Have you ever wondered how much money customers usually spend on a single purchase? That’s what we call the average order value. By analyzing AOV, you can find more opportunities to increase your revenue by encouraging customers to spend more per order.
Yet, there are many dropshipping beginners who do not know how to increase the AOV for their stores. Thus, to help fellow dropshippers scale their business, this article will share some tactical tips on how to increase AOV.
What is Average Order Value?
Average order value (AOV) is a common term to calculate the average amount of money that customers spend in one transaction. It’s calculated by dividing your store’s total revenue by the number of orders during a specific period.
For eCommerce stores, AOV is an important concept. Because it helps businesses understand how much their customers usually spend and how they can encourage customers to spend more.
Furthermore, increasing the AOV can bring many benefits for dropshipping stores, here are some examples:
- More Revenue: The most obvious benefit of high AOV is you can earn more money from it. It can lead to an increase in overall revenue for your dropshipping store, which means more money in your pocket.
- Cost Savings: When customers spend more money on a single order by buying multiple products, you can save more on package shipping and handling costs. For example, if a customer orders two products instead of one, the store only needs to ship one package. In this way, you don’t have to ship two products separately and pay the shipping costs twice.
- Improved Marketing: Analyzing AOV can help you identify opportunities to improve your marketing strategies. This includes promoting higher-priced products or offering discounts for larger orders, which can lead to more sales and higher revenue.
6 Ways to Increase Average Order Value
Branding Your Business
Branding is an effective marketing strategy to improve the credibility of your products. With a distinctive and memorable brand, you can add more value to your store’s products while getting more repeat customers.
There are several common methods you can use to create a brand. For example, selling print-on-demand (POD) products is a popular option preferred by many dropshippers.
With a supplier who provides printing services, you can create custom logos for products like t-shirts, phone cases, and mugs. By offering unique designs that customers can’t find anywhere else, you can create a unique brand that stands out from the competition.
Furthermore, applying custom packaging can also be a great way to brand your dropshipping business. Good packages can bring a sense of excitement and anticipation to customers when they receive their orders. It leaves customers with a positive impression of your brand, making them more likely to remember your business.
Besides, you can consider sharing your business’s origin story, your values, and your mission with the customers. Just like many people would like to support eco-friendly brands. A good brand mission can make more customers actively support your brand.
In addition, if you are looking for a supplier who provides printing services, you can check out wholesale platforms such as CJdropshipping.
On CJdropshipping, there are thousands of POD manufacturers that offer printing services and custom packaging. With countless available customization options, you can create your own branded products with these suppliers.
Free Shipping Thresholds
Free shipping services are attractive to customers. But for many dropshippers, providing free shipping service is hard because it may bring a negative impact on store revenue.
Therefore, only offering free shipping for orders over a specific threshold can be a good solution to avoid financial loss while increasing AOV. Because when customers see that they can get free shipping by spending a certain amount of money, they are often motivated to add more items to their cart.
For example, if a customer has $20 worth of products in their cart, and your free shipping threshold is $30. To get free shipping, the customer may add an additional $10 worth of products.
Moreover, if you are using Shopify, you can set up a notification that reminds customers at checkout of the free shipping threshold. This can be achieved through various apps available in the Shopify App Store.
Additionally, many customers will not only browse one store when shopping. While they are comparing different stores, the free shipping thresholds can make your products more appealing to customers.
However, it’s important to make sure that the free shipping offers won’t cut into your profits. You can also experiment with different discount thresholds and analyze the impact on your sales and AOV.
Offer Bundle Options
Creating bundle deals also is a great way to boost your average order value and entice customers to make larger purchases. When customers realize they can get benefits when purchasing bundle items, they will be more likely to buy more.
For example, if you sell phone accessories, then a $2 phone case can be an attractive free gift option. You can offer a bundle deal where customers can buy three cases and get a fourth free instead of buying them separately.
Therefore, providing customers with bundle deals can not only increase your AOV, but also make your store products appealing to customers.
However, just be sure to choose your free gift items carefully and price your products strategically. Because not all bundle deals are profitable and suitable, choosing relevant products that customers actually need would be a better option.
Provide Upsell and Cross-sell Products
Upselling and cross-selling are common practices to encourage customers to purchase more items in a single order. Although upselling and cross-selling are both sales techniques that can help increase revenue, they work in slightly different ways. Now, let us briefly explain how can upselling and cross-selling increase your AOV for your business.
Upselling is the act of encouraging customers to purchase more expensive items or add-ons to increase your AOV and profit. For example, if a customer searches for a keyboard in your stores, then you can recommend other keyboards with upgraded features.
Because there are a lot of customers willing to pay more to get better products, but not all customers know there are better versions of what they want to buy. So giving some upsell product suggestions may also help customers find what they want.
Cross-selling is the art of suggesting products that complement what a customer is currently browsing. It is highly effective when the additional purchases are relatively small compared to the initial purchase.
Let’s say you are selling keyboards, then you might give customers some suggestions on the cart page by recommending mice, USB chargers, or other complementary computer products. In this way, customers are more likely to purchase multiple products in one order.
Yet, when you are recommending products to your customers, you should always keep in mind to consider what customers actually need. Because redundant or pushy recommendations sometimes also have a negative impact on customer experience.
Give Cashback and Gift Cards
You can give cash back and gift cards to increase AOV for your store. For example, if a customer spends $50, you can offer this customer a $5 cash back reward in the form of a gift card. By using the gift card, the customer can save $5 on his or her next purchase.
Therefore, offering cash back and gift cards can encourage customers to spend more for orders to reach the amount. Besides, it also reminds them to come back to your store next time, leading to an increase in repeat customers.
However, when you are offering gift cards and cash back, just ensure the gift card offers won’t cut into your profits. Because if some products in your store are cheaper than the gift card, then your customer may buy things for free with this card.
Display Savings For High-Value Orders
Many individuals enjoy the satisfaction of saving money, in contrast, people may experience pangs of guilt when spending a lot of money. This is why displaying savings for high-value orders is another way to increase the average order value.
For example, you can offer a 10% discount on orders over $50 and a 15% discount on orders over $100. Then customers will be encouraged to choose the $100 option. When your customers see the more products they buy the more money they can save, then they will tend to buy more for each order.
In this way, customers may feel satisfied while reducing the guilt of spending money. Therefore, showing cost savings is an effective method to improve customer experience as well as increase AOV.
In summary, AOV is a helpful metric that gives drop shippers insights into their customer’s spending habits. It enables sellers to optimize their pricing and marketing strategies and ultimately leads to revenue growth.
Here are the 6 effective ways to increase AOV for a dropshipping business:
- Branding Your Business
- Free Shipping Thresholds
- Offer Bundle Options
- Provide Upsell and cross-sell products
- Give Cashback and Gift Cards
- Display Savings For High-Value Orders
By using these methods, your business can have more sales, more revenue, better customer experiences, and a healthier business model. So, don’t be afraid to suggest complementary products or offer discounts