Average Order Value increase i.e. AOV increase is a key lever that boosts profitability for a DTC store. The more your customers spend on products in your store, the higher net profit margins your business gets.
AOV increase helps reduce costs such as manufacturing costs, pick and pack fees, shipping costs, advertising costs etc. AOV increase also helps DTC brands to become more profitable per order. In summary, AOV can accelerate store growth and put more money in your pocket. More money means a better ability to spend on paid advertising and product development. This means its a good thing, right?
Benefits of Average Order Value Increase
Average Order Value (AOV) increase results in improved net profit margins, increased cash flows, more inventory liquidation, helping reducing customer acquisition costs (CAC) and reduce payback periods
Why Average Order Value Increase Matters for DTC Stores ?
Knowing the average order value (AOV) offers a window into shopper behaviors and how much they are spending on your products.
By gaining an insight into how much your customers are spending on each order, one can plan pricing and marketing strategies that accelerate growth. When you improve your average order value (AOV) it results in directly growing your revenue and profits.
A higher AOV is an absolute must to manage your unit economics with rising customer acquisition
15 Ways to Bolster Average Order Value
1. Strive for rapid product extension launches
this should be the aim, not only in engaging customers, but also in helping unlock an entirely new consumer segment.
New customer segments will help unlock a new scent, new flavor, or new blend. Besides this, it provides an opportunity to shift average order value (AOV) upwards. This helps fund product innovation and in turn will grow customer loyalty and reduces price sensitivity.
2. Align Product Volume with Demand
Update product volume and SKU availability to match customer demand. Sundays, a dog food brand noticed that many of its customers were buying 2-4 packs per order, so they launched two new SKUs, 2X and 4X the original size, and it doubled the AOV overnight!
3. Bundle and Package Well
Smart bundling strategies are built on a foundational understanding of customer preferences. Incentivize the customer with more price, value, or convenience in form of subscription offers to grow brand loyalty and retention.
Bundled bestsellers, frequently bought together items increase both value and convenience to the shopper. Above all, increased customer spending results in lowering shipping costs and improves customer loyalty and retention.
A good packaging strategy not only enhances brand identity and builds trust, but it also invokes customer purchase preference. By adding feature benefits clearly on the packaging as well as by demonstrating use cases of complementary products together – customers would better appreciate your brand offering.
Customers are also more inclined to try more of your product launches and extensions when brands provide more benefits and communicate them clearly. Bundling and packaging the right products for the right customer leads to AOV increase !
4. Offer Packaging and Bundling Options
One of the most effective ways to AOV increase is by bundling products together (3-5 products). This means selling a set of products together as a single unit.
The DTC brand, BOOM by Cindy Joseph Offers BOOM Bag Plus – this bag includes the Boom Stick Trio, Boom Silk, Boom Nectar, Boom Scrub, Boom Gold and Boom Clean. The Boom Bag Plus retails for $288.9 USD with a 5% discount off.
Similarly, Dr. Squatch, the personal soap care DTC brand showcases various bundled offers across their collection pages. Their bundled offers are starter bundles, bestseller bundles, full routine bundles, soap sets, deodorant sets and signature scents.
Each of these bundles are thoughtfully curated to meet the needs of a specific customer segment. The curation must ideally factor in price savings, lowered shipping costs besides outstanding variety of fragrances to choose from.
5. Implement Custom Bundles
DTC brands welcome customers to build their own custom bundles. Obvi, the DTC supplement brand, invites its customers to build their own bundle and in turn offers both value in terms of price (offering a 20% discount) and lower shipping costs.
These custom bundles are offered across beauty, weight-loss, feel-good, immunity and snack products and lead to AOV increase.
6. Amplify Social Proof to Grow Trust
Leveraging social proof across your website or store is key for average order value growth i.e. AOV increase. Use customer testimonials on the home page and product pages liberally.
Include product reviews from customers, encourage customers to post user generated content in the form of images, videos of their unboxing, product demo or even product in use experience. This helps grow brand trust, and improve customer experience.
Make getting customer testimonials part of the customer journey – always send a follow-up email to check on the customers product experience post purchase. Leverage feedback to make your product and services better.
