How to Increase Your E-commerce Average Order Value (AOV)? 

In today’s time, competing against numerous businesses and being able to make a profit is truly tough. A business mainly focuses on attracting more customers and persuading them to be buyers of one of its products, as it is the only way to earn profit. Businesses spend lakhs in advertisements and campaigns to spread awareness about their product and attract more customers. 

However, acquiring new customers often requires significant time, effort, and marketing investment. As competition continues to grow and customers have multiple brand options to choose from, businesses are constantly looking for smarter ways to increase revenue without relying only on customer acquisition. 

This is where an increasing average order value (AOV) is seen to be an effective gamechanger, as it is not costly compared to advertising and has the potential to boost the company’s revenue. 

What is the Average Order Value (AOV)? 

AOV simply counts or shows how much money the customers actually spend on each order that they place. It is the amount spent on placing an order on the internet. 

For instance, let us assume that you are a buyer. You make a purchase from an ecommerce site and pay 100 rupees. Similarly, let there be 9 more customers who place an order from the store. 

Now let’s see how the Average is evaluated:  

AOV = Total revenue/ Total Number of buyers 

Let total revenue be INR 1000 and the total number of buyers is 10, then AOV will be INR 100. 

Why is increasing AOV important for online stores? 

For e-commerce businesses, increasing traffic alone does not always guarantee higher profits. What truly improves revenue efficiency is how much a customer spends per order and this is where Average Order Value (AOV) becomes important.  

• Helps Optimize Marketing Spend: Spending on advertisements and other media to bring in more customers costs a lot. Higher AOV helps recover the market investment in the form of increased spending on products online.  

• Enhances Profitability: A higher AOV improves profitability because customers buy more items in a single order. This reduces the need to process multiple small orders, which helps businesses save on packaging, handling, and operational costs while generating more revenue from each transaction. 

• Boosts Revenue Per Order: When customers spend more in a single transaction, the overall revenue of the store increases. Even a small rise in AOV can significantly improve total sales and boost revenue without needing more orders. 

What are some core strategies to Increase Average Order value? 

Increasing average order value requires encouraging customers to spend slightly more during each purchase. Some of the tips to increase the AOV are mentioned below. 

• Offer Product Bundles and Combo Deals: You can offer bundles that combine products that are relevant and complement each other. This encourages customers to purchase multiple items together, increasing the total order value while also providing better value to the customer. 

Example: A water bottle or a shaker is often offered with a package of whey protein. 

• Use Time-Sensitive Deals to Create Urgency: Creating a time constraint will naturally create a sense of urgency that will make the product seem an opportunity and a benefit. This boosts the purchasing decision of the customers and increases the AOV on each order 

Examples:  Flash sales, Weekend discounts, and Festival deals. 

• Provide Free Shipping Above a Minimum Order Value: Customers are more likely to order such products that offer no delivery charges. You too can offer free shipment of products after deciding on a benchmark value. Any purchase beyond that threshold will be shipped for free. 

Example: An earphone worth INR 800 will be shipped for free, whereas a purse costing INR 150 will be charged INR 40 for home delivery. 

• Implement Price Anchoring Strategies: Price anchoring is a pricing strategy that enables customers to compare the prices of different products based on price differences. For instance, the customer might think that the high-priced product is affordable when the other product is relatively lower in price. In the same way, the customer will be able to select a product that is more valuable when different prices are given. This psychological pricing strategy will encourage the customer to overspend. 

• Use Personalized Product Recommendations: E-commerce businesses can recommend products based on customer behaviour and preferences. You can show these recommendations on the website or send it through emails and messages to customers, encouraging them to explore additional products. 

Examples: 

“You may also like” 

“Frequently bought together” 

“Customers also purchased” 

• Introduce Customer Loyalty Programs:  You may introduce or offer some rewards to the regular customers and give them coupons or points on each purchase, using which they can obtain a discount or avail other benefits by redeeming the points accumulated. It can include early access to sales, Exclusive member discounts, and many more.  

• Upselling and Cross-Selling Techniques: In upselling, customers are suggested some other products of higher quality and value, but of the same kind. Whereas in cross-selling, customers are offered something that is relevant to the primary products. 

Example: Upselling means suggesting a 256 GB phone instead of the 128 GB version. When a customer buys a smartphone, suggesting them accessories like a phone cover, screen protector, or wireless earbuds is cross-selling. 

• Offer Bulk Purchase Discounts: When you offer discounts on bulk items, this induces the customers to buy more. This contributes to increasing the AOV. 

Examples: Giving 10% discount on 5 items 

• Provide Discounts on Minimum Spend: You can set a spending threshold where customers receive a discount if their purchase exceeds a certain amount. This is a smart way to get the customer to spend more. 

Example: Offers like buy items worth INR 2000 and get a 10% discount. 

Key takeaways 

• Average order value is the amount of money spent on each product by the customers while placing an order. 

• It is a less costly way to increase the overall revenue of the business, without having to spend on advertising for customer acquisition. 

• Average order value is calculated by dividing the total revenue received on orders by the total number of orders placed. 

• Understanding AOV helps businesses plan better pricing, promotions, and product strategies. 

• There are various ways of increasing AOV, like offering product bundles, upselling, free shipment, and personalized discounts, to see what works best for you. 

Conclusion 

In e-commerce, increasing revenue does not always require acquiring more customers. You can also focus on increasing their Average Order Value (AOV) to generate higher revenue from existing orders. In order to do so, you can try implementing some small strategies like bundle or combo selling, bulk selling, personalized recommendation, and discount on minimum purchases.  

However, not every strategy works equally for every business. It is important to test different approaches and observe how customers respond. Over time, you will identify which strategies work best for your products and audience, allowing you to refine and optimize them for better results. 

While implementing these strategies, ensure the customers’ satisfaction, alongside accelerating your AOV.

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