This is the most complete guide to increasing your eCommerce store’s average order value (AOV).
So if you want to:
- Learn what AOV is and why it’s crucial for eCommerce businesses
- Optimize your website to convert SUPER well
- See 6 strategies to increase your average order value
Then you’ll love the detailed tactics in today’s guide.
Let’s jump right in.
What Is Average Order Value?
Average order value is one of the most essential metrics for eCommerce stores to track. It’s exactly what it sounds like, the average dollar amount for every order placed within your business.
To calculate your average order value, take your total revenue and divide it by your total number of orders.
- Average Order Value = Total Revenue / Total Number of Orders
For example, let’s say your store generated $50,000 of revenue from 1,000 unique orders.
50,000 divided by 1,000 would equal 50. This means that your average order value would be $50.
Why Is Average Order Value Important?
When it comes to growing revenue, most eCommerce store owners think of ways to find more customers. However, this isn’t the only way to grow an online business.
Increasing your store’s average order value involves squeezing more value from each customer you’re already attracting.
If your customers already spend an average of $45 per order, increasing the AOV to $55 while keeping the same order volume will increase your revenue by 22%.
This allows you to grow your business without spending any additional money on advertising, marketing, and other forms of outreach.
Average order value also helps you determine if your marketing efforts and pricing strategy are working.
By comparing your cost per purchase (CPP) with your average order value, you can accomplish this.
If your CPP is $10 and your AOV is $50, this leaves you with a $40 profit before factoring in the cost of goods and additional operating costs.
How To Increase Your Average Order Value
Now that you understand what AOV is and why it’s important, let’s discuss 6 proven ways to increase your eCommerce store’s average order value.
1. Create Order Minimums for Free Shipping
Rather than offering free shipping on all your orders, you can provide free shipping once a certain order value is reached.
For example, if your current average order value is $50, you should set the free shipping threshold above $50. I recommend increasing the threshold 20-40% of your current AOV. With a 30% increase, you should offer free shipping on orders over $65.
The current AOV on your store should already factor in shipping costs since I’m assuming you don’t offer free shipping already. This means that increasing your order minimums for free shipping to $65 is an immediate 30% increase over your current AOV.
Your store’s free shipping threshold needs to be highly visible across your store.
Examples
Gymshark, a premium fitness brand, places their free shipping threshold directly under their navigation menu. This means that the free shipping threshold is visible on every page across the Gymshark website.
Alphalete, Gymshark’s competitor, also offers a free shipping threshold on orders over $150.
Alphalete places their free shipping threshold above the navigation menu. It’s also visible on every page on the Alphalete website.
You may need to split test what shipping threshold is most ideal for your specific audience. You can accomplish this by testing a few different pricing thresholds and analyzing which price offers the best AOV.
The goal of the free shipping promotion is to make it attainable for the most significant number of customers. This way, you can effectively increase your average order value.
It’s also important to notify your customers about the shipping threshold on crucial pages.
As you can see, Gymshark explains to their customers that they will receive free standard shipping if the order value is equal to or above $75. The message is displayed directly above the ‘Checkout‘ button on the shopping bag page.
This serves as a last-second reminder that the customer isn’t too far away from receiving free shipping.
Without free shipping, I would need to pay $5 for standard shipping for my $50 order from Gymshark. Instead, I could add another item that’s worth $25, so my order equals $75 and essentially save $5 off my order.
Just by adding a free shipping threshold, you can see your AOV spike up dramatically. Online consumers are always on the hunt for free shipping, and they love when their favorite online stores offer it.
2. Offer Bundle Deals and Bulk Options
Enticing your customers to purchase more items through product bundles is another excellent way to increase your average order value.
This involves providing discounts on the more items a customer purchases. Bundling products creates an all-in-one solution for the desired experience.
On the other hand, bulk options allow users to purchase more quantities of a single item at discounted prices.
Product bundling is a technique used by eCommerce businesses to sell individual goods together as a combined package at a lower price than if they were sold individually.
Bundle deals provide:
- Higher average order value
- Savings on marketing and distribution costs
- Simplified customer experience
Kylie Cosmetics, by Kylie Jenner, built an empire with a simple product bundle: lip kits.
This product bundle contains lipstick and lipliner in a single package. With revenues over $100 million, it’s hard to argue against the power of an effective product bundle.
Kylie Cosmetics offers an additional bundle in the form of a 2 for $20 package:
However, Kylie Cosmetics could improve on one attribute by showcasing the discounted value. As you can see from the images above, Kylie’s bundles don’t display the discount value.
For this reason, make sure to include the total savings the customer receives if they choose to use product bundles or bulk orders.
For bulk orders, you can offer a price scheme such as:
- ‘Buy 2 get 10% off’
- ‘Buy 3 get 15% off’
- ‘Buy 4 get 20% off’
- ‘Buy 5 get 25% off’
This is how bulk order discounts work. The more quantity a customer purchases, the more savings they receive.
