Increasing average order value is among common problems that a modern-day online retailer faces today. Although there is a surefire formula to it, most online retailers can’t seem to find the ultimate hack resulting in low order sizes and underwhelming sales revenue.Are you looking for effective ways on how to increase average order value for your Ecommerce store? Read on to find out how you can potentially increase your profits per customer with our proven and tested strategies.
What is the meaning of average order value?
Average order value (AOV) is a metric used to measure the size of an average purchase made by a customer on a website or in a store. It is calculated by dividing the total revenue generated by the number of orders placed.
For example, consider a website that has generated $10,000 in revenue from 500 orders. The AOV for this website would be $20. Here’s how to calculate average order value for your Ecommerce site:AOV = Total Revenue / Number of Orders= $10,000 / 500 orders= $20This means that, on average, customers are spending $20 per order on the website.AOV can be a useful metric for businesses to track because it can help them understand the value of their customer base and identify opportunities to increase sales. For example, if a business wants to increase its AOV, it might consider offering bundle deals or upselling products to customers during the checkout process. That said, it’s crucial to understand how to increase average order value.It's important to note that AOV is not the same as the average sale price of a product. Average sale price refers to the average price at which products are sold, while AOV refers to the average size of an entire order.
Why is average order value important?
There are several reasons why average order value (AOV) is important for online retailers:
- AOV can help online retailers understand the value of their customer base and the overall health of their business. A higher AOV typically indicates that customers are spending more on each purchase, which can be a sign of customer loyalty or satisfaction.
- AOV can be used to set sales and marketing targets and to track the performance of these efforts over time. For example, if an online retailer wants to increase AOV, they may focus on upselling and cross-selling tactics, or they may introduce higher-priced products to their inventory.
- AOV can be used to optimize pricing strategies. By understanding the value that customers are willing to pay, online retailers can adjust their prices to maximize profits while still retaining customers.
- AOV can help online retailers better understand their customers and their purchasing habits. By analyzing AOV data, retailers can identify trends and patterns in customer behavior, which can inform future marketing and sales efforts.
- AOV is an important metric for calculating the profitability of an online retail business. By understanding AOV and the cost of goods sold, retailers can determine the margin on each sale and overall profitability.
What are some actionable tips on how to increase average order value?
Most online retailers don’t have effective strategies on how to increase average order value for their Ecommerce sites. If you’re an Ecommerce business owner looking to increase your conversion rates, then here are some proven and tested strategies you can start today:
Offer bundle deals
If you don’t know where to start on how to increase average order value, then start with offering bundle deals. Offer customers the option to purchase related or complementary products together at a discounted price. This can encourage customers to add more items to their order.
Upsell and cross-sell
Suggest higher-priced or upgraded versions of the product the customer is considering, or recommend related products that would complement their purchase.
Create a sense of urgency
Use limited time offers or sales to encourage customers to make a purchase now rather than later. This can increase the likelihood that they will add more items to their order.
Offer free shipping
Customers may be more likely to add more items to their order if they know they won't have to pay extra for shipping.
Offer personalized recommendations
Use data and machine learning techniques to suggest products to customers based on their past purchases or browsing history. This can help customers discover new products that they may not have considered otherwise.
Display related or complementary products
Make it easy for customers to see related or complementary products by displaying them on the product page or in the checkout process.
Offer loyalty rewards
Consider offering loyalty rewards or a loyalty program to encourage customers to make more purchases and increase their average order value.
Use email marketing
Use email marketing to promote special deals or sales to your email subscribers. This can encourage them to make a purchase and increase their average order value.
Offer payment plan options
Consider offering payment plan options, such as financing or layaway, to make it easier for customers to make larger purchases. This can increase the average order value for customers who may not have been able to afford a larger purchase upfront.
Increase Your Average Order Value with Outsourcing Experts
Outsourcing certain tasks to an Ecommerce service provider can help you streamline your operations, improve efficiency, and focus on driving more sales and revenue, which can ultimately help you increase your average order value.KDCI, a leading Ecommerce service provider in the Philippines, offers scalable offshore staffing solutions for businesses looking to outsource their Ecommerce operations. We offer a wide range of outsourcing services from product information management to design, web development, and customer support. Partner with us and let us help you drive more sales and increase your average order value.Click the button below and get your FREE consultation with one of our outsourcing experts today!Contact Us
