Achieving Mastery in Average Order Value for Fashion E-commerce Stores: An Essential Guide
Average Order Value, or AOV, is an important metric for e-commerce businesses. It measures the average amount of money a customer spends per transaction. A higher AOV means that a business is making more money from each sale, which allows them to spend more on ads for first time buyers and scale their brand to next level.
There are several ways to increase AOV,
Including increasing prices,
Offering free shipping,
And creating bundles.
One way to increase prices is through time-based A/B testing.
This involves choosing your highest volume proprietary product/design which is different then anything out there and increasing the price by 20%.
Compare the total revenue from before and after 14 days if there was an increase, to see what was the impact.
Another option is to duplicate a high AOV product, increase the price by 20% on the duplicate, and then compare the resulting revenue once conversions are above 20.
A third option is to test the price increase with your email list by creating a secret page with the product and increased pricing, measuring the number of clicks, and calculating the conversion rate and revenue after 2 -3 email broadcasts to that product page.
Another way to increase AOV is by increasing quantities. Most customers purchase more than one item, which can lead to a better customer experience and efficiency of scale. Identifying the right product to increase quantities for can be done by checking the average order quantity and starting with products that have an average greater than 1.
Offering coupons on the product page or site-wide can also encourage customers to purchase more. for example buying 5 belts instead of 1, or buying a bundle to 3 tie's instead of 1.
Free shipping is another powerful way to increase AOV. By offering free shipping above your AOV, it creates an strong emotional incentive for customers to purchase more items.
Brands can also leverage freebies on checkout page to upsell other goods.
Creating bundles is another way to increase AOV.
Bundled pricing is less likely to tick off customers and can lead to efficiencies of scale. Once a bundle is created, it should be promoted on the homepage, newsletter, related items section, on the product page, and at checkout.
Bundling is different than increasing quantities as you can bundle different items together, for example selling a bundle of leather wallet, belt and cuff links
Targeting "whales" (customers with a higher AOV) and building your business around them can lead to a 10X increase in business. This can be done by surveying them, merchandising for them, acquiring them, and retaining them.
Don't focus on customer which barely accounts for 20% revenue and are the cause of 80% expenses. Make sure you treat the heavy spenders well so you can retain them for long term. Those "Whales" not only will buy more and often from you but when they refer your brand to someone, they are also likely to more and at premium prices from you. Treat them well by keeping them engaged on email.
In conclusion, increasing AOV is an important metric for e-commerce businesses and can be done by increasing prices, increasing quantities, offering free shipping, creating bundles, and targeting "whales."
It's important to test different strategies and see what works best for your specific brand at this moment in time and space.
If you need assistance or guidance learning how to implement it step by step, book a call right now.