competitive Advantage Through Product Bundling

In my article How to Increase Sales Through Product Bundling, I explained the benefits of product bundling and gave five ways to increase sales by bundling products. But bundling products is not just a hack that will help you sell more. 

Product bundling will help you create a competitive advantage.

It is a way for you to set yourself apart from the competition so that customers choose to purchase from you.

Why Bundling Creates A Competitive Advantage

Over the last year, my wife and I have been working to build a small e-commerce business where we sell items through distribution channels like E-Bay and Amazon.

One of the challenges in selling products through these channels is the vast amount of competition.  Since we allow our products to be distributed directly by Amazon (FBA - Fulfilled by Amazon), it is fairly difficult to gain a competitive advantage where a customer will choose to buy our product over the competition. Sure, there are a few variables we can control - the name of our company, the price, and our customer service rating - but since there really isn’t any branding or loyalty when selling name brand products, it is very difficult to find a competitive advantage so a customer will purchase our product instead of buying from the competitor. 

This is where bundling comes in.  Bundling provides shoppers with the option of purchasing a group of products rather than the single product.  For example, instead of selling a single electronic tooth brush where there are ten or fifteen sellers offering the same item, we could bundle our toothbrushes together with floss and toothpaste so that we are the only ones to offer this bundle.

And bundling really is all the rave on Amazon right now - this is the strategy that many sellers are using to gain a competitive advantage and make more sales.

How To Create A Competitive Advantage

Now, you may be thinking that product bundling doesn’t apply to your business.  Or maybe, you are thinking that bundling won’t work because your industry just doesn’t use this strategy.

Well, if bundling can provide a competitive advantage on Amazon where one seller really isn’t different than another, I have to believe that your branded business can benefit from bundling.

Here are five ways to create a competitive advantage through product bundling:

Evaluate the Competition

First of all, it is important to understand how you are the same as your competition so that you can strategically set yourself apart from them and gain a competitive advantage.   

In evaluating the competition, start by making a list of your three main competitors. You should have an idea of who they are.  If you don’t know for sure, start by putting yourself in your customer’s shoes.  Imagine that you have the need your customer has and ask yourself this question: how would they find the product that would fulfill their need.  

To do this, you can use the phone book, internet, or newspaper.  Make calls to stores you would imagine may offer this product and ask for referrals.  Also, you could even ask your customers (and family and friends) what other companies they have previously used when purchasing the product they are now getting with you.

The goal is to understand who else is offering the same products as you.

Analyze the Competition’s Value Proposition

Once you have determined who the competition is, it is now time to compare what they have to offer with what you are offering.  Basically, you want to know if you are offering the exact same thing, and if not, what differentiates each offering.

To do this, make a list of your best selling and most profitable products or services.  For some businesses (like retail) this could be fairly extensive and you might want to focus on product lines rather than individual items.  For those who have a smaller product line, you should evaluate the individual products.

Basically, you can utilize a spreadsheet like Excel and use four different columns at the top.  In the rows of the very first column (on the far left), you are going to list your main products and services with their price and a description of the product offering.  Then, in the remaining three columns you are going to analyze your top three competitors.  If they have the same products as you, you will enter this information in the same row as the row containing your similar product in column one. 

If your competition offers a product that you don’t offer, then enter that product in a row at the bottom of your list where you don’t have any items in your column because you don’t offer that product.  

The idea is that you are creating a chart where you can compare what you offer to what the competition is offering.  (If you want an example of what this comparison could look like, just go to Apple’s website and compare different products - the site will automatically break down different specs for each product and compare them across different columns.) 

Bonus Tip- Analyze Out of Area Businesses

If you are feeling extremely ambitious - try analyzing companies similar to yours that are out of your target market and look for best practices that you could implement in your business.

Working with out-of-area businesses can be a way to collaborate and support similar businesses who are not direct competitors.  This can be a great way to further understand your industry and learn best practices without giving away your trade secrets to your competitors who might take away your competitive advantage.

Analyze Your Data

Once you have evaluated how your product offerings compare with your competition, it is time to determine what offerings are similar to your competition and what are the same. 

Your goal is twofold.  First, you want to figure out what similarities you have with your competition.  Basically, you want to find those areas where there isn’t a significant reason why customers would come to you over the competition.  These are the areas that you can begin to offer bundles to set yourself apart from the competition and give your customers a reason to purchase with you.

Secondly, you want to discover what product offerings are different from your competition.  If your competition is already offering a product bundle, this may mean that they have already gained a competitive advantage over what you are doing.  If this is the case, you can determine an alternative bundle that will close the competitive advantage gap with your competitors.

Create Your Bundles

The final step to gaining a competitive advantage is to create your bundles.  In creating your bundles, it is extremely important to put yourself in your customers shoes and to determine what needs they may have that could be fulfilled through a product bundle.  In my article How to Increase Sales Through Product Bundling, I share five steps for creating product bundles.


Product bundles can be a great strategy for setting your business apart from the competition when it feels like you are offering very similar products or the market is saturated with a large amount of competition.