What is Average Order Value? The Hidden Revenue Multiplier for E-Commerce Growth

Average Order Value (AOV) is the average amount a customer spends per order. It's calculated by dividing total revenue by the number of orders and reveals how much customers spend each transaction. For example, if your online store made $10,000 from 100 orders this month, your AOV would be $100.

As of late 2024, the global average AOV was around $144 (approx. £114), an 8.7% increase year-over-year. This metric varies widely by sector: luxury and jewelry orders average >$400, while beauty and personal care hover around $70.

Why should business leaders care about AOV? Because increasing it boosts revenue and profitability without requiring new customers. A higher AOV means more items or higher-priced products per checkout, which improves profit margins and helps cover marketing and fulfillment costs.

Why Does AOV Matter for Growth and Profitability?

AOV isn't just a vanity metric, it has real strategic importance for e-commerce businesses. When you increase the average value of each order, you're essentially getting more revenue out of each customer visit or acquisition.

This can dramatically improve profitability because the costs to acquire or serve that customer (marketing, shipping, transaction costs) can be spread over a larger purchase size. In other words, if it costs you $10 in ads to get a customer to your site, having them spend $100 versus $50 in that session makes a huge difference to your bottom line.

Higher AOV can improve your return on ad spend (ROAS) and make customer acquisition campaigns more sustainable. Moreover, AOV ties into customer lifetime value (CLV). Generally, if customers spend more per order, they generate higher lifetime value.

Strategies to raise AOV often overlap with those that improve retention. For example, loyalty programs encourage repeat high-value purchases, and personalization makes customers feel understood, which can increase both basket size and loyalty.

According to Accenture, over 90% of companies now have some type of loyalty program, and 75% of consumers prefer brands that offer rewards. These programs not only drive repeat business but also increase how much customers spend over time. In fact, shoppers who redeem loyalty points tend to spend significantly more (nearly 39% more per purchase on average).

A high AOV can also signal strong product-market fit or effective merchandising. It might mean customers love your product assortment enough to buy multiples or add complementary items.

How Do Industry Benchmarks Compare?

When assessing your AOV, it's useful to compare against benchmarks in your industry. What's considered a strong AOV differs vastly between a luxury fashion retailer and a grocery delivery service.

By late 2024, the global average AOV across online retail was about $144.52 (approx. £114.25), an increase of 8.7% from the previous year. AOV has been trending upward annually, partly due to inflation and partly due to successful upselling strategies by retailers.

By Industry:

• Luxury & Jewelry: The highest AOV, around $436 per order on average
• Home & Furniture: Approximately $253 per order
• Consumer Electronics/Equipment: In the $200+ range
• Fashion & Apparel: Around $196 per order
• Food & Beverage: Around $114 per order
• Pet Care: Roughly $83 per order
• Beauty & Personal Care: Only about $71 per order on average

These benchmarks highlight how AOV reflects product price points and purchasing patterns. Luxury is high because even one item is pricey. Beauty is low because items are cheap and often bought one at a time (unless bundled).

It's also useful to note seasonality: AOV can jump during holidays (customers buy more items for gifts per order) and can dip in off-season periods. In one fashion industry analysis, order values peaked in spring around April to May and again during fall, aligning with seasonal refreshes and holiday prep.

What Strategies Increase AOV in E-Commerce?

E-commerce apps (and websites) employ various tactics to encourage customers to add extra items or choose premium options. The overarching principle is to provide additional value or convenience that makes a larger purchase natural and appealing.

Upselling and Cross-Selling

Upselling means suggesting a higher-end or higher-volume version of the product the customer is considering, while cross-selling means recommending complementary products.

A classic cross-sell is Amazon's "Frequently Bought Together" and "Customers also bought" sections, a strategy so effective that a McKinsey report estimated 35% of Amazon's sales come from recommendations like these.

Example: Kopari Beauty built an upsell option into its product pages. When viewing a deodorant, customers can select a discounted 2-pack instead of a single, increasing the order value while feeling they got a deal.

For cross-sell, consider John's Crazy Socks: on the cart page, they offer a gift wrap add-on for a small fee. It's a low-cost add-on that over 10% of customers choose, bumping up those order values by a couple of dollars (in one sample order it was a 20% increase).

