Average Order Value AOV

Average order value is the money you take divided by the number of orders, which tells you how much a typical customer spends in one visit.

Also known as AOV average basket size average spend per order

Definition

Average order value is the money you take divided by the number of orders. If a shop sells 5,000 pounds of goods across 100 orders in a week, the average order is 50 pounds, and most people shorten the name to AOV. The number on its own means very little, because what matters is the direction it moves in over several months.

Raising it is usually cheaper than finding more visitors, because every new visitor costs money and advertising costs more every year. The person already holding a basket costs you nothing extra, so that is the better place to start. Lift the average from 50 pounds to 58 across the same 100 orders and the week gains 800 pounds, with nothing paid for the traffic.

Three things move it, and all three are quiet. Bundles come first, so sell the case and the screen cover with the phone at a small saving, which makes buying the set easier than choosing between the items. Free shipping is the second, and there the level matters far more than the offer itself. Set it a little above what people already spend, roughly fifteen to twenty per cent above your current average, because if you set it far above that shoppers stop trying. Add-ons are the third, and one small, cheap, related item at the payment step does more than three of them.

There is an honest warning here, because discounts can lift the average and still leave you with less profit at the end of the month. A bundle where half the items come back is worse than no bundle at all. So read profit per order next to the average, and read returns next to both of them. Storek records every order line and every return, which is how Linkysoft shows an owner both numbers side by side instead of one flattering one.

So before you pay for more visitors, look at this number first. Linkysoft usually asks for the last six months of orders, because the cheapest growth is often already sitting in the basket. When more traffic really is the answer, the digital marketing work and the shop's own reports have to agree on what counts as an order. If they do not agree, one report will show growth that the other cannot see. A custom web application is often built for exactly that reason, so both numbers come out of one place.

Questions about Average Order Value

How do I work out my average order value?
Divide your total sales by the number of orders in the same period. Count paid orders only and take the returns out first, or the figure will flatter you.
What is a good average order value?
There is no shared good number. A jeweller and a bakery cannot compare. Judge it against your own figure from three months ago, not against another shop.
Where should I set free shipping to lift it?
A little above what people already spend, roughly fifteen to twenty per cent above your current average. Set it too high and shoppers give up instead of adding another item.
Is it better to raise average order value or get more visitors?
Start with the order value. You have already paid for the visitors you have, while more traffic costs money every month it runs.

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