Group Bundling versus Traditional Bundling in e-Commerce: A Field Experiment

Selling in bundles has been argued to lead to more and earlier sales in promotion and clearance campaigns, which could improve inventory turnover, capacity utilization, and profitability. However, recent findings suggest that bundle promotions have limited ability in achieving such outcomes because of the quantity requirement in traditional bundling (purchasing a quantity of two or more for consumers to qualify for the bundle discount), which deter non-buyers to become buyers. A recently proposed method (group bundling) promises to alleviate the quantity requirement while maintaining the bundling benefits both to consumers (discounts) and to retailers (minimum sales volume). However, there has been neither theoretical explanation nor empirical validation of the method's advantage/disadvantage, a gap that this paper fills. The results of a field experiment we conducted on the e-commerce operation of a gym suggests that group bundling does have a relative advantage in driving consumers' intention to buy online bundles.