How to increase average order value infographic
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6 Tactics to increase your Average Order Value

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Published on

February 14, 2022

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Profit is the ultimate goal of any business. 


But increasing your ecommerce sales and revenue is no easy feat. There are so many variables in play: your product descriptions, your site speed and navigation, shipping options, the products themselves. 


When thinking about increasing revenue, a lot of online stores will focus on increasing traffic and conversion rates. This may sometimes be counterproductive, especially if your customer acquisition costs are high. 


Thankfully, there’s more than one way to increase your ecommerce store revenue:


Option number 1: Attract more shoppers (traffic + conversions).

Option number 2: Get your existing customers to spend more and increase their average order value (AOV)


In this article, we’ll focus on the latter and will show you some small changes and improvements you can make to your online store to increase your average order value. 


But, before we dive into the tactics, let’s see what average order value (AOV) is and why is it so important for your online store. 

What is Average Order Value and why does it matter? 

The average order value is one of the key performance indicators for every e-commerce store. It indicates the average amount each purchaser spends each time they place an order. 


The AOV helps you understand your customers’ behavior and can serve as a benchmark that helps you measure the success of your strategies and marketing efforts. 


Here are some reasons why the AOV is so important for e-commerce stores: 


  • AOV offers you insight into customer buying patterns. Understanding how your customers shop can help you strengthen your value props and think of the best ways to motivate shoppers to purchase more items.
  • Optimizing your AOV directly impacts your revenue. If your customer acquisition costs (CAC) stay the same, and you increase your average order value, it means you’ll be making more profit from each customer. Additionally, a higher AOV means you’ll be able to sustain profitability even if your CAC rises.
  • Motivating customers to purchase more items will ultimately increase their lifetime value. 
  • Tracking your AOV trend will help you measure the effectiveness of the changes you’re making to your site, as well as your marketing efforts, and will help you make more informed strategic decisions.
  • Having a favorable improvement of your AOV means you’ll have more funds to reinvest in your business and boost your growth. 

The AOV formula: how to calculate your Average Order Value? 


The AOV formula is simple: divide your entire revenue by the total number of orders to arrive at your AOV. Here’s how that looks:


Sales Revenue / Number of Orders = Average Order Value


For example:

  •  In January, you generated $3,000 in sales revenue
  • You had a total of 300 orders $3,000/300 = $10
  • This means that each customer that bought from your store in January spent on average $10 per order.


6 Tactics to Increase Your Average Order Value

#1 Improve your product visibility using visual search

Are your store visitors able to find the items they’re looking for easily? Improving product search discovery is a must when it comes to enticing shoppers to spend more. By making it easy for potential customers to find what they want, you’re removing friction from the buyers’ journey and making their experience more pleasurable. 


One of the easiest ways to increase product visibility is visual search


For example, let’s say you met a friend for a coffee. Your friend is wearing a knitted striped turtleneck, which you really like. You like it so much that you want to buy something similar. 


The problem is, the striped turtleneck is last season, and your friend doesn’t remember where she bought it. 


So, you immediately open your favorite online store and try to find a turtleneck just like the one your friend is wearing. When you type in “knitted striped turtleneck” in the search bar, you’re getting a lot of results, but nothing looks quite like the one you’re searching for. Wouldn’t it be so much easier to snap a a photo of your friend and upload it to the search bar to see if there’s anything similar without having to go through hundreds of results?


When you allow customers to submit a photo and browse aesthetically comparable results, you encourage impulse buys and enable shoppers to purchase based on their individual tastes, as opposed to browsing broad product categories in the hopes of finding something they want (and ultimately giving up).


#2 Introduce a free shipping threshold 

Free shipping threshold calculation
Source: Screenshot (GAP)

Free shipping is always a great motivator and helps you not only widen your customer base, but also increase the value of your orders. In fact, according to a 2020 Statista analysis, excessive delivery prices were the leading cause of cart abandonment at 63%.


To use the free shipping incentive to encourage buyers to add additional items to their carts and therefore increase your AOV, simply introduce a free shipping threshold.  For instance, you may provide free delivery on orders of $50 or more. 


This is a standard method used by many online merchants to boost average order values.

