This is the latest installment of the DTC Briefing, a weekly Modern Retail column about the biggest challenges and trends facing the volatile direct-to-consumer startup world. To receive it in your inbox every week, sign up here.
DTC brands are increasingly leaning on product bundles this holiday season. With price-conscious customers watching their spending this year, companies are hoping to entice them with slightly discounted sets, as opposed to generic site-wide discount codes.
Historically, beauty brands have used bundled gift sets to drive sales during high-traffic periods, such as the holiday. Major examples are the well-known fragrance sets sold at department store counters, which encourage higher spending through enticing gift-with-purchase bundles.
This fall, candle brand Boy Smells brought back its mini bundles, featuring a variety of votive-sized sets. Meanwhile this month, direct-to-consumer brand Italic released a new bedding bundle geared toward gifting. Some brands are even framing the purchase as a way to buy multiple gifts at a discounted rate that can be broken up by the customer. In recent interviews, a number of DTC brand executives made a case for why bundled merchandise is a key to converting hesitant shoppers and appealing to their existing customers. These brands’ executives are also hoping bundles increase average order value and lead to more gifting opportunities.
Deals to encouraging new shopper conversion
This quarter, air freshener brand Pura has been pushing bundles more than usual. The company’s website features a new gifting section, complete with a list of all its bestselling sets. These include the seasonal Pura winter set and the seasonal best sellers kit, which are currently the brand’s top-selling SKUs.
Mara Dumski, chief fragrance experience officer at Pura, told me that this season the company is putting its efforts behind promoting a free Pura diffuser device as part of subscription bundles. The device – normally sold at $44 on its own – is meant to entice new customers to commit to a six month-long subscription in exchange for the discount.
“So if you subscribe to two fragrances for six months, you’ll get a free diffuser,” Dumski explained. Not only does this tactic help with overall retention, Dumski said, but bundles also appeal to new customers who want to try multiple scents at once for a lower entry price. “Sets have been performing amazingly this quarter, as it makes gifting our products super accessible,” Dumski said.
For Pura, themed bundles and build-your-own sets have historically helped sales spike during high purchase intention times. “Whenever we do discounts or deals on sets, we hit record sales,” Dumski said. She also added that influencer and affiliate codes tend to perform better with sets better with single SKUs. “We’ve also sold out of fragrances included in sets faster when we push specific scents and sets,” Dumski said.
The company expects to sell about 60,000 bundle kits this month, compared to the monthly average of 9,000 during 2022’s first-quarter and second-quarter period. “Typically, about 4% of all fragrance sales are part of a kit, but this month we expect over 10% of all fragrance sales will be part of a kit,” Dumski said. This month, kits are selling at a 6%-8% better than they have in previous months this year.
Creating newness through existing merchandise
For the first time since opening in 2004, Brooklyn-based jewelry brand Catbird is testing bundled pieces. This fall, the brand has experimented with sets by releasing two or three piece sets of its dainty jewelry, such as a ring stack starter set and a bracelet starter set.
Catbird’s director of marketing, Sriya Karumanchi, told me that since releasing its trio stack rings this fall, the company has seen an increase in basket sizes. “Most of our customers typically buy multiple rings to wear together, so this is a way to promote styles that complement each other,” Karumanchi. And with a modest discount of about 15%, compared to buying the pieces à la carte, these sets are currently outperforming their single product counterparts. “Our bundles are meant to act like product edits that help customers build up their Catbird collection,” Karumanchi said.
“So far, we’ve seen strong sales from these sets,” she said, confirming that the company will roll out more bundle assortments in the coming months, including expanding into earrings. “We’re also working on collaborating with other brands on upcoming bundles,” Karumanchi said.
“We produce small batches of jewelry, which doesn’t allow for steep sales,” Karumanchi said. This is where merchandising bundles together helps encourage bigger basket sizes. Bundles are also a clever merchandising trick, Karumanchi explained. Even though the items had been previously available, Karumanchi said mixing and matching them together as new sets “creates a feeling of newness” that helps drive buzz and traffic to the website. Another helpful messaging tactic, Karumanchi said, is encouraging customers to break up their bundles to gift some pieces. That way, they get a discounted cost-per-gift, or gift themselves part of the set.
Boy Smells, for example, also has a current campaign that encourages doing this with the company’s new holiday candle set. “Three perfect scents you can break apart to gift or keep all for yourself,” the email campaign says.
Indeed, brands leaning into sets and bundles count on them for bigger cart sizes during the holidays.
Cadence, a DTC-only brand that sells refillable travel containers, introduced a new bundle of capsules for the holiday season. The brand is re-releasing three of its past fan-favorite colors, along with three brand new colorways. The new nine-piece bundle, called The Gradient, is a $126 value being sold for $115, and is the company’s first-ever nine-piece bundle; Cadence typically sells its discounted bundles in increments of six or 12 capsules.
The Gradient bundle is an effective way to bring back limited-edition colors by popular demand – retargeting existing customers just in time for gifting season, said Cadence founder and CEO Steph Hon.
Hon noted that, currently, the brand’s best selling bundles are the two themed sets that allow shoppers to fully customize their capsule systems. “For those looking for more guidance, we’ve designed additional bundles based on historical purchase data of the most commonly built custom systems, making them a great choice for gifting, or for those looking for a pre-made, grab-and-go option,” Hon said.
Merchandising existing and new SKUs together is also a fairly easy, high-impact strategy for getting old customers to build on their collections.
“At Cadence, bundles are an opportunity for us to reach the community where they are, creating a better and more personalized experience, which supports stronger conversion rates,” Hon concluded.
What I’m reading
- Skincare company Topicals has raised $10 million in funding. CAVU Consumer Partners led the round, according to Forbes.
- Nike is the latest brand to enter the digital goods space. It just launched a Blockchain-based metaverse marketplace called Swoosh for people to buy virtual items.
- Product incubator Heyday has acquired the skincare company ZitSticka for an undisclosed sum, reports RetailDive.