AOV

AOV (Average Order Value) is a direct performance metric that tracks the average dollar amount spent each time a customer places an order on your website or Amazon store.

While metrics like Conversion Rate track how many people buy, AOV tracks how much they spend. It is one of the most effective levers for increasing profitability without needing to spend more on acquiring new traffic.

How to Calculate AOV

Why is AOV Important?

Increasing your AOV is the "secret weapon" for offsetting rising advertising costs.

1. Improves ROAS (Return on Ad Spend): If you pay $10 to acquire a customer (CPA), a customer spending $50 is far more profitable than one spending $20. Higher AOV makes your ads more efficient.

2. Higher Margins: Shipping two items in one box is cheaper than shipping two separate orders. Higher AOV often leads to better operational efficiency and net profit.

3. Inventory Velocity: Strategies that boost AOV often help move inventory faster, reducing long-term storage fees.

Strategies to Increase AOV

If your AOV is stagnant or declining, consider these tactics:

• Virtual Bundles: Combine complementary products (e.g., Shampoo + Conditioner) into a single SKU or offer. This increases the perceived value and forces a higher transaction size.

• "Frequently Bought Together": Ensure your product detail pages cross-sell your other items.

• Quantity Discounts: Offer tiered pricing (e.g., "Save 5% when you buy 2").

• Free Shipping Thresholds: If you fulfill orders yourself (FBM/DTC), set free shipping just slightly above your current average order size.

AOV vs. LTV (Lifetime Value)

• AOV is a snapshot of a single transaction.

• LTV is the total value of a customer over their entire relationship with your brand.

Summary: AOV focuses on maximizing the "now," while LTV focuses on retention and repeat purchases.