Why a low average order value is a problem
You know this is one of my favourite topics to talk about, but that’s because it’s so often overlooked, and a focus on it can really change your business around!
I’m going to take you through some key understandings around your average order value, specifically around a low AOV, but keep reading if you average anything under £100 as it’ll all still apply.
So what do I mean by low? Typically anything sub £25 really, although it also all depends on your cash margin. You could have an AOV of £25 but a margin of 80%.
Anyway let’s get into it…
Put simply, AOV is the average amount a customer spends with you in a single transaction. It’s a key metric, not just a number on a spreadsheet, because it gives you insight into how valuable each order is. And if that number is low, well… that’s where the problems start.
How to calculate AOV
Average Order Value equals Total Revenue divided by Number of Orders. This is about orders, not individual customers, so if someone buys from you three times, it counts as three separate orders.
Why a low AOV is bad news for your business
Selling lots of low value items means your overheads like packing, shipping, payment processing, and customer service start to eat away at your profit. Even if you're selling at scale, you're working flat out to make very little back.
Say you want to make £10k this month. If your AOV is £20, that’s 500 orders. If your AOV is £50, that’s just 200 orders. See the difference? More AOV means fewer customers needed and less pressure on you..
If your average order is only £10, and it costs you £8 to get someone to your site through ads, influencers, or anything else, you’ve made £2 before you’ve even packed the parcel. That’s before postage, payment fees or your time. A low AOV makes customer acquisition costs feel very painful, and stores like this can find it difficult to make paid spend work.
One of the main errors I see time and time again is the failure by lots of brands to not encourage customers to buy more once they’re already interested. These people already like your stuff, don't just let them check out with one item when they’d happily buy two or three with the right nudge. The easiest time to get them to buy more is when they’re already buying from you
What causes low AOV?
There are a few usual suspects.
Pricing that doesn’t scale, like super low value items with no incentive to buy more.
Poor product variety. If there’s not much to choose from, people won’t add more to cart.
Lack of cross sells or upsells. If your website isn’t guiding the shopper to buy more, they won’t.
Clunky user experience. If your site’s hard to navigate or confusing, people will just grab what they came for and leave.
And discount overkill. If you’re constantly running sales, customers might wait for discounts and only buy the minimum.
So, how do you fix it?
There are 3 main ways to get people to spend more on your website:
Get them to add more items to their basket i.e get quantity per order up.
Get them to spend more with incentives and value offers.
Introduce more ‘expensive’ categories into your business.
There is also a 4th - increasing your prices! Don’t overlook this, make sure your pricing is level with market value and also your branding/ethos/general vibe and experience.
Here’s some key tactics you can consider for your business:
Product bundling - Bundle things that naturally go together. Take note of what people tend to buy together most often.. Create gift sets around seasons like Valentine’s or Christmas, or moods like self care night in. Use your bestsellers to shift slower stock, and add an exclusive item to sweeten the deal.
Upselling and Cross selling - Upselling means encouraging the customer to go for the bigger, better version. Cross selling means suggesting other things that go well with what they’re already buying. The key here is personalisation so they’re offer products that make sense. Suggest products based on what’s in the basket or what’s frequently bought together.
Free shipping thresholds - No one likes unexpected delivery costs. Set a free shipping threshold, like free shipping over £40, that’s around 20% higher than your current AOV. Visually show customers how much more they need to spend to get free delivery. That extra nudge works wonders. Think about combining free shipping with joining your loyalty club or email list. People love stacking perks and you love growing your email list too!
Limited time offers - Scarcity works. We all know the feeling of FOMO. Time limited deals can drive urgency and push up order value, especially if they involve bundles or exclusives. But don’t overdo it. If everything’s always on sale, people start ignoring your offers altogether.
Smart discounting - Use discounts to reward bigger spends, not just to make a quick sale. Volume discounts like buy 3 and save 10 percent or multi buy incentives can drive bigger baskets without undermining your brand. Keep an eye on your margins and don’t train your audience to only shop when there’s a code.
Live chat support - Live chat gives customers the confidence to spend more, especially on bigger purchases. Whether it’s sizing help, product advice, or just general reassurance, real time support builds trust and stops people bouncing off your site mid shop.
Make every order count
A low AOV doesn’t just mean you’re selling cheaper items. It means you’re working harder to grow your business than you need to be. A few smart tweaks to your product range, your customer experience, and your marketing can nudge up that average spend in a way that feels good for you and your customers.
So go and dive into your data and don’t just look at how many orders you got - look at what’s inside them and how you can help each one be worth that little bit more.
It’s doable for every single brand and it really can make a huge difference to your bottom line.