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.

Abacus Home Shopping Report 2013Why AOV is important

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!

Average Order Value by Month
Click on the image to see it full size

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).