What is Average Order Value (AOV)?

Average Order Value (AOV) is one of the most important metrics that brands can track and set goals for. Optimizing an eCommerce store's AOV can significantly increase profits yet many AOV marketing tactics don't cost much to implement.

With this in mind let's walk through the meaning of AOV and some of the most effective ways to improve it.

What does AOV Stand For?

AOV stands for Average Order Value. This is an eCommerce metric that indicates the average amount a customer spends during each transaction.

What does AOV Mean?

If your online store's AOV is increasing it may mean that customers are buying more expensive products. It could also signal that they are adding more items to their shopping cart before they check out.

Brands across all industries should aim to increase their AOV as this can directly boost revenue. Tracking average order value also allows brands to make informed decisions in key areas like marketing product pricing and customer acquisition investment.

How do you calculate AOV?

Calculating the average order value of your eCommerce store is simple. You just divide the total revenue earned by the number of orders received within a defined period of time.

AOV = Total revenue ÷ total orders

For example if a brand earned $150000 of revenue and processed 2500 orders in the month of April its average order value would be $60.

April's AOV = 150000 ÷ 2500 = 60

Because it's so easy to calculate brands can track their average order value across all their sales channels. At a minimum it is recommended to calculate it once a week so trends can be identified quickly. This makes it easier to track down the reasons behind dips and spikes too.