7. Upsell a Better or Higher Priced Product
Upselling is a time-tested method to grow your average order value (AOV). For example, if you are selling cruelty-free organic facial cosmetics, one could upsell night cream along with a daily moisturizing lotion or day-cream.
Glossier upsells items wonderfully, leveraging sets. For example, it sells its Milky Jelly Cleanser and upsells the 3-Step Skincare Routine Set which offers a cleanser+ moisturizer + lip balm together as well resulting in savings of $52.
Glossier also upsells the milky jelly cleanser with future dew which is a conditioning facewash and an oil-serum hybrid set, purchase of which results in savings of $42.
8. Cross-Sell Frequently Bought Products Together
Smart merchandisers understand the importance of stocking frequently bought items together. The same rule should apply when designing an ecommerce store.
Learn how Native Pet got a 15% AOV lift with intelligent in-cart cross-sells leveraging Rebuy here.
Showcase Frequently Bought Items Together
By showcasing frequently bought together items, an ecommerce store can enhance average order value. Wayfair, the home decor brand, showcases a Tracey Square Cotton Pillow Cover. It adds product detail pages and showcases frequently bought together details for average order value growth i.e. AOV growth for this SKU.
Interpret Order History
Customer purchase pattern trends can be interpreted from purchase order history. This helps identify buying patterns and inform your cross-sell and bundling strategy. Research on your customer avatar would also go a long way.
9. Look to Bundle Complimentary Products Together
Customers tend to scout to save both time and money while gaining convenience. When an ecommerce store shares complimentary products on their product detail pages it results in customers achieving their goals swiftly
10. Offer Limited Time Offers
Limited time offers are simple and a very effective approach to boost average order value growth i.e. AOV increase
11. Offer Email and SMS Marketing
Ecommerce Stores can leverage Klaviyo for email marketing and PostScript or Attentive for SMS marketing services. Requesting for a product review post purchase and collecting valuable customer feedback is a great way to embrace a customer centric feedback loop.
Email and SMS Marketing also makes for a great opportunity to introduce complementary products, frequently bought together, sell bestseller items or drop-dead deals. Most definitely increased trust leads to increased repeat purchase rates and AOV increase. Learn four email personalization strategies to grow revenue and loyalty here.
Post-purchase emails also focus on new product education. Rituals, a health supplement focused DTC brand, does a great job by focusing on brand education and boost AOV growth post purchase. Rituals does this by leveraging the email post-purchase series.
12. Offer Time Sensitive Deals
Time sensitive deals or limited time offers create fear of missing out i.e. FOMO and result in generating excitement and a sense of urgency to make a purchase and initiate action by the customer.
BlendJet 2 Mixer offers a limited time offer on the July 4th Sale. Offers 10% off on a purchase of a single BlendJet2 mixer. It also offers 12% off on a purchase of two BlendJet2 mixers and 15% off on a purchase of three BlendJet2 Mixers. BlendJet2 Mixer sleeves and 6 Jet Packs are sold as frequently bought together items.
13. Adjust Free Shipping Thresholds
Providing a minimum order quantity threshold, incentivizes the consumer to increase cart size, resulting in a AOV increase e.g. by offering a free shipping threshold on all orders over $75.
14. Offer Product Discounts
Allowing for product discounts when spend thresholds go beyond a minimum spend and are a good way to initiate AOV increase. For example, get $10 off when you spend $75 or more on full price items or new in stock items. “The Body Shop” brand offers $30 off on any 4 items to boost AOV increase !
15. Sell Hero Products Together
By selling a set of hero products or key hero products with a high margin with those with lower margins, ecommerce stores can quickly witness AOV increase while lowering shipping costs. Some examples of great bundle offers are as listed below:
Glossier Sets and Kits:
Are a common example of an excellent bundling strategy. Glossier is “The Makeup focused”, gifting sets also offers a makeup set, a ” Boy Brow + Generation G” duo as well as” The Dewy Look” sets within price ranges of $35-$55 with limited time offer discounts of between $5-$12.
“The 3-step skincare” routine offers cleansers, moisturizer and a lip balm online.
Bombas:
Offers women’s lightweight quarter sock sets both 4-Pack and 8-Pack with 10% discount savings. The lightweight socks are special sets as part of the summer collection and come in pastel and tie dye colors.
