Why you should care about your AOV
Last month Abacus published the latest copy of their Home Shopping Trends report. Hidden away amongst the other cracking data was a chart of AOV (average order value) by month over the last 2 years.
Many eCommerce businesses are guilty of focusing too much on Sales Value and not enough on order volumes or AOV, this chart is a great example of just why you need to worry about your AOV.
Consider 2 businesses:
- both drive £100,000 of sales in their first year
- both spend £30,000 on marketing in their first year
- Business A had an AOV of £100
- Business B had an AOV of £50
Which was the most successful?
Business B – let me show you why:
- Business A took 1,000 orders (£100,000 divided by £100)
- Business B took 2,000 orders (£100,000 divided by £50)
If we assume that each order is a new customer (it was their first year in business):
- Business A spent £30 to recruit each customer, and has 1,000 customers they can market to in year 2
- Business B spent £15 to recruit each customer, and has 2,000 customers they can market to in year 2
I would far rather own business B than business A – More customers, for less money!
Of course you can’t look at it that simply – not least because you’ll get a different AOV from different customer segments, different marketing methods, and as this graph shows – from different times of year too.
You can read my previous post about the report here.
You can download a copy of the report here, and of the last few year’s reports as well (you will need to provide them your details to do it).