E-commerce Glossary
Average Order Value Meaning
Average Order Value (AOV) tracks the average dollar amount spent each time a customer places an order. Learn the AOV formula for e-commerce.
Definition
Average Order Value (AOV) tracks the average dollar amount spent each time a customer places an order on a website or app.
People Also Ask: How do you calculate Average Order Value?
The AOV Formula is simple:
AOV = Total Revenue / Total Number of Orders
For example, if your Shopify store generated $5,000 in revenue from 100 orders last month, your AOV is $50.
People Also Ask: What is a good Average Order Value?
A good AOV is highly dependent on your industry. A luxury furniture store might have an AOV of $1,200, while a sticker shop might have an AOV of $8. The goal is always to increase your AOV relative to your historical baseline to improve your margins.
People Also Ask: How can I increase my AOV on Shopify?
Increasing AOV is one of the most effective ways to increase profitability. Because the cost of acquiring a customer (CAC) and fixed payment processing fees remain the same, getting a customer to buy two items instead of one drastically improves the net margin of that transaction.
Tactics to increase AOV include:
- Product Bundling: Sell sets of 3 or 5 items at a slight discount.
- Free Shipping Thresholds: Offer “Free Shipping on orders over $50” to encourage buyers to add one more item to their cart.
- Upsells and Cross-sells: Recommend complementary products during the checkout process.
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