Categories
Livestream eCommerce

What is Average Order Value or AOV?

Here is a a usable definition of average order value and how it relates to e-commerce. Find out why it matters so much and what outcomes you can affect.

Average order value is a key metric in e-commerce. It is often called by its Acronym: AOV. It is calculated by dividing total revenue by total transactions. AOV is used as a health metric for an e-commerce website. Every e-commerce manager wants a high average order value. They spend time optimising it and building strategies and tactics to push that number up.

The retail manager will also be interested in Average Order Value, although it is likely to be termed as average basket size or average transaction value.

Why does it matter so much?

  • If you have a high AOV, you need fewer transactions to hit your revenue targets
  • A higher AOV often means customers are buying more than one thing, which means you are cross selling well
  • While this is not always the case, margin is often higher with a high AOV – both as a percentage and absolute terms
  • That margin can be used in things like marketing money, commissions and tools to get more sales, which fuels growth
  • If you have a higher AOV than your competitors, it’s going to mean you are attracting a better customer

A great e-commerce operation has a sophisticated approach to improving average order value. Objective setting, strategies and tactics are supported by automation and machine learning that is seamlessly integrated into the online experience. Shopper outcomes are clear: needs are met, because all activity is oriented toward understanding explicit and implicit needs. The sophisticated e-commerce operation is highly skilled at responding to those needs.

The future of retail requires the use of increasingly sophisticated tools that understand shopper needs, responds to explicit needs and considers what implicit needs can be met to achieve higher average order value.

Confer With is a highly attuned toolset that understands customer needs, responds to those needs and achieves growth in average order value.

Request a demo of Confer With

Related Articles

image alt

24 Feb, 2021

Buying Furniture via Live Video Shopping – The Use Case

How do you improve furniture sales in a socially distanced retail environment? Here is the use case for improving conversion and average order value via live video shopping.

image alt

19 Feb, 2021

How to Increase Average Order Value on Shopify

Increasing your average order value on Shopify goes beyond seasonal promotions. Learn how to combine data, customer understanding and user experience to improve average order value

image alt

12 Jan, 2021

Buying golf equipment via Live video shopping – the use case

How do you improve golf sales in a socially distanced retail environment? Here is the use case for improving conversion and Average Order Value via live video shopping. A great way to keep customers engaged and on their game.