Product Bundling

Product bundling means selling multiple related items as a package, often at a slight discount or with added convenience, to encourage a larger total purchase.

Bundles can take many forms: a bundle of complementary items (e.g., camera + lens + bag sold together), a "kit" or set of products that go well together (e.g., a skincare routine set with cleanser, toner, and moisturizer), or a bulk pack of the same product.

The idea is to increase the units per transaction, thereby increasing the order value. Bundles create a sense of value and savings, the customer feels they're getting more for a good price. They also simplify decision-making.

A real example: MyProtein, a fitness supplement DTC brand, offers protein powder in various sizes. They introduced a much larger 11-lb bulk bag at a lower price per pound, effectively a bundle of product in one package. This upsell bundle appeals to heavy users who spend more upfront in exchange for a volume discount.

Loyalty and Rewards Programs

A loyalty or rewards program can elevate AOV by incentivizing customers to spend more to earn rewards or reach the next tier of benefits.

Customers will often add extra to their cart if they know it earns them something tangible in return. "Spend $100 to get 100 points and a $10 reward" can prompt a $90 cart to creep over the $100 mark.

Data supports this, one study found that customers who redeem points when purchasing spend 39% more on that purchase, on average.

A great example is Sephora's Beauty Insider program. Sephora's loyalty members tend to have higher average spend; they are often tempted to add one more item to get the next 100-point perk or to use a promotional code that requires a minimum spend.

For smaller DTC brands, loyalty programs can be simpler but still effective. Glow Recipe, a skincare brand, introduced a tiered loyalty program with fun names ("Bouncy", "Dewy", "Ultimate" tiers). Such tiers encourage repeat high-value purchases, customers want to unlock the next level for perks or exclusive products.

Dynamic Free Shipping Thresholds

Offering free shipping above a certain cart value is one of the oldest and most effective tricks to increase average order value. Shoppers universally hate paying for shipping so when you present a threshold (e.g., "Free shipping on orders over $50"), many will add extra items to avoid the fee.

The key is to set the threshold strategically just above your current AOV or target AOV. For example, if your typical order is $45, you might set free shipping at $60. Customers with $45 in their cart see that they're close to free shipping and often will find something to add to reach $60.

A study by Salesforce in 2024 noted that your free shipping threshold should be roughly 30% higher than your current AOV, high enough to push customers, but not so high that it feels unreachable.

Many brands display a simple bar or text at the top of the app screen at all times (as Heatonist, a hot sauce DTC, does with a constant banner "Free US shipping on orders $60+"). It keeps the threshold top-of-mind while the customer shops.

Beyond shipping, another variant is "gift with purchase" thresholds. Instead of free shipping, "Spend $75 and get a free deluxe sample" can similarly encourage customers to hit that cart value. La Roche-Posay, for example, offers a free 4-piece sample kit on orders over $70.

Personalization and Product Recommendations

Personalization involves tailoring the shopping experience to each user's preferences and behavior and it's a powerful driver of larger basket sizes when done correctly.

Modern shoppers have come to expect some level of personalization. Surveys show that 80% of customers say the shopping experience should be better tailored given all the data companies collect, and 65% expect companies to adapt to their preferences.

According to Salesforce's data, personalized product recommendations now account for 26% of total e-commerce revenue on average, despite being a small fraction of the content shown. That underscores how effective relevant suggestions can be.

Birkenstock's online store uses personalization to suggest products and saw an increase in AOV by customizing the shopping journey.

How Can Mobile Apps Drive Higher AOV?

App-Exclusive Offers and Features

Many brands now offer mobile apps not just for convenience, but as a channel for VIP customers with exclusive perks. App-exclusive offers can significantly boost AOV by giving customers reasons to shop in the app and load up their cart.

The psychology here is treating app users as an insider club. When customers feel they're part of a privileged group, they often engage more deeply and spend more.

One concrete example: BÉIS, a travel accessories brand founded by Shay Mitchell, leveraged its mobile app to create a VIP experience. They share behind-the-scenes content and product drops exclusively on the app. The result? App users of BÉIS have a 19% higher AOV compared to those on the mobile website.

