What is Average Order Value (AOV) in Shopify

So, you've opened a Shopify store, and you've heard of AOV. But what is it really, and do you need to pay attention to it?

Average Order Value

Average Order Value—or AOV for short—is an e-commerce term to describe the average amount that customers spend on an order. It is calculated very simply by dividing the total revenue by the number of orders.

Why Is It so Important to Shopify Sellers

Knowing your AOV helps you to evaluate your marketing strategies and pricing structures. It allows you to understand customer behavior and adapt your efforts to increase sales (and therefore the average order value) accordingly. Increasing your AOV has obvious advantages. Not all customers are return customers, so it's essential to get the most out of each transaction. By increasing your average order value, you will grow your business and increase your profits.

10 Quick Tips to Take It to the Next Level

There are many ways to encourage customers to increase the size of their orders, increasing the AOV for your business. Here are 10 to get you started:

1. Cross-Sell and Upsell in the Cart

Cart Cross-Sell is a marketing automation technique that encourages customers to spend more by bringing related or complementary items to their attention while they are showing an interest in a specific product. Upsell is similar to Cross-Sell, but it encourages customers to spend more on a higher-end, more expensive product. Both cross-selling and upselling increase revenue and AOV.

2. Offer a Free Shipping Threshold

Consumers' likelihood of buying is increased if there is free shipping involved. Set a threshold somewhat above the average order value, and offer free shipping on all orders exceeding that amount. Display announcements to remind buyers how much they need to spend to qualify for free shipping or use a notification at the checkout to inform them how close they are to qualifying for free shipping. This could encourage them to add to their order to meet the threshold.

3. Offer Product Bundle Deals

Create bundles by combining items that are good sellers with one or two related products. Offer the bundle at a price that's less than what the individual items would cost if bought separately, but keep your profit margins in mind. All customers love a bargain, and if they were going to buy one of the items anyway, a bundle could seem like good value for money.

4. Limited-time Offers

Time-sensitive deals are a good strategy for increasing sales and AOV during slow periods. For example, you could run a 3-day promotion that offers discounted prices on specific items or an end-of-season sale that lasts for as long or as short as you choose.

5. Special Offers for First-time Buyers

Encourage first-time buyers to spend more by offering special offers on the first order. This could include a discount, free shipping or a gift. If you're worried that the offer would attract small orders, set a minimum order amount to qualify.

6. Start a Loyalty Program

Repeat customers tend to spend more than new customers. Loyalty programs encourage customers to return to your store and spend more. Because the more they spend, the more they are rewarded, and they'll keep on coming back.

7. Discounts for Minimum Order Amounts

Strange as it seems, offering discounts can increase your AOV. To motivate customers to spend a minimum amount on a single order, offer a cash discount that customers can redeem with their next order. For example: "Spend $75 and get $10 off your next purchase." This also helps to encourage future purchases, and you're sure to see customers returning.

8. Offer a Gift Wrapping Option

Wrapping gifts is not everyone's cup of tea, and some customers are quite happy to pay for the service. While you're at it, why not include a personalized message service to go with the wrapping—at a fee, of course.

9. Product Recommendations

Make product recommendations based on customers' purchasing history. It's been estimated that up to 30% of online sales are driven by recommendations.

10. Shopify Slide Cart App

Now that you have some great strategy ideas for encouraging customers to increase their orders and spend more money on your products, wouldn't it be great if you could incorporate these strategies effortlessly into your Shopify store? Well, you can, with the Slide Cart App from Shopify.

Slide Cart Drawer replaces the default cart page with an enhanced version accessible from any page on your site. It goes beautifully with any theme and allows you to add a Cart Upsell or Cart Cross-Sell feature to your cart, enable a discount box, add coupon codes, make announcements, etc. Increasing your Average Order Value has never been easier. Your customers will soon be spending more money on your products, and they'll be thanking you for it.