eCommerce AOV: Definition and Growth Strategies -

eCommerce AOV: Definition and Growth Strategies

aov average order value

If you are successfully marketing your store and selling out your products, you might want to bigger! You start thinking that you need to acquire more traffic to start seeing more orders on your site and luckily make profits, but as a store owner, you will have to put much more funds to facilitate the ads-driven growth! And there is no guarantee it will work.

On the other hand, you can motivate your clients to purchase more products or buy high-ticket items. As a result, you don’t have to spend more on advertising and can enjoy the growth of the sales and profits. It all comes down to boosting your average order value. 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. 

You can calculate your average order value by using the below formulae:

The total profit/ number of orders = the average order value.

For example, if your store’s total profit is $2000 with a total of 100 orders, your AOV would be $20. It means that, on average, a client will spend $20 for each time they shop with you.

If you want to grow average order value, you will need to persuade your customers to buy more products or buy high-ticket items instead of the ones they initially wanted to buy. This is exactly what we did for our clients and you can read our CRO case studies to pick up more ideas.

So to know more about AOV, keep on reading it.

How to find average order value in Google analytics?

Step 1 – Enable eCommerce Tracking in Google Analytics

The first step is to set up Google Analytics tracking code on your site. You will need to add the code in <head> section in your theme file on Shopify.

Step 2 – Enable eCommerce Tracking in Google Analytics

The next step is to activate eCommerce tracking in Google Analytics. You can do that by visiting the Admin menu in the right menu tab in your Google Analytics dashboard. Then, go to the View section and click on the eCommerce Settings. Turn on Enable eCommerce.

Step 3 – Find and monitored your AOV

After that follow these simple steps to find your conversion and AOV rates.

  1. Log in 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

Kowing your average order value will help you understand how much every customer is spending on your store. Based on this knowledge, you can develop your promotions and marketing strategy to boost sales! 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.

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. 

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? 

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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