Average Order Value (AOV) is a key metric for evaluating the performance of an e-commerce and marketing campaigns.
It is used by both marketers and advertising specialists to measure the quality of traffic and sales strategies.
Definition
Average Order Value (AOV), or average order value, indicates the average amount spent by customers each time they make a transaction on a site or app.
It basically shows how much each generated order is worth on average, allowing you to understand whether users are buying a few cheap products or richer, high-margin shopping carts.
Formula and calculation
The formula for Average Order Value is: AOV = total revenue / number of orders in a given period.
For example, if in one month a store generates €10,000 in sales with 400 orders, the AOV will be €25, which is the average value of each shopping cart in that period.
Why it is important
AOV is a central metric because it directly affects revenue, marginality, and return on investment of ADV campaigns.
A higher AOV, for the same customer acquisition cost, allows for higher profits and better absorption of the increased cost of advertising traffic typical of paid channels.
Use in advertising and strategy
In the advertising context, Average Order Value is used to define free shipping thresholds, bundle offers, and upsell and cross-sell promotions that encourage the user to add products to the cart.
At the strategic level, AOV is often analyzed along with cost per order, conversion rate, and customer lifetime value to understand whether it is worth investing more on acquisition or strategies to increase the value of each transaction