How to Calculate and Improve Your Shopify Stores Average Order Value (AOV)

Imagine if every transaction in your Shopify store brought in more revenue without increasing your customer acquisition costs. That’s the power of understanding and improving your Average Order Value (AOV). For Shopify store owners and e-commerce entrepreneurs, AOV is a metric that provides clear insight into how much customers are spending per transaction. Best of all, it’s a metric you can influence through actionable strategies.

We’ll walk you through everything you need to know about Shopify AOV—from calculating it and understanding benchmarks to proven methods for driving it higher.

What is Average Order Value (AOV) and Why Does It Matter?

AOV is the average amount a customer spends each time they make a purchase in your Shopify store. It’s calculated using a simple formula:

AOV = Total Revenue / Total Number of Orders

For example, if your store brought in $20,000 with 400 orders in one month, your AOV would be $50.

Why does AOV matter? Because it directly influences your store’s profitability. A higher AOV means greater revenue with the same number of orders, helping businesses offset costs like shipping and advertising. Enhancing AOV is also more cost-effective than acquiring new customers because you’re maximizing the value of your existing ones.

What is a “Good” Average Order Value for Shopify Stores?

There’s no universal “good” AOV for Shopify stores, as it varies based on factors like industry, product types, and region. That said, benchmarks can provide a reference point. According to data from Dynamic Yield, here’s what AOV looked like by region and industry as of October 2024:

AOV Benchmarks by Region

• Global AOV: $133

• Americas: $204

• APAC: $160

• EMEA: $112

AOV Benchmarks by Industry (Global)

• Luxury and Jewelry: $265

• Fashion, Accessories, and Apparel: $194

• Home and Furniture: $247

• Consumer Goods: $199

• Food and Beverage: $113

• Beauty and Personal Care: $71

• Pet Care and Veterinary Services: $83

If your AOV seems low compared to the benchmarks, don’t worry! These figures are averages, and your store’s AOV will depend on factors like the types of products you sell and customer purchasing behavior.

The Downsides of Solely Focusing on AOV

While AOV is an essential metric, relying on it exclusively can be misleading. Here’s why:

1. Skewed by Outliers:

   A single large purchase can inflate your AOV, giving an overly optimistic view of performance.

2. Neglecting Repeat Buyers:

   A high AOV doesn’t necessarily mean loyal customers. For long-term success, focusing on metrics like Repeat Purchase Rate (RPR) and Customer Retention Rate (CRR) is crucial.

3. Customer Value Misalignment: A one-time high-value customer may not contribute as much value as a loyal, repeat buyer over time.

To create a balanced growth strategy, complement AOV with these metrics:

• Repeat Purchase Rate (RPR):

  Measures the percentage of customers who make repeat purchases.

Formula:

RPR = (Number of Customers Who Make Repeat Purchases / Total Number of Customers) x 100

• Customer Retention Rate (CRR): Tracks the proportion of loyal customers.

Formula:

CRR = (Number of Customers at End of Period - New Customers) / Starting Customers x 100

• Customer Lifetime Value (CLV): Estimates the total revenue a customer generates during their relationship with your brand.

Formula:

CLV = (AOV x Purchase Frequency) x Average Customer Lifespan

Proven Strategies to Boost Your Shopify AOV

If you’re ready to take your Shopify store’s AOV to new heights, here are actionable strategies:

1. Offer Free Shipping Thresholds

Encourage customers to spend more by setting a free shipping threshold. For example, “Spend $50 and get free shipping.” This small incentive can nudge shoppers to add extra items to their cart.

2. Create Product Bundles

Bundle complementary products to increase the perceived value and encourage higher spending. For example, a beauty store might bundle a cleanser, toner, and moisturizer at a slight discount.

3. Offer Free Gifts for Minimum Orders

Reward customers with a free gift if they reach a specific spending amount. For instance, “Spend $75 and receive a free tote bag.”

4. Upsell and Cross-Sell

AI-powered apps like Bold Upsell make it easy to suggest upgrades or complementary products during the checkout process. Cross-selling encourages customers to add related items, like pairing shoes with a matching handbag.

5. Implement a Loyalty Program

Loyalty programs are a long-term solution to driving repeat purchases and increasing AOV. By offering rewards like points for spending more or exclusive discounts, you incentivize larger purchases and deeper engagement.

Why a Loyalty Program is a Game-Changer for AOV

Loyalty programs, such as those powered by apps like Loyalty Wizard, are among the most effective tools for improving your Shopify AOV. Here’s why:

1. Unlock Valuable Customer Data

Loyalty programs generate zero-party data, including purchase frequency, rewards redemption rates, and customer lifetime value. This data allows you to segment customers and create targeted marketing campaigns that encourage higher spending.

2. Gamify Buyer Behavior

Tiered loyalty programs motivate customers to spend more by offering rewards for increased spending. For example, spending $500 a year might unlock “Gold” status, with benefits like exclusive discounts or early access to sales.

3. Personalize the Shopping Experience

Leverage loyalty data to personalize marketing efforts, such as upsell emails or customized product recommendations, to engage your best customers effectively.

Takeaways for Shopify Store Owners

Calculating and improving AOV is critical for scaling your Shopify store’s profitability. With strategies like product bundles, free shipping thresholds, and loyalty programs, you can easily give this metric the boost it deserves.

To maximize success, pair AOV optimization with other key metrics like Repeat Purchase Rate, Customer Retention Rate, and Customer Lifetime Value to create a well-rounded approach to growth.

Looking for the easiest way to implement a loyalty program and take your Shopify AOV to the next level? Try Loyalty Wizard, a Shopify-exclusive platform designed to drive brand loyalty and improve key metrics like AOV and CLV. Sign up today with our 100% free trial to start building the next chapter of your store’s success.