|Sun Oct 28 2012 16:56:41|
eBay's New Bundle of Joy
By: Brian Cohen
Those of you who watch History Channels' reality show "American Pickers" know that Frank Fritz's "trademark move" is bundling when negotiating with sellers. Frank provides an incentive for sellers to part with their junky treasures (one man's junk is another's treasure) by grouping items together and negotiating one price for a lot rather than pricing each item individually. Negotiation Theory and Practice Blog by Chad Ellis explains how there is a psychological component when Frank presents a bundle as a more attractive alternative to a seller:
"If someone makes an opening offer of $300 it can be emotionally difficult to come down to $200 even if their BATNA (Best Alternative to a Negotiated Agreement) is $180. They may be afraid of being a sucker (e.g. if the buyer's BATNA is really $320) or they may be embarrassed about asking for $300 if they were actually willing to sell for $200. It may be as simple as seeing their final offer of $250 as winning and anything else as losing...even as they think, "I'd really hate to lose this sale."
"By bundling, Frank gives them an out. They're getting their price (I think he always has the bundle come out at or slightly above the price they wanted for the larger item) in exchange for throwing in a little extra. That feels like a shared win, even if from the numbers alone Frank is getting his price."
Frank might be surprised that his "trademark move" was just sent to the United States Patent and Trademark Office as a patent application "Methods and Systems for Merchandising Products in Bundles in an Online Marketplace" by eBay. I found eBay's bundling patent application to be highly customizable and I will present to you notable extracts from the patents below:
"...With conventional online marketplaces, sellers typically have limited options when it comes to promoting their items, and particularly, providing potential buyers with incentives to purchase multiple items...sellers may list two or more related, but different, products for sale to potential buyers. The related products may be listed separately in the online marketplace, such that each product has its own item listing. In some instances, a seller may embed one or more links in a particular listing to one or more listings of related products. Alternatively, a seller may manually bundle one or more products into a single advertisement or listing within the online marketplace, for example, by generating a single listing that describes two or more related products being offered together..."
"...A "bundle," as used herein, is the purchase of two or more items from a selection of products sold by a seller. A bundle may or may not be predicated on an incentive provided by the seller... "
"...(With this invention) the bundling interface used by the seller to define a bundle... provide(s) one or more incentives associated with the bundle."
"... product bundles ... allow a buyer to select and purchase multiple related products being offered via independent listings by the seller. In defining a product bundle, the seller may provide a discount or some other incentive to the buyer who buys multiple products from the seller. The seller may benefit by having higher sales volume and reduced transaction costs... "
"...the incentives may include discounts on individual primary or secondary products, a discount based on the number of products added to a bundle, a discount based on a total price of a bundle, a discount on shipping (e.g., secondary items ship free with the primary item), (...gift certificates) a warrantee or extended warrantee, a more generous return policy, a "buy one, get one free" offer, a discount applied to additional items, or the like. The seller may further dictate other aspects of the bundle such as start date of a bundle, end date of a bundle, a number of items that a buyer can select to be in a bundle, a ranking of inventory to be included in the bundle (discussed in more detail below), cross-bundling agreements with other sellers..."
"For example, a primary product may be a camera that is associated with accessories such as tripods, lenses, cases, additional memory, photograph printing supplies, digital imaging software, flashes, etc. The accessories may be referred to as "secondary products"..."
And the most interesting part of this patent application is the cross-bundling agreement:
"...the seller may establish cross-bundling agreements with other sellers. For example, the seller may include a product in a product bundle ... that he does not have in inventory or that is frequently sold out. The other seller may sell the same product but have those items in inventory. In these instances, the seller may include the other seller's items in a bundle sold to a buyer..."
While eBay does already have a very limited type of bundling automation through both Calculated/Combined & Promotional Shipping:
"Offering a shipping discount helps promote your item and encourages buyers to buy additional items from you...Calculated shipping rules let you combine multiple purchases from a buyer into one shipment, which is generally less expensive than shipping items separately... Promotional shipping rule, you can offer buyers special discounts if they buy multiple items or spend a certain amount. You can also charge a maximum shipping amount for a single order."
"Methods and Systems for Merchandising Products in Bundles in an Online Marketplace" brings bundling to a whole new level. Bundling is a win-win-win (eBay-Seller-Buyer) strategy.
Meanwhile, Amazon was just granted Patent 8,290,818 on October 16, 2012 (they applied back on November 19, 2009) for "System for recommending item bundles."
What type of products will you be bundling? And for that matter, can you think of some products that should "never" (unless being mischievous is your type of thing) be bundled? Discuss below!
About the Author
Brian Cohen has been an active member of the eBay community since May 1998. He currently trades under the member name Bidofthis.com. His first AuctionBytes article was published in May 2002. Brian can be contacted through his website at BidofThis.com where he always has a "little Bid of This and little Bid of That."