Average Order Value
Definition
The average amount customers spend per transaction in your shop. Calculated by dividing total revenue by number of orders.
What is Average Order Value?
Average Order Value (AOV) measures how much customers spend on average per purchase. It's calculated simply: total revenue divided by number of orders.
If you made GBP 10,000 from 200 orders, your AOV is GBP 50.
Why AOV Matters
AOV directly impacts profitability. If your customer acquisition cost is GBP 25, an AOV of GBP 30 leaves thin margins. An AOV of GBP 80 gives you room to invest in growth.
Increasing AOV is often easier than increasing traffic or conversion rate. It means getting more value from customers you've already acquired.
Calculating AOV
Average Order Value = Total Revenue / Number of Orders
Track AOV over time and segment by:
- Traffic source
- Device type
- Customer type (new vs returning)
- Product category
- Time period
Strategies to Increase AOV
Upselling
Encourage customers to buy a better version of what they're considering. "For GBP 20 more, get the premium edition."
Cross-Selling
Suggest complementary products. Bought a camera? You'll need a memory card and case.
Bundling
Create product bundles at a slight discount. Customers perceive value while spending more.
Free Shipping Thresholds
"Free shipping on orders over GBP 50" encourages adding items to reach the threshold.
Minimum Order Incentives
Discounts or gifts for orders above certain amounts.
Product Mix
Ensure you have higher-priced options available for customers willing to spend more.
AOV vs Revenue
A rising AOV with falling order count might still mean declining revenue. Always view AOV alongside total revenue and order count.
Similarly, AOV can fall while revenue grows – if you're acquiring more customers at lower price points, that might be fine.
Benchmark
AOV varies wildly by industry. Fashion e-commerce might average GBP 50-80. Furniture could be GBP 300+. Compare against your own history and industry peers, not arbitrary numbers.