eCommerce AOV: Definition and Growth Strategies - Leangenix

eCommerce AOV: Definition and Growth Strategies

If you’ve seen AOV (average order value) metric in your Google Analytics or Shopify store and have no clue what it is, you are in the right place. Below you will find everything you need to know about AOV and how to increase it!

What is AOV in Ecommerce? And what does the average order value metric measure?

AOV (average order value) is an eCommerce metric that measures the average amount people spend in your store each time they place an order. You can find it in your Google analytics and Shopify dashboard. 

How to find average order value in google analytics?

  1. Login to Google Analytics.
  2. On the right menu, click Conversions > eCommerce > Overview
  3. The dashboard will give you an overview of your average order value within the selected timeframe.

Why average order value is important

The benefits of having a high average order value are: 

  • Offsetting customer acquisition costs
  • Increasing ROI (return on investment)
  • Positive ROAS (return on ad spend) 

In other words, you can make more money from your online shopping business and get profitable much faster. Having high AOV is especially important if your traffic source is social media advertising.

AOV and Facebook Ads

You need to have a good AOV size to be profitable with Facebook ads. Many direct-to-consumer brands use Facebook as their only source of traffic, which is not cheap. So to have a good return on ad spend, you need to have a high conversion rate and AOV. For example, if your product costs $10 and you spend $100 to acquire a customer through ads, and the customer’s lifetime value is $50 – you will lose money. Isn’t it a good enough reason why increase average order value? 

What is a good average order value?

The average net order value rate heavily depends on your niche and product margins. If you have healthy product margins, $70+ AOV is good as it will often allow you to cover your ad spend and marketing costs. You can check this article about a good conversion rate in 2022 to have general guidance. By supplementing AOV with high conversion, you can definitely succeed in the eCommerce business.

How to increase average order value online?

If you are a Shopify user, then increasing AOV is relatively easy. There are plenty of Shopify apps that can do it for you. So, how to increase average order value in Shopify?:

  • Cross-selling: Frequently bought together app does miracles for our clients. You can use it to create “shop the look” combos or let the AI do the job.
  • Upselling: Candy wrack is among our favorite apps for this. It works particularly well for skincare brands. For example, you can offer users to upgrade to a kit that is only $10 more expensive than a stand-alone product.
  • Volume discounts: Volume discount apps work well to increase AOV for the t-shirt business. For example, “Buy 3, get 20% off” always does the job. 
  • Free shipping: Moster Cart will be perfect for this. For example, you can notify users that they only need to spend $10 more to unlock free shipping. 
  • Loyalty programs: We love Stamped.io where you can reward your shoppers with redeemable points each time they purchase something. So the more you spend, the more points you get. 

We hope it was useful, and now you know what AOV is and how to increase it in eCommerce. If you still have any questions, feel free to reach out to us!

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