How to Increase Average Order Value on Shopify Plus

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4 min read
by: Holly Kuldell12/15/2021

Quick Summary Increasing the average order value (AOV) of your online retail store can equate to an increase in profit. When an eCommerce beauty brand sells more from its product catalog, that retailer is likely to make more profit.

Tracking the AOV of your eCommerce business can help you understand your clients' purchasing patterns. This eCommerce metric can help determine the ideal pricing and marketing strategy for your business as well as calculate the average lifetime value of your customers.

But first, what does AOV mean?

What Is AOV?

Average order value is a metric that measures the average amount of money customers spend on every order they make from your online retail store. You can calculate the AOV of your eCommerce store by dividing the total revenue by the total number of orders.

AOV = Total Revenue ⁄ Total Number of Orders

Alternatively, you can easily access this eCommerce metric with one click on your Shopify overview dashboard.

Increasing average order value is an efficient way for online businesses to grow their return on investment (ROI). Lifetime revenue per visitor and your eCommerce conversion rate are key benchmarks that go hand in hand with the AOV of your Shopify Plus store.

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Both AOV and conversion rate optimization (CRO) are tied to business performance. Retailers seeking to increase eCommerce revenue shouldn't ignore these metrics. CRO helps increase the percentage of visitors who perform desirable actions, be it filling out a form or buying your products.

High CRO and AOV translate to:

  • An increase in eCommerce revenue and profit

  • The sale of more inventory

  • A cost-effective marketing strategy

According to Statista, in 2020 online shoppers from around the world spent an average of $84.69 using their mobile phones. AOV from desktop devices in the same year was $120.51. As of the third quarter of 2020, smartphones accounted for more retail site traffic than desktop devices. Nonetheless, retail website revenue from desktop devices was higher than that of mobile phones during the same quarter.

For online businesses looking to increase their AOV, it is advisable to consider all measures of central tendency — mode, mean, and median. These analytics can help to impact the average value of a brand's overall orders. When analyzing customer purchase behavior, the mean or average is AOV. Median is the middle value of your store's orders, while the mode is the frequently occurring order value in the dataset.

Increasing average order values should factor in a brand's modal orders. You can impact your AOV by increasing your most frequent order values, which in turn boosts your overall revenue.

6 Tips To Increase Your eCommerce AOV

There are many tactics that online businesses in sectors like beauty, fashion, and more can use to increase their AOV. 

1. Offer Free Shipping at a Threshold

Free shipping can increase your revenue ROI. Online shoppers love free shipping offers. Creating an order minimum for customers to qualify for free shipping may entice them to spend more. This is the easiest way to increase your Shopify store's AOV.

An announcement bar that is strategically placed can let customers know how much more they need to spend to enjoy free shipping. For instance, you may decide to offer free shipping for all orders above $100. As a customer adds items to their cart, the announcement bar will gradually update until they are eligible for free shipping.

Once a customer passes the free shipping threshold, congratulate them. This will incentivize them to proceed to checkout. Aaron Zakowski suggests that a 30% increase in AOV works best as the threshold for free shipping. Setting a very high threshold may lead to an increase in cart abandonment.

The Baymard Institute reports that the average eCommerce shopping cart abandonment rate is 69.82%. 49% of online shoppers who abandon their carts cite extra costs — shipping, tax, and fees — as the number one reason why they abandon their online carts.

You may also offer product discounts for orders above a specific threshold. For example, get $15 off when you spend $95 or get 15% off orders above $75. Such incentives can easily motivate customers to buy more products, thereby increasing the average order value.

2. Provide Bundle Deals

Customers are drawn to products that portray a sense of value for money. Offering your buyers bundle products increases the perceived value of their purchase. For example, a skincare brand on Shopify may offer a package of products like moisturizers, lotions, and face cleansers to add tot heir daily routine as an all-in-one solution for its buyers.

Bundle alerts are an efficient way to sell more products that your clients are already shopping for. Bundling products also reduces overhead costs due to the economies of scale involved. Customers can pay less since more products are packaged and shipped at once.

Allowing buyers to create their own product bundles can also improve your CRO and AOV. Why not let your customers pick what they want? After all, this will increase their order total and your overall revenue.

3. Start a Customer Loyalty Program

Consumers in the U.S. hold approximately 3.8 billion memberships in loyalty programs, with an average of 14.8 loyalty programs per consumer. Interestingly, 86% of consumers will buy more products or services if they like a loyalty program. Customers will probably come back to buy more activewear or makeup if there's a reward involved in doing so.

Setting up a loyalty program is an excellent way to establish customer relationships and build brand loyalty. Every time a customer buys a product, they can get discounts or earn points that they can redeem. A loyalty program can also increase the lifetime value of customers whilst creating brand ambassadors. 

Remember to consider your customers' experiences to guarantee your loyalty program evolves with their needs.

4. Use BOGO Sales

Everyone is familiar with the "Buy One, Get One Free" (BOGO) signs and posters. This is a common retail practice that boosts eCommerce growth and increases AOV. Such announcements help to incentivize shoppers to buy more products from their favorite beverage or food store.

Exit-intent pop-ups that lure buyers with BOGO offers can boost CRO. Online shoppers enjoy free gifts and are more likely to make purchases if they know they'll get two products for the price of one. Offers such as "buy two and get a free gift" can eventually increase your eCommerce AOV.

5. Offer Cross-sell and Upsell Items

Cross-selling implies selling related products that a buyer may be interested in and that they can buy. More often than not, eCommerce stores get it wrong by featuring irrelevant products.

You should cross-sell any relevant items you feel a customer may like while checking out. A customer buying several long-sleeved shirts may be interested in other warm apparel like a winter hat or matching gloves. If they see the products all on the same page, they may be inclined to add both of them to their cart.

Cross-sells can also occur on the checkout page. These targeted messages can entice buyers to buy more products from your catalog.

Upselling promotes a more expensive product or an upgrade for a customer to add to their cart. You can implement this on the product page or at a later stage during checkout. Putting the right upsell items in front of your buyers can increase your AOV and ROI.

Ecommerce businesses should be wary not to upsell too much. Creating an ingenuine impression may hurt conversions.

6. Offer a Discount Post Purchase

Offering a discount once a customer has bought a product can increase profit margins. You may offer a 15% discount on their next purchase. Such a strategy can come into play as a pop-up after a customer has already ordered your products.

Post-purchase discounts can also be sent through email or text message. You should be courteous when offering your customers discounts on their next purchases.

To influence their purchasing behavior, you can offer a limited-time offer for products that meet a certain threshold. For example, you may set up a 48-hour deal where a customer gets a $15 discount for purchases over $70.

Limited-time offers are effective at boosting eCommerce AOV during slow periods.

Remember to thank your esteemed customer for purchasing products at your Shopify store. It's important to leave a great impression on your clients. This may lead to word-of-mouth referrals that may also increase your conversions and AOV.

Thinking About Selling More to People? 

AOV is an essential metric that online businesses should never ignore. Growing your AOV is an effective way to increase your eCommerce revenue and profit margins. You can uncover valuable insights about your customer purchase patterns by constantly analyzing your AOV.

Improving your brand's AOV is a continuous process. You can use industry benchmarks to find out what works best for your business. But also, remember to focus on other key performance indicators — like traffic, CRO, and customer lifetime value — when increasing average order value.

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