Average order value: $128*
*Based on ten different ecommerce studies listed below.
Average order value is a central ecommerce metric.
Retailers seeking to grow their revenue ignore it at their peril!Along with average ecommerce conversion rate and customer lifetime value, it forms one of the 'big three' of #ecommerce optimization. #AOV #EcommerceTips Click To Tweet
But it’s often difficult figuring out where you stand. Is your average order value (AOV) blazing ahead of the rest of your industry competitors? Or are you limping behind like a three-legged horse?
In this post, we’re going to give you all the data you need to determine exactly how your average order value compares to your competitors.
Check them all out!
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At Growcode, we think average order value is one of the key ecommerce metrics that online retailers seeking to grow their revenues need to focus on.
But there are a few caveats.
On the one hand, it sounds simple. If you boost the amount customers are paying whenever they buy from you, that’s a good thing, right? And the answer, of course, is yes. But the broader picture is a little more complex.
In fact, while focusing on average order value alone will result in a boost to revenue, it almost certainly won’t be the best possible outcome you can achieve.
As we outlined in a recent post, there are four metrics that ecommerce retailers should optimize for: conversions, average order value, purchase frequency (repeat transactions average), and retention period.
So while average order absolutely is important, it’s only part of the bigger picture.
It’s also worth mentioning that it’s important to account for variation between verticals.
While it is useful to have external benchmarks, AOVs can vary drastically between markets, seasons, and even individual stores. It’s always important to formulate your own KPIs (key performance indicators) based on a mix of competitor data, market-specific benchmarks and, of course, your own in-house data.
Growcode also recommends this eBook:
Ecommerce Optimization Checklist of a 7+ Figure Online Store
We regularly cite a number of key sources when compiling “roundup” benchmarks. In ensuring that your own KPIs are up-to-date, it’s useful to be aware of them. These sources invariably use either information gathered from their own users or large quantities of data from third-parties as the basis of their reports.
Average order value (AOV) is a relatively simple metric to calculate. You just need to take the total revenue over a given period and divide it by the number of orders made over that same period.
If, for instance, a store has generated $1000 of revenue over the previous month, and there were 100 orders, the AOV is calculated by dividing $1000 by 100 to give a figure of $10.
Boosting your average order value is fundamentally about encouraging customers to (1) buy more items and (2) buy items that cost more. Creating greater ecommerce urgency and promoting up-sells and cross-sells are two excellent ways of achieving this and are also great conversion rate optimization tips.
The million-dollar question that every online retailer has probably asked at some point is: “What constitutes a good average order value?”The million-dollar question that every online #retailer has probably asked at some point is: What constitutes a good average order value? #ecommerce #EcommerceTips Click To Tweet
Every answer will be different, and the average metric above is only useful as a loose reference-point. When determining your own KPIs and goals, it’s worth keeping the following points in mind:
Assuming that your own average order value exists within a reasonable spectrum given industry standards (i.e. that it’s not exceptionally lower) then it’s probably fair to say that you don’t have any major problems.
In such a case, a “good” average order value is simply one that’s better than your previous one, whether calculated on a yearly or even monthly basis.
Industry-specific benchmarks are among the most useful reference-points for your own performance.
IRP Commerce is a compiler of data about UK markets. The company publishes up-to-date metrics across a number of verticals and is, in our opinion, the best real-time source of information in this space. It’s also interesting to see the significant disparities that occur between industries.
When retailers separate average order values by source, they are able to see which traffic avenues drive the highest revenue. This enables them to do two things. First, it’s possible to allocate further resources to those top-performing channels. Second, online retailers can formulate more accurate channel-specific KPIs, with specific goals tied to each individual source.
Desktop still leads the way by a sizeable margin when it comes to device-specific average order values, with Windows computers driving the highest of all.
One of the big challenges facing ecommerce retailers is the growing use of mobile phones to make online purchases. Mobile commerce sales account for nearly half of all ecommerce sales, yet average order values remain comparatively lower. There is a significant opportunity for ecommerce retailers to boost metrics like conversion rates and AOVs on mobile devices to bring them closer to desktop levels.
If you can boost your average order value, your revenue will increase. It’s really that simple.
Whenever we work with a new client at Growcode (BTW do you know that we were recognized as a top conversion rate optimization agency on Clutch?!), we always conduct a comprehensive analysis looking at how we can grow average order value by changing and tweaking different page formats. In particular, positive changes during product page optimization can have a sizeable impact on average order value.
The key thing to remember about general benchmarks is that they are only tools to help you form your own KPIs. It’s also important to focus on high-quality studies that are close to your own specific circumstances in terms of country, verticals and traffic sources.
Just always keep in mind: the best AOV is one that’s higher than the previous month’s.
Want to learn about the best ways to boost your average order value? In our 115-point checklist for 7+ figure online stores, we cover the best strategies for all your pages, from the homepage to the checkout page.