Increasing your customer’s average order value will increase your ecommerce store’s profitability. At first, this seems very logical and intuitive—just get customers to buy more and you will make more money! However, do you actually know how to do it? More importantly, do you even know how to calculate your average order value? This post will cover both of those topics!
How to calculate average order value (AOV)?
Before learning how to boost your average order value, it is very helpful to understand how to calculate it. Knowing your current average order value is vital to setting goals and evaluating progress.
This is the simplest way to calculate your average order value, but it doesn’t provide the full picture. Remember to subtract expenses and cost of goods sold for a better representation of your current average order value that is translating into pure profits.
You can also adjust the reporting period by looking at revenue and number of orders for a weekly, monthly, quarterly, or any other time period.
Tips to increase average order value
The two best ways to increase profitability as an ecommerce business are by improving purchase frequency and average order value. Now that you’re an expert on calculating average order value, here are 5 proven ways to increase it.
1. Create a threshold for free shipping
One of the easiest ways to increase average order value is by setting a threshold that a customer must spend in order to receive free shipping. According to a study by Baymard Institute, 70.19% of online shopping carts are abandoned. That means that for every 10 shoppers that fill their carts on your website, 7 never hit that buy button.
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