PH - 03 9090 7070

Wed Oct 23 2019

How To Increase Your Average Order Value?

Back to Blog
Back to Blog

eCommerce has grown from an internet novelty into one of the biggest industries in the world – in fact, it’s expected to reach$3.5 trillion in global sales in the current year.

For eCommerce store owners, the growing reliance on online shopping provides them with a golden opportunity to increase their profitability. One of the best ways to accomplish this goal is to increase average order value.

As an important metric in the eCommerce arena, your average order value is the average amount spent per order – a key insight into your consumer’s purchasing habits.

Simply put, by optimizing your store to increase the average transaction value, you can increase your profit margins without having to heavily invest in new consumer acquisition strategies.

5 Ways To Increase Your Average Order Value

According to Monetate’sECommerce Report (Q3 2018), the average order value for the US market was $133.77.

While the metric may vary from industry to industry, season to season or even store to store, its importance as a measure of success means that store owners should always look for ways to increase it.

Here are 5 ways to help you increase your AOV:

Offer Free Shipping – With A Minimum Order Value

The word ‘free’ contains an intrinsic appeal that has proven to be highly effective for consumers. Particularly when it comes to shipping costs, consumers have shown to be highly averse to paying for shipping even if it constitutes a small percentage of the total purchase amount.

In fact, studies have consistently proven that the promise of free shipping has a profound impact on consumers – with52% of them adding items to their shopping carts to qualify for free shipping and83% willing to wait for two additional days for the product.  

Adding a minimum order value to your existing average transaction value ensures that your business remains profitable, despite paying for all the shipment costs – for this, a rule of thumb is to add 30% to your average order value.

You can take it up a notch and add a notification when a consumer tries to checkout without reaching the level required for ‘free’ shipping.

You can include dynamic, persuasive content to encourage consumers to reach the free shipping threshold. Even a small text like ‘you’re only $15 away from receiving free shipping’ can prove to be highly influential.

Here’s an example of free shipping fromZoet Bathlatier:

homepage increase average cart

It only takes a few minutes to configure your eCommerce store to include a minimum order value – and it’s well worth the time.  

Offer Product Recommendations On Page

Personalization is now an important aspect of every marketing strategy – especially when it comes to selling products, as people are more likely to buy what resonates with their lifestyle or behaviour.

The majority of shoppers who come to your store are already aware of their purchase consideration; they search for the product, add it to the cart and checkout. This is where product recommendations come in.

The biggest player in the eCommerce arena, Amazon, generates35% of its revenue through the targeted recommendations engine that excels at pitching relevant products based on a user’s purchase history.

By highlighting other products in a ‘customers also viewed’ section, you can intrigue buyers into checking out more of what you have in store – thereby increasing your average value order simultaneously.

Here’s a classic example from Amazon:

amazon example increase average cart

Offer Product Bundles

While essentially an iteration of a cross-sell, product bundling allows consumers to buy several complementary products at once – rather than buying them individually at a higher price point.

This is the main tactic used to market ‘starter packs,’ where several items are packed in one bundle – all required for a single goal. It is a highly effective strategy as it allows suppliers to sell more without incurring additional transaction costs – positively impacting your average order value.

When I searched for a ‘keyboard’ on Amazon, the store automatically generated a product bundle for me:

product bundle increase average cart

The key is to bundle products that are frequently bought together and ensure that your bundle is visible on the product page. Chances are that the consumer will buy the entire bundle, rather than the individual items separately.

Price Anchoring

You can use price anchoring as a psychological tactic to influence your visitors into buying a product that is priced around your AOV.

Here’s how price anchoring works – you surround the target product (priced equivalent to your average transaction value) between two products:

  1. One which has a lower price point and thus, lower utility, and
  2. Another with a considerably higher price point, but negligible marginal utility compared to the target product

The ultimate goal of price anchoring is to have the visitor perceive your target product as both well priced and value for money. Any rational user is likely to click on the target product based on a swift cost-benefit analysis.

When implementing this tactic in your eCommerce store, remember to place these products side by side and elaborate on the differences between each – subtly highlighting the target product.

You can also use this tactic for product bundles as value-added leverage to help justify the consumer’s decision to buy.

Display ‘Savings’ Counter On Bulk Orders

Consumers love extracting the maximum ROI for their hard-earned money; this is whystudies continue to report that the average consumer is constantly on the lookout for deals, offers and discounts – simply because it allows them to purchase more for less.

While you can also add discounts and deals to your eCommerce store, another strategy is to include a ‘savings’ space on your checkout page. This shows the amount of money people have saved by buying in bulk instead of purchasing each item individually.

ABebe checkout page summarizes this brilliantly – notice the ‘savings’ row right below the total order amount? It serves to encourage the consumer and reassure them that they are getting more for their money.

example of increase average cart

By showing customers exactly how much they are saving as each item gets added to the list, you are essentially reassuring them that they are not overspending – in fact, they are saving money.

This will persuade them to buy in bulk to save money, while for you it will translate to more goods being sold, more revenue earned and an overall increased average order value.

As one of the most important measures of eCommerce success, it is imperative for store owners to look for ways to increase their average order value. With these easy to implement strategies, you can start optimizing your store for increased average transaction value in no time.

If you’re looking at improving your current eCommerce strategy, give us a call today. At Arcadian Digital, we believe there’s always room for increasing your sales, so let us help you!

Get in touch

We’d love to hear about your digital requirements. Even if you don’t quite know what you need, get in touch as we can help formulate a whole digital strategy to meet your business objectives.

Contact us

Level 16, 459 Collins Street, Melbourne, VIC 3000

03 9090 7070

© Copyright Arcadian Digital Pty. Ltd.