#3 Assist your customer with relevant product recommendations

Display or highlight similar items to your consumers whenever feasible to increase sales. This might be as simple as displaying a list of products that go well together with the product that your customer views at a given moment.

Product recommendations for a sleeveless sheath dress
Source: Screenshot (Amazon)

Create an interface and product descriptions that make it apparent that your items are more valuable when purchased in combination with other items.

See how AI-powered visual search can help you increase AOV

See how it works

Test Drive Pixyle.ai

See how AI-powered visual search can help you increase AOV

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Try Live Demo

See how AI-powered visual search can help you increase AOV

See how it works

Try Live Demo

See how AI-powered visual search can help you increase AOV

can help you increase AOV

Test drive Pixyle.ai

See how AI-powered visual search can help you increase AOV

Harness the power of Visual AI

Try Demo Here

See how AI-powered visual search can help you increase AOV

Harness the power of Visual AI

Try Demo Here

See how AI-powered visual search can help you increase AOV

Harness the power of Visual AI

Try Demo Here

See how AI-powered visual search can help you increase AOV

Harness the power of Visual AI

Try Demo Here

#4 Create personalized shopping experiences 

Use data to create tailored and targeted purchasing experiences. Customers are more inclined to spend higher amounts of money if your offers a personalised, and bigger spend = higher average order value.


For example, you can examine the order history and on-site behaviour of a group of shoppers, and then  create campaigns to promote items that appeal to that specific audience

#5 Leverage product discounts

Product discounts
Source: Screenshot (ASOS)

While it may seem contradictory, offering discounts can assist in increasing your average order value. 


The key is ensuring you include a minimum spend requirement. Used this way, the discount becomes a “reward” when a customer meets a certain threshold. 


In the example from the screenshots, ASOS have set a minimum spend of £20.


You can additionally apply scaled price discounts or quantity discounts to encourage buyers to spend more. 


Scaled price discounts are a type of discount where you apply a different discount depending on the spend, so the higher the spend the higher the discount. For example, if a buyer spends $100, they can get a discount of 10%, and if they spend $200, they can get a discount of 15%. Volume or quantity discounts on the other hand are applied when a buyer buys more of the same item. 


#6 Drive urgency with limited time deals 

Introducing time-sensitive bargains are a great way to increase AOV. 


Urgency helps raise conversions and average order value in a given period, even if it impact the order value in the long run. Limited time offers are excellent for expanding average order value when you're facing a quiet period in your online store. 


They're also quite simple to put into action. Most e-commerce stores just add a banner at the top of their website to announce them.


Conclusion 

It’s clear AOV is a key performance indicator that you can use to measure the success of your online store. Higher AOV means a bigger difference between your order value and your customer acquisition costs, which in turn leads to increased profitability. 


Track the AOV in combination with other metrics like traffic, conversion rate, and revenue per visit to get a full picture of your online store performance. Then implement some of the tactics mentioned in this article to make it easier for customers to find what they’re looking for and encourage them to add more items to their carts.


Don’t forget to measure the before/after - it’s the only way to know what’s working and further solidify your strategy.

About Pixyle


Pixyle.ai is the world’s most accurate visual AI product discovery platform for fashion ecommerce. We're a mission to transform the fashion industry through intelligent automation. Through the use of computer vision, we help e-commerce companies deliver an intuitive product discovery experience that enables shoppers to find exactly what they’re looking for faster and easier than ever before.

See how AI-powered visual search can help you increase AOV

See it for yourself

Try Demo

See how AI-powered visual search can help you increase AOV

See it for yourself

Try Live Demo

See how AI-powered visual search can help you increase AOV

See how it works

Try Live Demo
Work Smart

Harness the power of AI. Transform the way you work.

Work Smart

Harness the power of AI. Transform the way you work.

Work Smart

Harness the power of AI. Transform the way you work.

Work Smart

Harness the power of AI. Transform the way you work.

Work Smart

Harness the power of AI. Transform the way you work.

Work Smart

Harness the power of AI. Transform the way you work.

Work Smart

Harness the power of AI. Transform the way you work.

Work Smart

Harness the power of AI. Transform the way you work.

Work Smart

Harness the power of AI. Transform the way you work.