Average order value (AOV) is a key metric in ecommerce that tells you the average amount of money customers spend each time they place an order on your online store. It’s calculated by dividing your total revenue by the total number of orders over a specific period. For example, if your store earns $10,000 from 200 orders in a month, your AOV would be $50.
How to calculate AOV
The formula for AOV is straightforward:
AOV = Total revenue / Number of orders
So, if you made $5,000 from 100 orders, your AOV is $50.
Why AOV matters
AOV helps you understand customer buying habits and the typical amount spent per order. This information is valuable because:
- It shows how much customers are willing to spend in one transaction.
- It helps you measure the effectiveness of marketing campaigns and promotions.
- It guides decisions about pricing, product bundling, and free shipping thresholds.
- Increasing AOV is often one of the simplest ways to boost revenue, since you earn more from each sale without needing more customers.
Typical AOV benchmarks
AOV can vary widely depending on the industry, product type, and region. For example, as of late 2024, the average order value for ecommerce in the United States was around $78 per order, but it can be much higher or lower depending on what you sell. Some stores, especially those selling higher-priced items, may see AOVs above $100, while others with lower-priced products might have AOVs closer to $20 or $30.
Ways to increase AOV
Businesses often try to increase AOV by:
- Offering free shipping for orders over a certain amount.
- Suggesting related products (cross-selling) or upgrades (upselling) at checkout.
- Providing discounts or gifts for larger purchases.
- Creating product bundles or volume discounts.
Key points to remember
- AOV is about orders, not individual customers. If a customer places multiple orders, each order is counted separately.
- Tracking AOV helps you spot trends and make smarter decisions about your store’s strategy.
- A higher AOV usually means more revenue and can lead to higher profits, especially if you manage costs well.
In summary, average order value is a simple but powerful metric that shows how much customers spend each time they buy from your store. Understanding and improving your AOV can help you grow your ecommerce business more efficiently.