Average Order Value in Ecommerce (2016–2024)
As an ecommerce business, one crucial metric that determines marketing success is the average order value. It indicates the amount customers typically spend in your online store per transaction, providing insights into potential bundling strategies.
But what exactly is the average order value? In this post, we will cover:
- Average order value definition
- Average order value formula
- Annual average order values from 2016 to 2024
- Average order values by product category
- Average order values by industry
- Strategies to increase average order value
Average order value in ecommerce: Key takeaways
- Definition and calculation of average order value: The average order value measures the average amount spent by customers per transaction. It is calculated by dividing total revenue by the total number of orders within a specific timeframe.
- Historical and current average order value: The average order value has fluctuated in recent years, with notable highs and lows. In May 2024, the AOV was $128.34, marking a 1.6% annual increase.
- Average order value by product category: As of May 2024, the categories with the highest average order values were cars and motorcycling, baby and child, and electrical and commercial equipment.
- Average order value by industry: In March 2024, luxury and jewelry had the highest checkout values. It is followed by home and furniture and fashion and accessories.
Average order value (AOV) meaning
Average order value, or AOV, tracks the average amount spent by customers per checkout. This is calculated by dividing the total revenue generated by the total number of orders placed over within a specified timeframe.
It’s important to note that the average order value is calculated based on the amount spent per transaction rather than per customer. Even if a single customer carries out multiple orders, each one is evaluated independently to determine the AOV.
How to calculate average order value
To calculate the average order value of your online store, you need to first establish a time period and then divide your store’s total revenue by the number of orders customers placed.
- Choose a specific time frame, such as a particular month.
- Calculate the total revenue generated by your store during that period.
- Determine the total number of orders placed within the chosen time frame.
- Divide the total revenue by the total number of orders to obtain the AOV.
Punching in some hypothetical numbers to better illustrate the calculation, let’s assume your store made $10,000 in May 2024 from a total of 400 orders. The average order value would be $10,000/400 = $25.
Average order value formula
Simply put, the formula for calculating average order value is:
Average order value = (Total revenue)/(Total number of orders)
What is a good average order value?
|
Month |
Average order value (£) |
|
May 2016 |
£88.51 |
|
May 2017 |
£109.56 |
|
May 2018 |
£99.01 |
|
May 2019 |
£95.81 |
|
May 2020 |
£75.33 |
|
May 2021 |
£83.52 |
|
May 2022 |
£90.34 |
|
May 2023 |
£99.70 |
|
May 2024 |
£101.25 |
Average order values vary from month to month, season to season, and even year to year. For instance, the year-end holiday season, ranked among the busiest shopping events of the year, tends to see higher average order values. Conversely, economic downturns may lead to decreased AOV as consumers become more conservative with their spending.
According to the latest ecommerce data, as of May 2024, the average order value (or AOV) in ecommerce is £101.25, which is approximately $128.34. This is a 1.6% increase from May 2023’s average order size per customer and a slowdown from the previous year’s 10.4% increase.
The annual rise in the average order value ecommerce in May 2024 is also the fourth consecutive yearly increase, following a 21.4% dip in 2020—the largest fall between 2016 and 2024. This was likely a result of the COVID-19 pandemic, which drove consumers’ confidence downwards and forced them to cut back on expenditure.
The average order value aside, the average sale price per item has also increased slightly over the past year from £50.58 to £50.95, or approximately $64.11 to $64.58, over the past year. This marks a 0.7% rise over the same one-year period.
From 2017 to 2024, the highest average order value in ecommerce was registered in 2017, when online shoppers spent around £109.56 (or around $138.86) per internet purchase.
Average order value by product category: top five
|
Product category |
Average order value (£) |
|
1. Cars and motorcycling |
£220.93 |
|
2. Baby and child |
£164.92 |
|
3. Electrical and commercial equipment |
£127.68 |
|
4. Arts and crafts |
£112.56 |
|
5. Food and drink |
£108.08 |
To understand how well your store is performing, we need to take a more in-depth look at its category.
The AOV in ecommerce varies from category to category. Items with the highest average order value per visitor in May 2024 are in the cars and motorcycling category. Consumers buying these products online spend an average of £220.93, or $280.01, per checkout. The average checkout value of these products marks a 10.5% year-over-year increase from May 2023’s £199.95 (around $253.42).
Baby and child products are second on the list. Online buyers typically spend £164.92 (approximately $209.02) on an order in this category. These products saw a 6.8% dip in average order value from 2023 to 2024.
Products in the electrical and commercial equipment category have the third-highest average order size of £127.68, or $161.82. This category rose marginally from 2023 to 2024, by 2.1%. The arts and crafts category comes next with an average value per visitor of £112.56, or $142.66, followed by food and drink, with £108.08, or $138.98.
Average order value by industry
The average order value metric also varies significantly from industry to industry. Here’s a look at the average amount consumers spend per checkout according to the different sectors an online store is in.
|
Industry |
Average order value in March 2024 ($) |
|
1. Luxury and jewelry |
$426 |
|
2. Home and furniture |
$382 |
|
3. Fashion, accessories, and apparel |
$309 |
|
4. Consumer goods |
$259 |
|
5. Food and beverage |
$106 |
|
6. Multi-brand retail |
$90 |
|
7. Beauty and personal care |
$75 |
|
8. Pet care and veterinary services |
$71 |
The ranking of average order value by industry shows that in March 2024, luxury and jewelry recorded the highest expenditure per checkout ($426) across all industries, reflecting the premium nature of products in this sector.
Home and furniture follows, with an average order value of $382. Conversely, pet care and veterinary services record the lowest AOV. Shoppers buying products from this sector typically spend just over $70 per purchase.
How to increase average order value
There are several strategies businesses can adopt to bolster the average order values of their stores. Some tried and tested ways include:
- Cross-selling complementary products
- Example: recommending a chew toy to a customer who’s added a dog bed to their cart.
- Upselling a more expensive or better version of a product
- Example: recommending the 16oz candle instead of the 8oz
- Setting free shipping thresholds at slightly above your store’s average order value
- Example: If your average order value is $35, setting a minimum order value of $45 to quality for free shipping may incentivize buyers to add more items to their carts.
- Offering volume discounts and/or bundled deals
- Example: offering a 10% discount for customers purchasing three or more of the same item