In ecommerce, it is often thought that the conversion rate is king.
However, another metric to not only look out for but also take advantage of how easy it is to influence is low average order value (low AOV).
So that you can understand low AOV to improve the success of your ecommerce store, here is everything you need to know from the Imaginaire team.
What Is Low Average Order Value?
As the name suggests, low average order value (low AOV) describes a situation whereby the amount of money being spent in a transaction by a customer is considered low.
Every ecommerce business will have its own definition of what it deems to be a ‘low’ amount.
However, it’s fair to say that the monetary value isn’t considered high enough to be a driver of business across the business as a whole.
For example, if an ecommerce store sold bathroom products, high ticket items would be baths, showers, sinks or tiles. These types of orders may amount to hundreds if not thousands of pounds.
But if customers were mostly purchasing sink plugs or light switches, this would offer a comparatively low amount of revenue. As a result, this would be considered a low average order value.
How Does Low AOV Impact Ecommerce Businesses?
A low AOV can be a cause for concern, especially if something such as the above example was occurring. That’s because in order to make a profit, the business would naturally want to have decent average order values.
When taking all order values into account, if the average figure is not high enough, this can threaten the health of the business. Ultimately, profit margins will take a hit if the situation isn’t recovered fast.
What Causes Low AOV?
A variety of factors can cause low AOV, so it’s essential to identify the specific cause related to your business if this is currently an issue it is experiencing. This is to ensure that the fix truly gets to the heart of the issue, especially since it is so serious.
Generally speaking, some of the most common causes of a low average order value include:
The low pricing of items – If an ecommerce store primarily sells goods at a low cost, it makes sense that the average order value will also be lower, especially if there are also no drives to multi-buy or bundle orders.
Limited product range – When customers can’t find everything they need or aren’t being presented with opportunities to add more items to their basket, their order value will be lower.
Discounts and promotions – Such measures attract customers but ultimately encourage price-sensitivity especially where customers are in search of the lowest possible prices.
Complicated checkout process – Poor user experience, especially during the journey from product page to checkout puts hurdles in the way of sales. Until the experience is streamlined the situation won’t recover.
Seasonal factors – In some cases, the popularity of some items you sell may be seasonal, such as Christmas gifts or back to school accessories. Where seasonality applies, order values will typically be lower out of season because there is less demand.
Curious if your website is the reason behind your low AOV? Our ecommerce web design and development experts would be more than happy to offer you a free website review!
How To Increase Low AOV
It probably comes as no surprise that the fix for low AOV mostly involves identifying any of the above and coming up with an appropriate solution. This is especially the case since many of the causes relate to the user experience on the website along with your overall sales strategy.
As for the measures this can involve, things to look out for include specific ecommerce tactics such as bundles, cross-selling and upselling.
But beyond sales techniques, it’s also important your marketing is on point.
For example, if your ecommerce store isn’t optimised for SEO, how are customers going to find your products or services on search engines?
Likewise, PPC and social media marketing remain important to attract your target customers online.
Overall, everything you do needs to have a clear strategy behind it. You should not only know who your target customer is, but also have an understanding of their wants and needs. Otherwise, it’s impossible to know how to get them to spend more, and ultimately boost that low AOV.
Discover Our Digital Marketing Services For Ecommerce Businesses
As an ecommerce business experiencing low average order values, don’t fret but definitely get in touch with our experts.
Our team helps businesses just like yours identify and eliminate bottlenecks to achieve ecommerce success.
Alongside our ecommerce web design and development, we also offer a full suite of digital marketing services especially geared towards ecommerce.
Get in touch with us today by giving us a call on 0115 647 4153 or by filling out our contact form.
