{"id":12954,"date":"2021-10-20T09:58:13","date_gmt":"2021-10-20T16:58:13","guid":{"rendered":"https:\/\/michaeljbrumm.com\/dcl-v3\/?p=12954"},"modified":"2024-06-10T09:14:22","modified_gmt":"2024-06-10T16:14:22","slug":"increase-average-order-value","status":"publish","type":"post","link":"https:\/\/michaeljbrumm.com\/dcl-v3\/blog\/fulfillment\/increase-average-order-value\/","title":{"rendered":"Ways to Increase Average Order Value\u00a0"},"content":{"rendered":"

As an ecommerce seller, you may have high site traffic, great conversion rates, and even good customer retention. But are your order values consistently low? If\u00a0so\u00a0tracking your AOV is an important metric if you\u2019re looking to increase revenue.\u00a0<\/span>\u00a0<\/span><\/p>\n

How to Measure AOV? Why is it Important?\u00a0<\/span><\/b>\u00a0<\/span><\/p>\n

Tracking average order value is an important measurement of overall growth.\u00a0It’s\u00a0helpful to evaluate your pricing strategy and profit margin. Once\u00a0you\u2019ve\u00a0established\u00a0a benchmark for your order value you can work toward increasing the AOV which will directly increase profits and revenue.<\/span>\u00a0<\/span><\/p>\n

To calculate your AOV you divide the total revenue from your store by the number of orders placed within the same time frame. Using an example, if you make $1000 total per day from 25 orders, your average order value is $40. That means your customers purchase, on average, $40 for each order. If you were to try to increase that, you might set a goal of $45 or $50 per order (depending on the value of most of your products).<\/span>\u00a0<\/span><\/p>\n

Ways to Increase AOV<\/span><\/b>\u00a0<\/span><\/p>\n

The name of the game when increasing AOV is incentivization. You need to entice your customers to purchase more or higher valued items, or both. Here are a few reliable methods.\u00a0<\/span>\u00a0<\/span><\/p>\n

Free or Discounted Shipping\u00a0<\/span><\/i>\u00a0<\/span><\/p>\n

The number one, highly effective way to boost orders (both in volume and average value) is to offer free shipping. Before you jump in, there are numerous considerations to make. Free means it is free for your customers, but that also means the cost of shipping needs to be absorbed somewhere.\u00a0<\/span>\u00a0<\/span><\/p>\n

By offering something for free, customers may be influenced to believe they are getting a better deal than they\u00a0actually are. For example, Amazon\u2019s Prime service offers members free shipping yet there is an annual or monthly fee. While shipping may feel free at the checkout, Prime members are still paying some portion of that through their membership dues.\u00a0<\/span>\u00a0<\/span><\/p>\n

Most sellers set a minimum order value for free shipping. To do this, you might take your current AOV and set your order minimum 20% higher than that to incentivize customers to purchase more. Only the customers who reach that order minimum will be offered free shipping.\u00a0<\/span>\u00a0<\/span><\/p>\n

Read more about the many ways to offer\u00a0<\/span>free shipping<\/span>\u00a0to customers.\u00a0<\/span>\u00a0<\/span><\/p>\n

Bundle Complimentary Products Together\u00a0<\/span><\/i>\u00a0<\/span>\u00a0<\/span><\/p>\n

Bundles increase the perceived value of your products. When products are bundled together customers will spend more money than if they purchased only one item. You can offer your customers bundles for promotions and limited time offers to test if they\u00a0sell, or\u00a0do a small batch of a few kits and test which your customers seem to like best.\u00a0<\/span>\u00a0<\/span><\/p>\n

Other than increasing the average order value (and cart size!), offering bundles is also a great way to expose customers to wider variety of items, introduce loyal customers to new things, and promote a unique product mix that may not be available from other sellers.\u00a0<\/span>\u00a0<\/span><\/p>\n

Kits and bundles are conducive to beauty products (makeup and their applicators, seasonal color scheme, night or day kit, etc.) and consumer packaged goods (flavor variety pack, items for each day of the week, etc.).\u00a0<\/span>\u00a0<\/span><\/p>\n

Case Study<\/span><\/a>: How Magic Spoon improved their customers’ experience with easy add-on products, virtual bundles.<\/span>\u00a0<\/span><\/p>\n

When working with your fulfillment provider to create product bundles, it is important to do it efficiently cost-effectively. Some 3PLs may need a seller to pre-kit (or pre-assemble) the product bundles before sending them to the fulfillment center. This requires a long lead\u00a0time,\u00a0and the seller could end up losing money on products if the bundled products don\u2019t sell well. More modern 3PLs can set up virtual bundles, which are a faster, more efficient way to execute this fulfillment project.\u00a0<\/span>\u00a0<\/span><\/p>\n

Major benefits to virtual bundling include:<\/span>\u00a0<\/span><\/p>\n