Bundling is a basic retailing concept that’s as old as the hills—even the great Louis Daguerre offered his legendary Daguerreotype cameras alone or as complete kits way back in the 1840s!
In our industry, bundling is defined as configuring camera outfits containing more than just the camera, and offering them at lower prices than the individual items put together. It’s a flexible system that runs the gamut from adding a few essentials like a cleaning kit, UV filter and case to complete multi-lens outfits that include high-end imaging software, instructional classes and “free” printing services. Indeed, bundling has become progressively more sophisticated as we advance into the digital era.
From the consumer perspective, a DSLR bundle looks attractive if it provides items the customer actually needs for less money. From the retailer’s point of view, bundles can incentivize sales while providing ancillary benefits that include increasing the profit margin on each individual sale, enhancing the customer’s success with, and interest in, photography and establishing a more active interpersonal relationship with your store.
If executed creatively, bundling can make your establishment more successful in competing with everyone from big-box stores to other retailers (like electronics and office stores) that offer a variety of products (e.g., memory cards and batteries) in the photo space.
Retailers who are adept at DSLR bundling are generally enthusiastic supporters of this time-honored strategy and proudly point to their bottom lines as proof that it’s a business model for success. However, other dealers are not so gung ho on DSLR bundling and limit their bundling activity to offering and/or mildly enhancing the two-lens kits promoted by major DSLR makers like Canon, Nikon, Sony, Olympus and Pentax.
Whatever approach you take, you’ll stand the best chance of success when you combine it with an even more fundamental concept—relationship marketing. Getting to know your customers—what kind of shooting they do now and where they want to go—will let you create effective DSLR bundles, modify them to suit specific needs, or add high-margin accessories individually at the point of sale. It’s all good.
We interviewed the executives of four well-established stores and herewith present their insightful views on this fascinating subject.
THE PHOTO SUMMIT, located in Summit, New Jersey, has been serving northern New Jersey’s photographic needs for more than 30 years, while its sister store, Madison PhotoPlus, has been operating for over 60 years. Both are located less than 30 miles from New York City and focus on a broad customer base from beginners
to advanced enthusiasts.
“Any camera sold in our stores features two prices on the price tag—the ‘box only’ price and the ‘complete solution’ price,” Bret Harmen, co-owner, tells us. “This motivates customers to as what we mean by 'complete solution,' and the answer is that it adds on everything they need that doesn’t come in the box. For example, our ‘complete solution’ for the popular Canon Rebel T2i includes a gadget bag, SDHC memory card with USB reader, UV filter, cleaning kit, flash diffuser, lens hood, HDMI cable, more comfortable strap, a 30-minute private lesson, and store coupons. All this is bundled together at a price far lower than the items would be if purchased piecemeal.
“These solutions are not locked in; if someone wants a different case, or a larger memory card, that’s easy to do. The customer is, of course, still able to buy just the camera, or just get, say, a memory card plus the camera, but the solutions are priced so that it doesn’t take many add-ons to make the solution a better bargain. We also have a special ‘famous maker’ software package that includes editing software and more that would usually cost over $200, for $59 additional with any camera purchase.
“We don’t usually offer season-specific bundles, except in certain situations; for example, we have had companies make a package of their underwater point and shoot that adds on a camera skin, float strap and case, and we will then add in some more of our goods to create a Summer Bundle. We also configure bundles like this for Mother’s and Father’s day, frequently featuring cameras in special colors,” adds Harmen.
Thoughts on HD video: “HD video shooting with DSLRs has really just started to enter the amateur mainstream consciousness for us; cameras like the Canon T2i, Pentax K-x and Micro Four Thirds cameras are making this category grow. So far our accessories for this have mostly been limited to providing LCD hoods, HDMI cables and fast memory cards, but we are actively looking at new (to the photo space, anyway) accessories like external microphones.”
