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AOV

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AOV is an e-commerce metric that how much money customers spent while placing each order for a period of time.


What is AOV ?

AOV stands for average order value. It is one of the most important metrics for e-commerce business decisions such as advertising spending, expenses, store layout, and product pricing.

When one customer comes to visit your website and purchases something but in the same order, they include multiple products to buy then your Average Order Value automatically increases.

Essentially, the AOV may provide some insights regarding customer behavior while purchasing. For example, a lower AOV indicates that the customers prefer to make small purchases with each order on your website.

How to calculate AOV ?

To calculate your business AOV, the simple formula is that AOV is equal to revenue divided by the number of orders.

Average order value(AOV) = Total revenue / Number of orders

With this formula, you can get an idea about your business. AOV is determined using sales per order, not sales per customer means one customer may come back multiple times to make a purchase but each order AOV calculate separately.

This indicates two trends of customer behavior in the store:

  1. Customers are not buying multiple items from the store.
  2. The particular products represent the majority of sales.

Why AOV is Important ?

It helps to evaluate your overall online marketing efforts and pricing strategy for each product. AOV also helps in the long-term value of individual customers.

If you get customers' behavior towards the business then you can easily set goals and strategies to increase sales and profit.

How to Improve the average order value ?

  1. Offer free shipping
  2. Charm Pricing control between products
  3. Good Upselling and cross-selling
  4. Bundling or bulk
  5. Set limited-time offers
  6. Discounts on products
  7. Coupons
  8. Product recommendations
  9. Live chat support
  10. Return policy

FAQ

Q. What does high AOV mean?

Ans. The high AOV means you're getting more from your customers, they purchase multiple items from the store and increase your revenue.

Q. What is a good average order value?

Ans. It depends on the price, anything more than US $285 puts good AOV in 20% of stores, and more than US$ 543 would put you in the 10%.

Q. What is C AOV and F?

Ans. These are the 3 ways to grow your business that is Increase the average order value (AOV), Increase the frequency of purchase (F) and Increase the total number of customers (C).