If you’re an ambitious ecommerce seller looking to uplevel your year-on-year performance, you already know there are a number of KPIs to keep an eye on.

From ROAS to CLTV—and of course, that ever-so-sacred ROI—focusing on the right numbers can absolutely improve your sales performance.

But when it comes down to it, there are really only two main ways to increase the sales performance of any ecommerce store:

  1. Get more users 
  2. Get current users to spend more

Many sellers focus their efforts on the former—and that’s a good thing—but we encourage ecommerce owners to not neglect the second option.

Because increasing your average order value (AOV) is a surefire way to increase your total revenue, and with way less effort than you might think. Today, we’re going to dive deep into AOV and reveal some of the best ways to boost this number for optimal ROI in your ecommerce business.

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What Is Average Order Value (AOV)? (And Why Every Ecommerce Seller Should Know This Number)

Simply put, average order value is the average dollar amount a customer spends each time an order is placed, whether that’s on your own website or a marketplace like Amazon or Walmart.

How to calculate your average order value

In a world of complex KPIs, AOV is one of the easier numbers to put your finger on. 

Simply divide your total revenue by the total number of orders.

AOV = Total Revenue/Total Number of Orders

For example, let’s say the total revenue for the month of January for an ecommerce store that deals in high-end electronics is $56,000 and the total number of orders is 35.

The average order value will be 56000/35. So, for every order, your shoppers spent an average of $1,600 in the month of January.

In this scenario, if you increase your AOV by just 10%, you can deliver a serious boost to your total monthly revenue:

1760*56000 = $61,600

Some of the benefits of increasing average order value are:

For all these reasons, AOV is a metric that deserves your attention. Once you’ve built out your strategy for increasing your AOV, make sure you check in on this number weekly, bi-weekly or monthly to know exactly how well your store is doing.

5 Simple Ways to Increase Your Average Order Value with Complementary Products

1. Group a high-priced product with another high-priced product

You already know segmenting your customers is crucial to the success of your business —and one of the best ways to segment your buyers is based on how much they spend.

When it comes to spending, research has shown that there are generally three types of buyers:

  1. Spendthrifts
  2. Average spenders
  3. Tightwads

Spendthrifts spend the most because they feel almost zero buying pain. This makes them the easiest group to appeal to with your complementary products.

Because spendthrifts are impulsive when it comes to buying, grouping a perfect high-priced complementary product with your already higher-priced main product is a great way to increase your average order value.

You might be wondering: 

Why not combine a high-priced and low-priced product?

There are two main reasons why you don’t want to take that route:

Reason #1 – Categorical Reasoning

Research carried out by Professor Alexander Chernev of Northwestern University and Professor Aaron Brough of USU suggests that the conventional marketing wisdom of grouping expensive and inexpensive products may be hurting rather than increasing sales.

Due to a process called categorical reasoning, bundling a high-priced and low-priced product makes people devalue your entire product grouping and reduces their willingness to pay.

Reason #2 – Spendthrifts prefer to pay more

Studies on the buying behaviors of spendthrifts have shown that they perceive high-priced products as more valuable and are even willing to pay additional fees, like express shipping fees, etc., if they’re assured of getting greater satisfaction.

If you’ve got a fair number of spendthrifts in your customer base, defying the conventional wisdom and adding high-end complementary products could be a great way to boost your AOV.

Most importantly, when it comes to marketing to spendthrifts, make sure to keep the focus on the pleasure they’ll get from buying your products. 

Use five-star reviews, raving customer testimonials, and compelling product descriptions that focus on the emotional end benefits of buying your products in order to assure them that satisfaction is guaranteed. ✔️

?Pro tip: Amazon and Walmart sellers can easily add product bundles to their offerings to instantly increase AOV depending on the type of shoppers most likely to purchase from them. You can even offer shoppers the option to create their own customized product bundles.

2. Upsell a high-priced complementary product after a low-priced main product

We all know upselling is another great way to boost your AOV. 

But instead of suggesting an expensive version of the same product, try offering a high-priced complementary product.

For example, if someone just ordered a low-priced headset, you can offer suggestions of expensive complementary products such as a tablet or laptop.

Make sure your suggestions are relevant to the customer’s needs and expectations and that the perceived value of buying an additional product is high.

