Running an ecommerce business is akin to managing a bustling marketplace. Every click, cart, and conversion is a moving piece in a dynamic business environment. There's a lot to do, from attracting new customers and fulfilling orders to chasing business targets. While doing all this, one key metric that influences your bottom line is Average Order Value (AOV).
Average Order Value is the heartbeat of your revenue strategy. It offers a smarter and cost-effective way to increase revenue by maximising the value of every customer who walks through your company's digital doors. By using the right strategies, customers can be nudged to spend more and come back again.
In this article, you will discover simple and actionable tactics to increase your ecommerce company's AOV for growth.
Average Order Value (AOV) Meaning
Average Order Value (AOV) offers a bird's eye view of your existing customers' spending habits. It essentially shows the average spending per customer per order or the average dollar amount a customer spends every time they place an order. It is also one of the most important key metrics to monitor because it offers a deeper insight into your revenue generation. Simply put, it helps determine how much your business makes per transaction. When the AOV increases, you earn more per transaction without increasing your business's customer acquisition cost.
Understanding the Importance of Average Order Value
Average Order Value is one of the key performance indicators (KPIs) every ecommerce business must monitor. Average Order Value KPIs are quantifiable metrics that help measure the progress toward achieving business goals. As a KPI, Average Order Value helps measure the average dollar customers spend on each order.
Here is how AOV helps businesses:
AOV is an important metric for obtaining insights into customer spending patterns. For instance, a lower AOV might indicate that customers usually prefer making smaller purchases per order.
Monitoring AOV makes it easier to identify areas for improvement and optimise business strategies to increase profitability and revenue.
It helps determine business strategies, such as pricing and marketing strategies or tools, based on customer spending patterns. It also helps evaluate the effectiveness of different business strategies.
A higher average order value signals that quality sales are generated and are directly related to revenue growth. A higher AOV usually indicates that customers are spending more per order, which directly increases the revenue generated.
Calculating Average Order Value
To calculate your ecommerce company's AOV, you must divide the total revenue generated during a specific period by the total number of orders placed. Here's the formula to calculate Average Order Value:
Average Order Value = Revenue/Total number of orders
Suppose an ecommerce company's total sales in May 2025 were S$35,000, and the total orders was 1000. This means their AOV is S$35. Various online tools and apps can be used to calculate and track key metrics, such as the AOV, for ecommerce businesses.
How to Increase Average Order Value
Cross-sell complementary products
Cross-selling is the simple marketing technique of offering products that complement what a customer is already buying. This helps improve the customer's overall experience while gently nudging them to make a bigger purchase.
For instance, if a customer is buying a professional camera, chances are they might be interested in buying memory cards, lens cleaners, or camera bags. If the customer sees a bundle of these products before checkout, chances are they might add them to their cart.
However, an important aspect is to offer only helpful recommendations based on your customer's purchase history or selections. If not done properly, offering random add-ons defeats the purpose of this strategy, making your cross-selling efforts go to waste.
A simple way is to show products under the heading "Frequently bought together" or "Products you may also like." You can also offer samples as a free gift on your ecommerce website. Similarly, email campaigns can be used to inform customers about other relevant products. Targeted advertising can also be used based on the user's prior purchases or cart contents.
As long as the product recommendations are timely and relevant, the chances of this tactic working are higher. And the more money they spend, the more revenue the business generates.
Bundling and product packages
Create product bundles and packages to encourage customers to spend more. When multiple products that are commonly sold together are turned into a discounted bundle or package, the chances of a customer buying them together increase.
For instance, an ecommerce business selling coffee beans can create a product bundle of its best-selling coffee beans. By doing this, the business automatically encourages its customers to try different combinations and buy more.
Product bundling offers different benefits, such as increasing the customer's perceived added value, simplifying the purchasing decision, and promoting higher-margin products. While increasing the AOV, this tactic also increases your sales volume and boosts customer satisfaction. In turn, this results in increased revenue and profitability, too.
Product recommendations
Offering personalised product recommendations is an effective tactic to increase Average Order Value. Product recommendations must be based on average user behaviour to make them more effective. When executed well, it creates a more enjoyable and relevant shopping experience for your customers.
Personalised product recommendations can be listed on the homepage, cart page, and product pages. It can be shown as a list of suggested items or offers on related items. You can even offer discounts. Emails and push notifications can also be used to share dynamic product recommendations based on past purchases of abandoned carts. For instance, a fashion ecommerce company can show suggested accessories, shoes, or clothes as per the shopper's selected size or style. Doing this increases product visibility, especially for items that align with the customer's preferences.
