You've built an online store. You've invested endless hours to drive traffic to your store through consistent social media posting, community management, email marketing, paid advertising, and optimizing for SEO. People are buying! So what now? Your next goal is to maximize revenue generated on each single order.
AOV is an acronym for "average order value". To calculate AOV, take the total revenue generated from your store and divide by the total volume of orders over the same period of time (month-to-date and year-to-date are common time frames we use to benchmark AOV data).
For example, if your store has generated $5,000 of revenue off of 50 orders over the course of the month, your AOV for that month would be $100.
"Good" is relative to the price point of your products, so we can't speak to what is a "good" AOV for your brand in particular. However, the goal is for users to purchase more than one bottle or product at a time.
Take a look at your price point for one bottle. What is the average potential revenue if 2 or 3 SKUs were sold? This average is an excellent place to start as you set your AOV goals.
Below are three proven strategies that have worked for our partners in increasing the average order value within their stores.
We can assume that when a user finds themselves on a product description page (PDP), it means they're already interested in the item. This is the perfect opportunity to suggest related or complementary products below the main product, saving users the time of having to hit the "Back" button to sift through your catalog again.
Products to highlight: Your best selling products, bundled versions of the product they're already interested in, or complementary products (drinking glasses, cocktail making tools, bitters and spices, etc.).
Shipping in the alcohol industry is expensive. As a brand manager, you might feel forced to charge accordingly, even if it's subsidized!
However, in a recent study on online consumer trends by Jungle Scout (Amazon's research tool providers), 66% of consumers expect free shipping on every purchase they make online. An even larger number (80%) expect free shipping when ordering a certain dollar amount on online products.
Based on this, if brands do not offer any method for shoppers to receive free shipping, they put themselves at risk of losing a customer.
So how do you ensure that users will spend enough to cover the shipping costs, product costs, operational costs, and still offer profit margins?
Set a minimum order value for customers to reach before they are offered free shipping. This could be based on the total dollar amount or quantity of products in their carts.
Be sure to highlight your shipping promotion clearly before and during the checkout process to decrease the risk of cart abandonments. The more transparent you are, the more likely online shoppers are to convert.
The final strategy is to bundle your products and merchandise together to create higher value SKUs without having to create entirely new products. This tactic couples well with the complimentary shipping offer; Customers can add the amount of product needed to meet the shipping threshold in one click, and swiftly proceed with checking out.
Another helpful tactic is to provide discounts for bulk bundles, such as 6 bottles or an entire case.
Finally, remember to flag offers that apply to your bundles. If shipping threshold is met by adding the single SKU, find a way to easily indicate this to the customer.
With our partners, brands saw an average increase of 25% in AOV after they added bundled or bulk SKUs to their product catalog.
One of the easiest ways to grow your company without acquiring new products or increasing conversion rates is to increase your average order value. Start with these recommendations, and let us know how they work for you!