What is AOV?
Average Order Value (AOV) is the average dollar amount spent each time a customer places an order. It's one of the three primary levers for ecommerce growth alongside traffic and conversion rate.
AOV = Revenue ÷ Orders. If you made $100K from 1,000 orders, your AOV is $100.
Why AOV Matters
Increasing AOV is often the fastest path to profitability. You've already paid to acquire the customer and get them to checkout. Getting them to add more to their cart is pure margin.
AOV also determines which acquisition channels are viable. If your AOV is $30 and your margin is 50%, you can only afford $15 in acquisition costs. If AOV is $100 with the same margin, you can spend $50.
Strategies to Increase AOV
Bundle related products. Offer free shipping thresholds above current AOV. Create volume discounts. Add upsells at checkout. Recommend complementary products. Implement tiered pricing for larger quantities.
AOV = Total Revenue ÷ Number of Orders
Revenue = AOV × Number of Orders
Monthly ecommerce stats:
- Total revenue: $150,000
- Total orders: 2,500
AOV = $150,000 ÷ 2,500 = $60
If you can increase AOV by 20% to $72 through bundling or upsells, that's $30,000 more monthly revenue without any additional customer acquisition.