Free Shipping Threshold
Offering free shipping on a certain minimum order limit is also an effective strategy to increase AOV. Free shipping acts as an incentive to add more items to the cart to avoid delivery charges. When implemented, this strategy is likely to increase the chances of cart abandonment while driving up the conversion rate.
Conversion rate optimisation
Improving the conversion rate is also an efficient means of increasing your ecommerce's Average Order Value. It's not just about pushing people to buy more. Instead, it could also mean directing customers toward higher-value purchases. To do this, it's important to improve their overall experience so the customers not only complete their purchases but also spend more, too.
Use incentives such as offering free shipping, flexible returns, or create demand by showing limited stock. Whether it is an urgency tactic or a smoother and frictionless checkout process, these strategies will improve your Average Order Value.
Improve the customer experience
Improving the overall customer experience is related to increasing your Average Order Value and building long-term loyalty. A satisfied and happy customer is likely to make more purchases in the future and recommend your business to others. In a way, this gets you free word-of-mouth publicity.
Offering real-time customer support, loyalty programs, and flexible delivery options are simple ways to improve customer experience. You can also consider personalising post-purchase communication to create a more engaging customer experience.
Track average revenue and profitability
There is a direct relation between average revenue, profitability, and AOV. If the AOV increases, your revenue and profitability will increase. Similarly, by focusing on strategies to improve your revenue and profitability, you can increase the AOV, too. To do this, delivering more value is important so that customers are more likely to complete their purchase and buy more.
Some tactics include identifying high-margin items and promoting them through bundles or featured listings. Loyalty programmes can also be used to incentivise increased spending per transaction. An example could be to offer a free sample or a gift on purchases above a specific threshold.
Analyse average order influencers
A simple yet effective way to increase AOV is to understand the factors that influence it. The most common ones include customer segmentation, pricing strategies, marketing strategies and techniques, and product categories. For instance, offering free shipping, hosting sales, volume discounts, or limited edition bundles around local holidays can increase sales, which in turn can increase your AOV.
Using data and analytics
Data and analytics form the backbone of any business decision, and it is no different when it comes to your Average Order Value strategy. It can offer insights into what's working, what the customers prefer, what drives them away, and what pushes higher-order values.
Some useful points to focus on include cart values and abandonment rates, frequently bundled products and customer lifetime value. Various online tools can be used for expense tracking, managing ads, and analysing data.
For instance, a business might obtain several leads from its online marketing campaign. However, identifying the specific platform that generates more leads makes it easier to refine the campaign further. And this insight cannot be obtained without data and analytics.
Tracking key metrics
By regularly tracking and evaluating key metrics such as conversion rate, ROI from ads and promotions, cart abandonment rate, and revenue per visitor will help assess the performance of your Average Order Value strategies. Dashboards can be used to monitor AOV trends across different product categories, acquisition channels, and time periods. Data obtained from this can be used to optimise marketing tactics and strategies for your e-commerce company.
Optimising performance
An important aspect of increasing your Average Order Value is to ensure the strategies used don't stay static. This is because customer preferences, trends, and technology are dynamic, and therefore, the strategies used must change and adapt to the changing situation. This is especially important in a digital-savvy market such as Singapore.
To optimise performance, ensure you regularly review and compare campaign performance, obtain customer feedback, introduce seasonal offers, and monitor your competitors' offerings.
For instance, let's say you are running an ecommerce store. A/B testing for your online business can be used to gauge customers' responses to two bundles, one consisting of similar items and another with complementary items. This helps notice customer trends and preferences that can be used to optimise marketing and pricing strategies.
Conclusion
Increasing your ecommerce business's average order value isn't merely about pushing customers to spend more. Instead, it's about offering greater value, convenience, and relevance in every transaction that keeps them coming back for more. Different strategies can be implemented to increase your average order value, such as cross-selling, bundling, or improving the customer experience.
Various data and analytical tools can be used to analyse customer behaviour and purchase history, which can help improve your business health and make smarter and more informed choices for long-term success. All this helps increase the AOV, too.
With a reliable partner like Aspire, you get more than just a business account. You gain real-time financial visibility, budget controls, custom approval flows, multi-user access and smart corporate cards, all in one platform. This helps you streamline operations, manage spend efficiently, and stay focused on scaling your business.
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