ROCKBROOK CAMERA, Omaha, Nebraska’s largest imaging retailer, operates three stores to serve the upper middle-class suburbs of Omaha. The original store was founded in 1975 by the late Carl Fortina; his son Chuck Fortina is now the president and CEO.
“Adding on accessories to a camera sale is the lifeblood of the photo specialty retailer,” says Tony Fortina, manager. “At Rockbrook, nearly half our revenue comes from accessory sales. Our associates have always been very good at adding the fundamental items like high-capacity memory cards, extra batteries, bags and cleaning kits to a camera sale, and they do it on a consistent basis without the need to discount these profitable items.
“Our secret is not so much in making a predetermined bundle but rather embedding important accessory items into the presentation so the customer is prepared to add them to the camera when they make the purchase. Our associates are paid a larger commission on accessory items, so the incentive is there to suggest them to customers, but they really sell these accessories because they believe the items are necessary components to complete the outfit.
“We are very mindful of the way our national and local competitors have included accessories like bags, batteries and lenses in their Sunday ads, and we’ve been doing more of the same thing. This is all good, as it raises the awareness of these important accessories to prospective camera buyers. With the two-lens DSLR outfits promoted by major makers this summer providing instant savings, we’ll take a look at creative ways of bundling additional value-added items like backpacks and printers.
“Another effective tool is having our in-store photography classes, because the instructors all have their personal variety of ‘go to’ accessories they like to talk about,” Fortina adds. “A lot of this comes from the fact that they own these accessories themselves and utilize them to get the full potential out of their shooting outfits. This registers a lot of confidence in the customer’s mind, which is something you seldom get at big-box stores.”
ART’S CAMERAS PLUS, in Pewaukee, Wisconsin, is a second-generation business that’s operated since 1967. It’s known among industry watchers as “The Bundling King of the Midwest.” It has two locations: the Pewaukee store houses a full-service lab, warehouse and offices: the Greenfield location has a “Digital Print Suite,” a comfortable room with seven kiosks. Posters, greeting cards, photo books and high-volume buy-the-box photo and slide scanning services for both are handled in Pewaukee.
“We’ve been a big advocate for selling cameras in bundles or kits for years,” says Tony Miresse, president and owner. “There are several reasons why we believe it is in our best interest. First, in order to be successful in selling this way, we need to make it a win-win-win (yes, three wins). The customer wins because they get a perfectly matched system and save significant dollars. The sales associate wins because most of the items in the kit are profitable and have a nice commission on them. And finally, by attaining the first two wins, the company wins because our close rate on DSLR sales is exceptionally high. A by-product of a 10- or 12-item ticket is that our total profit dollars are much higher than if the customer only purchased the camera with a couple of extra items.
“The key is to include items with a high perceived value but low cost. We like to use ProMaster products because they have outstanding profit margins and are quality products my staff has the utmost confidence in. ProMaster items commonly included in our SLR ‘Hot Buy’ kits include a bag, SDHC card, battery, UV filter for each lens, LCD protectors and lens cleaning kits. We also include a coupon for our quick-start class, which gives us the opportunity to talk up our educational programs. We can add all this to our SLR price for around $100 and still show the customer a savings of over $100. The nice thing is that we make at least $50 extra after we pay a nice spiff to the sales associate. And, customers are more likely to purchase even more items beyond the original kit. For instance, if they purchase the Hot Buy outfit, we let them enhance it by adding on ‘suggested items’ at a savings.
“Our staff emphasizes the kit during their camera pitch. This gets the focus off the camera-only price customers may have researched before coming into the store and onto the savings the kit offers. Selling bundles or kits creates value for our customers—along with just the right amount of confusion to get them to forget about what everyone else is selling the camera for. Our staff finds it’s easy to get customers to commit to an 8–10 piece outfit, after which they can successfully add on items they probably wouldn’t even get to mention had they added on all the ‘normal’ accessories. The profit margin on the additional add-ons—which may include an upgrade to digital filters, a Mack Diamond warranty and a mini HDMI cable—is excellent, and we almost always get at least three additions to the kit.