The app's exclusivity (like app-only product colors and in-app community content) fosters loyalty and bigger purchases. Customers might wait to buy through the app because they know they'll get something extra or just enjoy the experience more.

Mobile UX Improvements

Improving the mobile user experience (UX) of your store whether in-app or mobile web, can indirectly but meaningfully raise AOV. A huge portion of e-commerce traffic is now on mobile devices (mobile commerce comprised about 35% of sales during Cyber Week 2024).

If the mobile experience is clunky, customers may limit their browsing or stick to one item and checkout quickly (or abandon). A smooth, engaging mobile UX encourages users to explore more products and complete multi-item purchases.

Key areas of mobile UX that impact AOV include: navigation and discovery, site speed, and checkout ease. If your app or mobile site makes it easy to find related products (through intuitive menus, filters, or recommendation carousels), users are more likely to add those items.

One notable trend is retailers implementing one-click upsells during checkout on mobile. For example, after you hit "checkout", a screen might appear "Add this popular accessory to your order with one tap, no additional shipping."

What Real-World Results Have Brands Achieved?

Let's look at some real-world examples of how direct-to-consumer (DTC) and e-commerce brands have implemented AOV-boosting strategies:

BÉIS (Travel Goods): By funneling their most engaged customers to the app and offering app-exclusive content and early product access, they cultivated a community that shops more frequently and in higher amounts. The app saw a 19% higher AOV than the mobile website.

Kopari Beauty (Personal Care): This brand implemented a "buy more, save more" upsell on product pages. For instance, on a product that normally sells as one unit, they offer a duo at a discounted rate. This kind of upsell led many customers to choose the 2-pack, effectively doubling the revenue from that order minus a small discount.

John's Crazy Socks (Apparel/Gifts): The gift wrap add-on is a simple cross-sell at checkout that adds $2 to the order. For a company that sells socks (low-priced items), getting an extra $2 is significant proportionally.

La Roche-Posay (Beauty): They implemented the free gift with purchase over $X promo, "Get a 4-piece sample kit on orders $70+". This effectively increased their AOV as customers aimed for that $70 basket.

MeUndies (Apparel): The underwear brand has a section called "Match Me" to encourage buying for couples, matching underwear sets for you and your partner. This is a clever cross-sell where they tap into a social/shared experience to increase AOV.

How Can Small Teams Implement AOV Strategies?

Many AOV-boosting tactics can be implemented incrementally and with modest resources, especially if you're using modern e-commerce platforms like Shopify, WooCommerce, or BigCommerce.

Start with the Low-Hanging Fruit

Some changes require just configuration or simple coding. For example, setting a free shipping threshold is usually a basic setting in your store's shipping options, decide on a threshold (use your current AOV + ~10-20% as a guideline to start), and update your shipping settings.

Similarly, creating a few product bundles can be as easy as adding new bundle products in your catalog (or using a bundling app). You don't need a fancy algorithm to pick a couple of complementary products and sell them together at a discount.

Leverage Apps and Integrations

You don't have to custom-build everything. There are one-click upsell apps, cross-sell recommendation apps, loyalty program apps, etc. For instance, if on Shopify, apps like ReConvert or Candy Rack handle post-purchase and in-cart upsells; Smile.io or LoyaltyLion can launch a basic loyalty points program quickly.

Evaluate which tactic might yield the best ROI for you and try an app in that category. (Pro tip: implement one major app at a time and measure results, rather than 5 at once, to know what's moving the needle.)

Use Your Existing Content and Channels

If building personalization algorithms is out of reach, you can still personalize in simpler ways. For example, manually create "Recommended" collections on your site and promote those in your marketing emails or homepage.

Use your email newsletter or SMS to encourage larger baskets: send an email saying "Our top picks to complete your skincare routine" highlighting items that go well together.

Focus on Customer Value (Not Just Your Revenue)

AOV tactics should ideally create a better experience for the customer. Brainstorm from the customer's perspective: "What would I find useful or delightful that might also make me spend more?"

If you approach AOV increases through the lens of adding customer value, you're more likely to succeed and not face backlash. Plus, satisfied customers tell friends and come back (long-term benefits beyond one order).

What Pitfalls Should You Avoid?

