SlackAverage order value, or AOV, is revenue divided by the number of orders in the same period. It rises when people buy more units per order or pay more per unit. It can also rise for reasons that do not help the business, so check the cause first.
Check in this order
- First, the definition. Is revenue before or after discounts, returns and shipping? Is tax in or out? Use the same rule in both periods.
- Second, the outliers. One very large order, or one bulk buyer, can move the average on a small store. Read the median order value next to the average.
- Third, the mix. A larger share of a higher priced product group raises AOV, even when each product's price is unchanged.
- Fourth, the discounts. A threshold rule, such as a free gift above a set spend, pushes buyers to add items. Check the promotion calendar for the same days.
- Fifth, the buyers. New and returning customers often have different order sizes. A shift between them changes the blend.
Read it with margin
- A higher AOV that came from a deeper discount can lower contribution margin per order. Read AOV next to margin per order, not alone.
- Shipping costs that do not grow with the basket make a bigger order more profitable. Check the shipping cost guide for the rule to use.
Writing it up
- State the revenue rule, the window, the order count, the median and the margin per order, before and after.
Made-up scenario: AOV rose from 62 to 78 in one month. A free gift threshold had been set at 75, so buyers added items to reach it. The median order rose less than the average. Margin per order was flat, so the rise was real but thin. The team kept the threshold and reviewed what the gift cost.