3. Provide a Flexible and Hassle-Free Return Policy
Nowadays, it’s essential to be as transparent and flexible as possible with your online customers. According to a 2019 UPS survey, 73% of shoppers say that their returns experience affects their likelihood of buying from the retailer again.
This is why it’s especially crucial to offer a flexible returns policy for your eCommerce store. Since your customers can’t physically walk into your retail store and touch your products, they have to go off of pictures.
They place a lot of trust in your product images and understand that they’re taking a risk with every online purchase. However, you can ease their anxiety and skepticism by offering a clear and visible returns policy.
Some returns policy best practices include:
- Allow customers to return items within 30 days of delivery
- Accept returns if item is in new condition with all the tags in place
- Provide customers with a free shipping label
Looking once again at Gymshark, their website showcases ‘Free Returns Now For 30 Days‘ on their scrolling announcement banner.
If a customer clicks this banner, they are taken to an in-depth returns policy page.
Including a clear and flexible returns policy gives your customers the confidence to add more items to their orders. If a customer knows that their purchase is risk-free, they are more likely to purchase more items.
Gymshark further emphasizes their free returns policy on each of their product pages.
If your eCommerce store is in the clothing niche or another niche with a lot of variances, it’s crucial to offer an excellent returns policy.
4. Add a Discounted Upsell After Order Completion
One of my favorite ways of increasing the average order value of my eCommerce businesses is through post-purchase upsells.
Post-purchase upsells are when you offer your customer a product they’ll love after they make their purchase. This product can be a complementary product or even the exact same product the customer just purchased. You can also offer a selection of different products to choose from.
The key to post-purchase upsells is to include a hefty discount.
This way, the customer won’t think twice about making an additional purchase and boosting up your average order value.
There are two ways to offer post-purchase upsells.
- Immediately after a customer makes a purchase
- After the original purchase, in an email a few hours later
Here’s an example of what an immediate post-purchase upsell looks like:
This type of upselling is so effective because the customer doesn’t need to enter any of their information again. All of the customer’s information is pre-filled from the previous order, and the new order is placed in just 1 or 2 clicks.
Here’s an example of a post-purchase upsell email from Yoga Accessories:
As you can see, this email mentions the customer’s recent purchase and recommends a few additional items that may be intriguing.
What Are the Benefits of Post-Purchase Upsells?
Upsells are highly beneficial for any eCommerce store. This is because they can quickly boost your average order value without needing to complete much additional work.
Think about it like this.
A high average order value can offset customer churn. Customer churn is when a customer purchases something from your store once and then never returns.
Although you can actively combat this problem, it’s optimal to counterbalance those losses by increasing how much each customer spends on average.
Furthermore, if a customer has already made a purchase, there’s no harm in trying to convince them to purchase more. The worst-case scenario is that they decline the upsell. This doesn’t even hurt your business because their first order is already placed.
You also give the customer a chance to find another product they’ll love. If they find a product they are obsessed with, there’s a high chance they’ll revisit your store or recommend your store to their friends.
5. Give Product Discounts With Order Minimums
For example, let’s say your eCommerce store already offers free shipping on all orders, so you can’t implement strategy #1 in this guide.
Instead of a free shipping threshold, you can offer a discount threshold. For example, ‘15% Off Orders Over $100‘ would be a discount threshold.
Similar to the free shipping threshold, we recommend capturing a 30% higher AOV than your current one. So if your current AOV is $70, you should try setting your product discount threshold at $115 if you’re offering a 15% discount.
This way, customers that spend close to $115 will create an average order value of around $100.
You can even take it one step further by offering the minimum order discount ONLY if they sign up for an account. As you can see in the image above, this is exactly what SHEIN does. SHEIN is a massive global online clothing retailer with over $10 billion in revenue in 2020.
Based on how enormous SHEIN is, it wouldn’t hurt to try the same strategies that they use.
6. Offer Time-Sensitive Deals
Urgency and the fear of missing out (FOMO) are extremely tried and true marketing tactics. This is why offering time-sensitive deals is a great way to increase your eCommerce store’s average order value.
Here’s an example of what this looks like in action:
FashionNova goes above and beyond with their time-sensitive deals. As soon as you enter the website, you see a timer on the top-most headline banner that’s counting down until the end of the sale. As your eyes gaze down, the same time appears again under the navigation.
FashionNova heavily emphasizes countdown timers because of the sense of urgency they can create among their customers. When online shoppers see ‘50% off everything‘ next to a timer, they will scramble to add everything they want to their cart.
Conclusion
So, I hope you got a lot of value out of my average order value tutorial.
I know that there is A LOT here, so I want to ask:
Which strategy from this guide do you want to try first?
Do you want to implement a free shipping threshold to boost your AOV?
Or integrate a post-purchase upsell?
Either way, let me know by leaving a quick comment below right now.