Also, when offering complementary upsells, you don’t want to suggest products with a price range that’s way out of the customer’s league. The ideal products should be more expensive, but not too expensive that they turn your customers off.

?Pro tip: Leverage Amazon DSP to retarget your customers and bring them back for upsells. Amazon’s shopper data makes it easy to identify those audiences that have already shown interest by browsing or buying your products.

3. Offer a complementary product with limited availability

The principle of scarcity when it comes to buying behaviors tells us that the rarer or harder it is to obtain a product or offer, the higher the value in the eyes of the customer.

So, instead of merely suggesting a complementary product, try attaching a constraint that makes the customer want it more.

You could say that only a limited number of products are available, and it’s a product made by a very good or exclusive manufacturer—one that’s tough to find, so they better act now to avoid missing this deal!

Or, you could offer a one time discount if they purchase the complementary product together with the product they initially came for.

?Pro tip: While this tip is hard to replicate on a marketplace, one tactic to try is to offer shoppers a coupon at checkout. By having a clear incentive to purchase another item, they’ll be much less likely to wait on an item they’ve been thinking about.

4. Reduce the price for a set of grouped goods

Here, you take your product grouping a step further by offering a discount to customers who buy a particular set of complementary products.

The beauty of this approach is that it can work for groupings of any type of complementary products, provided the customer sees the value in buying them together.

This is an especially ideal strategy for seasonal offers. For example, you could offer a discount on a group of men’s skincare products and market it as the perfect set for father’s day.

The only thing you’ll want to keep an eye on when dealing with reduced prices, is to make sure you’re not offering your products at a price that is too low just because you want people to buy more.

Dropping your prices too low in an effort to sell more complementary products can actually reduce your AOV and lock you into a vicious cycle of too much downward pressure on your prices.

?Pro tip: From your Seller Central account, create a promotion offering a discount on a complementary product. Amazon will then display this promotion in your product listings, increasing the likelihood that shoppers will buy both products. Over time, these products may be featured as ‘Frequently bought together’.

5. Free shipping order minimum

Customers love free shipping. ?

A study carried out by the National Retail Federation reported that 65% of customers said they look up free shipping thresholds before adding items to their online shopping carts.

Even better, they’re often willing to buy additional products if it means qualifying for free shipping.

You can take advantage of this super simple way to increase your AOV by offering complementary products with price ranges which, when added to the price of the product they’ve already added to their cart, will help them meet the free shipping order minimum.

For example, if your free shipping order minimum is $120 and a customer orders a $75 product, you can suggest complementary products with a price range of $45-$50.

They get the free shipping, you get the AOV boost. It’s a true win-win.

?Pro tip: Use your marketplace’s free shipping thresholds wherever possible to make it extra easy for them to keep adding products to their cart.

Bonus Tips to Increase Your AOV without Complementary Products

Complementary products are a fantastic way to boost your AOV, but they do require time, effort and a set strategy.

If you’re looking at other ways to increase your AOV without launching into new product groupings or completely new product lines, here are a few other simple ways to make it happen.

Not only that, split testing will also help you get to know and understand the purchasing patterns of your customers, which can help with future marketing and advertising, potential expansion opportunities, new product lines and more.

In split testing, just like in a science experiment, you test variants against a control. 

You’ll create multiple versions (the variants) of your website and test them against an original version (the control) to see which performs better. The one with the highest conversion rate is your winner. 

Other Important Metrics that Influence Average Order Value

In order to stand above the competition and capitalize on the ecommerce gold rush, sellers need smart strategies for understanding the real numbers behind their business.

The KPIs you choose will always depend on your unique goals and customer base, but here are a couple other important metrics to watch, along with your AOV:

The future of ecommerce is all about customer experience. And it’s a bright future indeed. 

In Q3 2020 alone, there was a 44% increase in ecommerce sales for online sellers in the US. During that same period, SellersFunding clients have seen, on average, an 85% increase in sales compared to the previous year.

When you have access to the working capital you need, you can sidestep costly delays in marketplace payouts, keep your cash flow strong and ensure that your customers keep coming back for more.

Ready to hit the next level? At SellersFunding, we know eCommerce. We offer a range of flexible working capital solutions designed to give you easy, transparent access to the funds you need to grow and profit. Learn more here.