Average order value (AOV) is the average amount a customer spends each time they place an order. It’s calculated by dividing total revenue by total number of orders in a given period.
Why Average Order Value (AOV) matters
AOV tells you how much customers spend per purchase, giving you insight into customer purchasing behavior and your product mix. Raising AOV increases total revenue without requiring more visitors, which makes it one of the most cost-efficient levers for growth. In ecommerce, improving AOV can also improve margins, as fixed costs like shipping and transaction fees are spread over larger orders.
How Average Order Value (AOV) works
AOV = (Total Revenue ÷ Total Orders). You can track AOV by channel, product category, device type, or customer segment. Changes in AOV often result from pricing adjustments, promotions, or bundling strategies. Monitoring AOV helps determine the effectiveness of upselling and cross-selling tactics.
Example in ecommerce
A specialty coffee retailer notices an AOV of $28. They introduce “buy two, get one 50% off” bundles and set a free shipping threshold at $40. Within a month, AOV rises to $37, improving overall revenue and reducing shipping costs per unit sold.
Common mix-ups
AOV is not RPV, RPV considers all visitors, while AOV measures only completed purchases. It’s also not lifetime value (LTV), which spans the entire customer relationship.
Best practices
- Introduce bundles and kits.
- Set free shipping thresholds slightly above current AOV.
- Offer volume discounts.
- Cross-sell complementary products at checkout.
- Feature premium versions of popular items.
- Personalize recommendations based on browsing history.
- Test pricing adjustments on high-margin products.
Industry benchmarks
- AOV varies widely: fast fashion might be under $50; electronics could be $200+.
- Seasonal promotions often temporarily boost AOV.
- Monitor AOV by channel, paid channels sometimes skew lower without proper targeting.
