AOV Guide: How to Increase Your Average Order Volume (AOV) and Why You Should

As an e-commerce seller, you know that every sale counts. But what if you could make that sale count even more? That’s where average order volume (AOV) becomes an essential metric that e-commerce businesses shouldn’t overlook. Today, Phase V is giving you insights on what AOV is, how to calculate it, how to increase it, and why you should for maximized success. Simple changes can make the biggest difference in how much your customers are willing to spend, and we’re gonna show you exactly how you can achieve that.

What Is AOV?

Average order volume is a key performance metric that measures the average amount of money a customer spends per order. It can be calculated by dividing the total revenue by the total number of orders over a specific time period.

For example, if your business made $10,000 from 200 orders in a month, your AOV would be $50.

AOV helps you as a business owner understand your customers’ purchase behavior and how much they are willing to spend on an order. So, what if you could increase that?

Why You Should Increase AOV

The answer is pretty simple—the more customers spend per order, the more revenue you generate, which is generally the goal of any successful business. That’s not the only benefit though, increasing your AOV can help you both operationally and improve your relationship with customers.

• Higher revenue per customer: By raising the amount each customer spends per order, you’re maximizing your revenue generated from each sale.
• Improved customer loyalty: Offering your customers deals that help increase AOV, also gain their satisfaction and loyalty. If they can get a good discount, they’re more likely to be a repeat buyer.
• Efficient inventory management: Increasing AOV means getting products out the door faster, leading to a more efficient inventory turnover rate. This can reduce the costs associated with having excess inventory and overall helps you manage stock levels better.

How to Increase AOV

However you can convince your buyers to spend more on their order is the goal, and in turn it can benefit them as well. Here are some methods to increase AOV.

Bundles

Instead of buying different products separately, offer bundles where customers can purchase them together. While customers get a better value on multiple products, your AOV is increasing. Consumers love a deal where they can get multiple items for one price—without the bundle, however, they probably wouldn’t purchase all the individual items included.

Free shipping

An easy way to increase AOV is to offer free shipping for spending a minimum amount. For example, orders over $50 get free shipping. You can even take it a step further, by telling your customers exactly how much more they have to spend to unlock the free shipping offer. Thus, you provide a clear incentive and call-to-action for buyers to keep adding to their cart. Who doesn’t love free shipping?

Personalized product recommendations

Cross-selling is a great way to make your customer’s shopping experience unique to them while increasing your AOV. To do this, you can offer personalized product recommendations based on that user’s behavior—tailor recommendations to what they like. You can also suggest other related items to the product they’re considering purchasing. E-commerce giants like Amazon do this successfully by showcasing items “frequently bought together.”

Limited-time promotions

Creating a sense of urgency can sway customers to make a purchase before the time’s up. Flash sales or limited edition items with a time constraint are perfect for convincing customers to buy something, since they won’t be able to get the same item or price again once the deal is over. These promotions can motivate customers to make larger orders and therefore, increase AOV.

Gift with purchase

Similar to the free shipping method, you can offer a minimum order value in exchange for a free gift. This might encourage shoppers to keep buying things to reach that threshold and get an additional free product.

Loyalty programs

You can both increase AOV and reward your repeat customers with a loyalty program. With each purchase, buyers can earn more points which unlock special offers and discounts. This will incentivize your customers to shop at your store consistently, increasing AOV over time.

The Bottom Line

Increasing your AOV is a powerful way to not only gain more revenue, but also improve operational efficiency and cultivate customer loyalty. These strategies are simple, yet effective, but if you struggle to implement them yourself, a 3PL like Phase V has the logistical capabilities to support you. At Phase V, we offer solutions such as free shipping options and bundle creation to maximize your order value. If you want a thriving e-commerce business amongst the highly competitive market, level up your AOV.