What is Average Order Value (AOV)?

Why It Matters

Because revenue only comes from traffic, conversion rate, and AOV multiplied together, raising AOV is one of the few growth levers that doesn't require spending more to acquire new customers, which usually makes it cheaper to move than the other two. A store that fixates on driving more traffic while ignoring AOV is leaving free revenue on the table from customers it's already paying to acquire. It also acts as a feedback signal for merchandising and pricing decisions, an $8 lift from a shipping threshold shows customers responding to an incentive, not a change in underlying demand. Tracking AOV alongside conversion rate is also important because tactics that raise one can sometimes suppress the other, so watching both prevents optimizing one lever at the other's expense.

Example

An online store generates $50,000 in revenue from 1,000 orders in a month. AOV is $50,000 divided by 1,000, which equals $50 per order. If the store adds a free-shipping threshold at $75 and average order value climbs to $58 the following month as customers add items to qualify, that $8 increase applies to every order without any additional spend on acquiring new customers. Because raising AOV through bundling, upsells, or shipping thresholds is often cheaper than acquiring new customers to hit the same revenue target, it is usually one of the first levers ecommerce teams test.

Frequently Asked Questions

• How is AOV different from Basket Size?

  AOV measures the dollar value of a transaction, while basket size measures the number of items in it. A store can raise AOV by selling higher-priced items without any change in basket size, or vice versa.

• What's considered a good AOV?

  There's no universal benchmark since it depends heavily on the product category and price point, so AOV is more useful tracked as a trend over time for a specific store than compared against other businesses.

• Why do ecommerce teams test AOV before spending more on acquisition?

  Raising AOV through bundling, upsells, or shipping thresholds applies to customers already being acquired, so it doesn't add any additional acquisition spend, making it typically cheaper than acquiring new customers to hit the same revenue target.

• What causes AOV to drop?

  Heavier discounting, a shift in product mix toward lower-priced items, and removing upsell or bundling prompts at checkout are common causes of a declining AOV even when order volume stays steady.

• How do you increase AOV?

  Free-shipping thresholds set just above the current average order, product bundling, and checkout upsells are among the most common and directly testable levers, as shown by the shipping-threshold example raising AOV from $50 to $58.