“Customers feel good about the money they save and that they have everything they need. Sales associates win because they make $20–$40 commissions and have a happy customer who will return and ask for them for future sales opportunities. And the company wins because rather than being content with a $60–$90 profit on an SLR sale (if we’re lucky), we’ve doubled or tripled our profit dollars—even after paying the sales associate’s commission.
“We routinely offer Hot Buy kits featuring certain SLR and lens-shutter cameras that we want to push, but we also feature ‘Essentials’ kits that are more generic and can be sold with any camera. Items may include a ProMaster flash, flash bracket, off-camera shoe cord and flash diffuser.
“As for accessorizing with HD video capable DSLRs, I have a couple of ideas for the near future. There is a growing opportunity for a ‘Video Maker’s’ kit that could be an easy add-on to a Nikon D5000, Canon T2i or 7D, and even an Olympus Pen, for example. It would include many of the standard items that go with cameras (bag, filters, screen protectors) plus a ProMaster 16GB high-speed card, tripod, HDMI cable and a software bundle we’re currently buying that includes Adobe Elements 8 and Adobe Premier Elements (for video editing). I also intend to put together a studio lighting kit, and maybe a tripod kit that includes a base, head, spare quick-release plate, bag and a wireless remote.”
CROWN CAMERA, located in scenic Redding, California, was founded by Gary Engell in 1957 as a small store with no processing services. It gradually expanded thanks to the efforts of Engell and Fred Lerner, eventually taking over all the small stores on a corner in downtown Redding. The store has 11 employees and 4,000 square feet of retail space, including a studio and classroom.
“Crown Camera is successful largely because of our customer service—our tagline is ‘Always someone to talk to,’ and we mean it,” says manager Frank Tona. “We’re an authorized dealer for Nikon, Canon, Olympus, Fujifilm, Pentax, Leica, Casio and more, and we’re an active member of the PRO organization.
“We offer a number of creative, flexible approaches to bundling add-on items with DSLRs. When customers buy a camera, they receive our Crown Special, which includes a free photo class and free prints for a year. We’ve added a package this year that includes a software creativity suite (Adobe Photoshop Elements 8 and Adobe Premiere Elements 8, Frame Shop, and ACDsee). These four programs bought individually would retail for more than $200, but our customers can buy the package for only $99 with the purchase of any five ProMaster accessories. ProMaster is our premiere product line for accessories like memory cards, camera batteries and chargers, camera bags, tripods and lighting products. When a customer buys a spare battery, cleaning cloth, memory card, bag and mini tripod, this automatically allows the customer to receive our creativity suite at a savings of over $150—a great value!
“Even if the customer bought their camera at a big-box store or online, we still offer them our photo classes, during which we suggest a similar package to them. Bundling ProMaster products with our camera lines provides us with better profit and happier customers!
“For Canon HD camcorders and Nikon and Canon DSLRs with HD video recording, as well as high-end point and shoots, I believe we have only begun to scratch the surface of what is possible. Spend any time on YouTube or Vimeo and you’ll find many fine examples of photographers who have been bitten by the video bug.
“This growing segment includes the Go video line of small helmet-mounted cameras and HD Flip cameras with a convenient push-to-record button. And all are easy to hook up to HDTVs. I don’t think many camera stores have caught on to this trend, but I bet their customers—skateboarders, cyclists, hang gliding and paragliding enthusiasts, snowboarders—are asking about these products. Did you know that many new TVs and DVD players can stream YouTube video directly from computers so the whole world can instantly view them? How cool is that? There is now enormous upside potential for selling high-margin accessories and HD-capable DSLRs, lenses and a host of viewing and stabilization devices to enhance the HD video experience.
“As a side note, we use social networking to drive customers to our store, including Twitter and Facebook. While we have many loyal walk-in customers, Facebook connects us with their friends and family as well!