How to Increase the Average Order Value in Your E-Commerce Store

average order value

A lot of business details matter in e-commerce. However, at the end of the day it’s all about driving more traffic and growing revenue. While there are a number of ways to do so, no strategy is more effective than increasing your store’s average order value, or AOV.

Of all the business metrics to track for your store, AOV is as top-level as it gets. The best part is that you can experiment with a number of strategies tailored to your niche and product. Keep testing until you find the most successful methods.

Let’s look at how to increase the average order value in your e-commerce store.

 

Set Discount Tiers

Getting shoppers to spend more money at your store ultimately falls into two categories. You can compel them to buy more from you with a long-term brand strategy. Or you can give them incentives for spending more now, with a short-term method that can yield long-term loyalty.

For example, offer consumers discounts for reaching certain order values. This works as a direct call-to-action for consumers to add to their orders. With no discount tiers, a shopper might be inclined to check out with $40 of goods in their cart. But you could offer 10 percent off orders over $80, and 15 percent off orders exceeding $125. In that case, the same shopper would likely find more items to add to their order.

A good way to promote your discount tiers is via an email blast aimed at frequent shoppers. You can complement this with a navigation banner ad communicating the discount offers. Discount tiers work because they gamify the shopping experience. Users add items to their cart and see their “money saved” increase. And you’ll move more of your product inventory as shoppers search for additional products to reach the discount tier.

 

Establish a Free Shipping Threshold

Amazon’s “free shipping on orders over $25” made the free shipping threshold popular. This is a straightforward way to increase your average order value. A good rule of thumb is to set the free-shipping price 30 percent higher than your current AOV. You can calculate your AOV by dividing your total revenue by the number of transactions.

Additionally, cast an even bigger net with your free-shipping threshold. Do this by having a message appear upon checkout that reminds the user to add “$xx more to qualify for free shipping.” Of course, you’ll also promote it through your regular channels as well. When shoppers are only an item or two away from getting free shipping, there’s a good chance they’ll add more products to their cart (guilt-free).

 

Bundle Products

E-commerce stores that offer a wide selection of products encounter vast purchasing disparities. An effective way to move more of your product, give customers value, and increase your AOV is to bundle your products. Mix and match accessories to make different “kits” or “ensembles” or “collections.” Then back these with an advertising campaign centered on a season, holiday, product use cases, or other themes. Selling product bundles can net you additional review coverage (think “gift idea” blog articles). They can also give you more material for email blasts and engage new store visitors.

 

Give a Gift Card with a Purchase

Yes, offering your customers gift cards can increase your average order value. Just be sure to offer gift cards for amounts that are not too much lower than what most of your products cost. For example, if your store sells high-end electronics and your lowest-priced item is $50, then offering a $15 gift card might be enough to spark a shopper’s interest without hurting your margins. However, if you offer a gift card only worth $5, most shoppers will roll their eyes and move along.

 

Start a Loyalty Program

Here’s an interesting fact. Around 40 percent of an e-commerce store’s revenue comes from eight percent of its customers! Repeat customers buy more per order. Moreover, they are easier (and cheaper) to sell to. Plus, they buy more at key times. And they are more likely to share about your store with those they know.

Therefore, if you’re looking to build a devoted customer base, and especially if you want to avoid selling on marketplaces, starting a loyalty program is crucial. Give consumers a reason to continually return to your store over one of your competitors’ and you’ll be rewarded again and again and again.

 

RELATED ARTICLE: 4 REAL ESTATE PRINCIPLES FOR SELLING COMMERCIAL PROPERTY

 

Loyalty programs, unlike the other strategies on this list, are as close to a set-it-and-forget-it initiative as you can develop. Think critically about a rewards system that offers shoppers real value and still makes solid business sense. Then, promote it!

Customers can accumulate points with each purchase they make. This provides a long-term gamification effect that keeps them coming back. If you created your site using one of the best e-commerce website builders, such as Shopify, you can choose from several loyalty apps. Popular options include Smile.io, Bold, and Loyalty Lion.

 

Test, Test, Test

These options, and countless others, can all provide significant return on your investment. What’s more, you’ll enjoy an increased average order value for your e-commerce store. However, some of these ideas will work better than others based on your target audience, niche, time in business, and the products you sell—among other details.

The best approach is to choose a strategy you’re comfortable with. Then experiment and test your results. You’re unlikely to find your bread and butter right out of the gate. However, by basing your decisions on your customers’ experience and your operating margins, you’ll be well on your way to increasing the average order value in your e-commerce store.


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