Foundation · 2 min
What you need to know
What is average order value?
Average order value is the defined sales value divided by the number of eligible orders in the same period. Merchants should state whether the value is gross, net, product-only or inclusive of shipping.
How is AOV calculated?
Divide the chosen order-value numerator by the matching count of completed eligible orders. For example, net merchandise AOV uses net merchandise sales divided by non-test completed orders.
How can ecommerce stores increase AOV?
Increase AOV by improving product fit through bundles, compatible add-ons, quantity options or useful thresholds. Measure incremental contribution and order volume, so a larger basket is not mistaken for better economics.
Can higher AOV reduce profitability?
Yes. Larger orders can carry deeper discounts, expensive shipping, low-margin items, greater service needs, or higher return exposure. Compare contribution per order and total contribution with AOV.
How do bundles affect AOV?
Bundles can raise AOV by combining several items in one order, but their discount and product costs may lower margin. Compare bundle orders with what similar customers would otherwise buy.
How does free-shipping threshold affect AOV?
A free shipping threshold may encourage customers to add items, raising AOV, but the shipping subsidy can reduce contribution. Test the threshold using order distribution and shipping cost.
Should AOV be compared by customer segments?
Yes. New, returning, wholesale, loyalty, and gift customers may have different basket patterns. Use consistent value definitions and report segment size before comparing them.
A quick store check
Recalculate AOV by new versus returning customer and confirm that contribution per order did not fall.
Foundation · 2 min
Frequently asked questions
Is a higher AOV always better?
No. It may accompany fewer orders, lower margins, larger shipping costs or more returns.
Can AOV rise only because prices have increased?
Yes. Separate price, quantity and product mix changes before crediting merchandising.