Peel Analytics

Every order tells a story, not just about how many customers buy, but how much they spend when they do. Average Order Value (AOV) captures that insight. By tracking AOV, e-commerce brands understand purchasing behavior and find opportunities to drive higher revenue from the same traffic.

What is Average Order Value (AOV)?

Definition: AOV is the average dollar amount spent each time a customer places an order.

Formula: AOV = Total Revenue / Number of Orders

Example: If your store generates $50,000 from 1,000 orders in a month, your AOV is $50. 

Why AOV matters in e-commerce analytics

1. Revenue Efficiency: Higher AOV means more revenue per customer, without spending more on acquisition.
   
   
2. CAC Leverage: When AOV rises, CAC’s impact lessens — every new customer acquired generates more upfront revenue.
   
   
3. Strategic Pricing: AOV reflects how customers perceive value and helps brands optimize bundle pricing, discount thresholds, and upsell strategies.
   
   

In Peel, AOV can be segmented by channel, product line, or customer cohort to uncover which strategies truly lift order size.

How to increase AOV

• Upselling & Cross-Selling: Recommend complementary products or premium versions during checkout.
  
  
• Bundles & Kits: Package products together at a slightly discounted rate to encourage higher cart totals.
  
  
• Free Shipping Thresholds: Set a minimum spend requirement (e.g., free shipping above $75) to nudge higher AOV.
  
  
• Loyalty Rewards: Offer bonus points for larger purchases.
  

FAQs

What is a good AOV for e-commerce?
It depends on the industry. Beauty might see $40–$70, while luxury fashion may average $300+.

Does AOV include shipping and taxes?
Usually no — AOV focuses on product revenue, but brands can define it differently depending on reporting.

How does AOV affect LTV?
Higher AOV directly increases LTV, since each order is more valuable.

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