How to calculate AOV
- Average Order Value = Total Revenue / Number of Orders
For example, $20,000 in revenue across 500 orders is an AOV of $40. Track it over a consistent period so seasonal swings do not distort the picture.
Why AOV matters
Acquiring a shopper is the expensive part. Once they are buying, every extra dollar in the order is highly profitable because the acquisition cost is already paid. That is why lifting AOV, through bundles, thresholds, and relevant recommendations, is such an efficient growth lever.
How stores raise AOV
- Free-shipping thresholds that nudge a larger basket
- Bundles and volume discounts
- Relevant cross-sells and upsells
- Reviews on higher-value items, which give shoppers the confidence to trade up
Questions
Is a higher AOV always better?
Usually, but not if it comes from discounts that erode margin or from pushing items shoppers later return. Watch AOV alongside profit and return rate.
How is AOV different from lifetime value?
AOV is spend per order; lifetime value is total spend across the whole customer relationship.