How to Increase the Average Order Value of Your eCommerce Business

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Ecommerce industry keeps steadily growing and businesses are looking for new ways to increase conversion rates, generate more sales and encourage customer loyalty. In fact, it is thought that by 2040, 95% of purchases will be facilitated by eCommerce.

In order to be successful, it is crucial for every online retailer to often screen analytics and eCommerce growth statistics to plan for the upcoming year. There are many was to grow your online retail business and some of them don’t require acquiring new customers.

Have you ever wondered how to increase average order value and its frequency, for every purchase made on your website? Luckily, in this article we will discuss the ways that will help you increase the average order value for your eCommerce business, whether it is Amazon, Shopify or any other platform.

What is Average Order Value?

Average order value is the average amount each of your customers spends per single purchase made on your eCommerce site. It is estimated that the total average eCommerce spend per customer over the course of the year will be £1,600 in the UK. But how much will they spend per transaction?

Statistics say, that the average order value in the UK has seen a decrease over the past year, with £146 in January 2018 to only £88 in January 2019. Average value is one of the “big three” forms of ecommerce optimasation and is essential for growing your revenue.

This is the easiest and quickest way to calculate an average order value (AOV):

average order value, appnova

It is recommended to use Google Analytics to track average order value, because it provides many additional benefits. You have to enable eCommerce tracking in Google Analytics account, and you are ready to go.

Tips to Increase an Average Order Value

You should now have an idea of what average order value is and how to calculate it. Below we have listed the most effective ways to increase it.

1. Provide Product Recommendations

Think like a customer- when you come back to a certain store, it is usually because you liked one of the products and you want to order more. You have a few ways to attract shoppers’ attention, starting with displaying similar or related items that may be a point of interest to them. You can do this with help of “People Also Viewed” or “Popular Products” section or showing pieces that will complete the look, which increases the chances that customers will purchase additional items.

misguided product recommendations, appnova

2. Upselling and Cross-Selling

Upselling is offering a more expensive variant of a product. The good examples are subscription websites which offer Free and Premium versions of the service, and encourage customers to purchase the more expensive one, by listing all of the benefits. Cross-selling on the other hand is similar to product recommendations and can be identified as displaying related additional products to a customer. For instance, if someone is purchasing a phone from your online store, it would be worth recommending some headphones, case or a charger and soft sell these products as an addition.

apple upsetting and cross-selling, appnova

3. Establish free shipping threshold

According to Shopify, 56% of online shoppers abandon their basket because they were presented with unexpected costs at the checkout. No one likes paying for delivery, especially if an order value is low. Setting your free shipping order threshold won’t surprise your buyers, but it will encourage them to purchase more in order to meet the minimum value and qualify for a free delivery. After calculating your average order value, add 30% to it and set it as your free shipping threshold- this value is proved to be the best for the increase. Remind your customers if they didn’t meet the minimum order value and they will be more likely to spend more money on your items instead of paying for delivery.

4. Personalisation

When product recommendations display items similar to previous purchases and order history, there is many ways that personalisation can improve your customer experience even more. You can find and display items based on buyers browsing history, location, device they used to make a purchase, browser type and how they have interacted with your site. In fact, 93% of companies see an uplift in conversion rates from personalisation and having a personalized homepage can increase your sales by 7%.

5. Set the time frame for any offers

We’ve all seen these “Today only, limited time offer!” adverts online, which are encouraging customers to make a quick decision and purchase an item before the offer expires. It works! No one wants to miss out on a deal such as free next day delivery or 50% off on a second bought item. This strategy will not only boost your sales, but also help you increase the average order value, because customers will feel urgency to purchase that extra item for 50% off, before the limited offer ends or use Premium for free for the first month.

Spotify premium offer, appnova

Summary

Now you should have a full understanding of what average order value is and how increasing it can benefit your eCommerce business. We have introduced you to a few of many ways to increase your average order value. It is important to think like a customer and not be overly promotional- do not implement it all at once, it doesn’t work like that. Remember these ways that can help you with your eCommerce strategy for 2019 and help you grow your online business:

  1. Provide Product Recommendations
  2. Upselling and Cross-Selling
  3. Establish free shipping threshold
  4. Personalisation
  5. Set the time frame for any offers

You are ready to go, good luck!

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