While increasing AOV is generally positive, it's not without potential downsides. It's important to be aware of these pitfalls:

Over-emphasis on AOV vs. Other Metrics

Chasing AOV in isolation can lead to decisions that hurt other parts of the business. For example, you might push an upsell that indeed raises AOV but annoys customers, causing a drop in customer satisfaction or conversion rate.

Is it better to have a higher AOV or a higher conversion rate? Ideally both, but sometimes there's a trade-off. If upsell prompts are too aggressive, some customers might abandon carts. AOV of completed orders might rise, but overall sales could fall if conversion tanks.

Many experts stress balancing AOV with metrics like conversion rate, lifetime value (LTV), and customer retention. A holistic view is needed: it's the long-term revenue and profit per customer that matter, not just squeezing out one big order.

Customer Experience Backlash

Some AOV tactics can feel like nickel-and-diming. For instance, if a site bombards users with add-on offers at every click, it can degrade the experience.

Similarly, setting a free shipping threshold too high above typical order value might frustrate customers who feel it's unattainable, potentially driving them to competitors.

The strategic debate here is short-term AOV vs. long-term loyalty. As one source pointed out, fostering loyalty tends to have higher long-term ROI than single-mindedly boosting AOV at the expense of customer satisfaction.

Discount Dependency

Relying too heavily on discounts or promotions to drive up AOV can train customers to only buy when there's a deal. This can erode margins and brand premium over time.

There's also the pitfall of margin impact: If you raise AOV by giving large volume discounts, ensure you're not sacrificing so much margin that the higher revenue doesn't translate into higher profit.

What Does the Future of AOV Optimization Look Like?

As we look ahead to 2025 and beyond, optimizing Average Order Value is becoming an even more sophisticated game, intertwined with technology and evolving consumer behaviors.

AI and Machine Learning Everywhere

We're already seeing AI-driven recommendation engines, but this will get more advanced. Expect hyper-personalized shopping experiences where the entire app or site rearranges itself to show each customer the optimal mix of products and bundles they are most likely to add.

As one report noted, retailers using AI-driven merchandising strategies can achieve significantly higher order values and as much as 40% more revenue from personalization efforts.

Augmented Reality (AR) and Immersive Shopping

For certain verticals like furniture, fashion, or beauty, AR can help customers visualize products. This not only increases conversion but can increase AOV by giving customers confidence to buy additional items.

As AR becomes more common via mobile devices, we might see "Add entire look to cart" after someone uses an AR styling app, for instance.

Deeper Integration of Content and Commerce

Expect more brands to blend social community, content, and commerce in their apps or sites. For example, live shopping (livestream commerce) where a host demonstrates multiple products often leads to higher AOV because viewers add several of the showcased items to cart.

Content-driven commerce builds that emotional connection and can justify higher spend (the customer feels part of something).

Mobile-First Experiences

The continued shift to mobile shopping means brands focusing on mobile UX are investing in fast, easy, and rich experiences to keep customers shopping longer on their phones.

Progressive web apps (PWAs) and mobile-first designs are becoming standard to ensure mobile shoppers have an "app-like" experience without any hurdles.

Conclusion

Average Order Value is a critical metric for e-commerce businesses, directly impacting revenue growth and profitability. By implementing strategic approaches to increase AOV, from upselling and cross-selling to loyalty programs and personalized recommendations, businesses can maximize the value of each customer interaction.

What makes AOV particularly powerful is that it can be improved without acquiring new customers. Instead, it focuses on getting more value from people already interested in your products.

As customer acquisition costs continue to rise, optimizing AOV becomes even more essential for sustainable growth. The most successful strategies are those that enhance the customer experience while encouraging larger purchases, creating a win-win for both the business and its customers.

The future of AOV optimization lies in personalization, seamless tech integration, and genuine customer engagement. Those who excel at this will enjoy better unit economics and can outpace competitors, reinvesting gains into further growth.

Remember that a sustainable approach to AOV focuses not just on the short-term transaction value but on building relationships that increase lifetime customer value. When customers feel they're getting genuine value from adding more to their cart - whether through better deals, more convenience, or enhanced experiences - they'll reward you with larger orders and continued loyalty.