E-Commerce Dictionary
Average Order Value (AOV)
Definition
The average amount of money each customer spends per transaction with your store.
Deep Dive
Average Order Value (AOV) represents the average amount of money each customer spends per transaction with your store or business. It is calculated by dividing the total revenue generated over a specific period by the number of orders placed during that same period. AOV is a crucial e-commerce metric that helps businesses understand customer purchasing behavior and gauge the effectiveness of their pricing strategies, product bundling, and upselling/cross-selling efforts.
Examples & Use Cases
- 1A customer spends $120 on an online grocery order, contributing to the store's daily AOV
- 2An e-commerce site offering a "buy two, get one half off" deal to encourage larger purchases, thereby increasing AOV
- 3A customer adding a protective case and screen protector to their new smartphone purchase, raising the transaction's value
Related Terms
Customer Lifetime Value (CLTV)UpsellingCross-selling