Average Order Value (AOV)

Average order value measures how much customers spend per transaction. It is one of the three fundamental levers of e-commerce revenue (the others being traffic and conversion rate). Increasing AOV is often the quickest path to revenue growth because it requires no additional traffic or marketing spend, only changes to product presentation, pricing, or incentive structure.

Common tactics for increasing AOV include bundle pricing, volume discounts, free shipping thresholds (set just above current AOV), cross-sell recommendations, and tiered pricing. Amazon's "Frequently Bought Together" and "Customers Also Bought" features are AOV optimization in action. Setting a free shipping threshold at $50 when current AOV is $42 naturally encourages customers to add items.

AOV should be analyzed alongside other metrics for the full picture. A rising AOV with falling conversion rates might mean you are pushing customers toward more expensive purchases but losing the ones who just wanted something simple. The ideal scenario is rising AOV with stable or improving conversion rates, indicating that customers are genuinely finding more value in larger orders.