Definition

Average Order Value (AOV) is the average amount a customer spends per transaction. It is calculated by dividing total revenue by the number of orders in a given period.

Detailed Explanation

AOV = Total Revenue ÷ Number of Orders

Increasing AOV is often cheaper than acquiring new customers. Tactics include upsells, cross-sells, bundles, free-shipping thresholds, and volume discounts.

AOV directly affects ROAS break-even: higher AOV means you can afford a higher CPA/CPC while remaining profitable.

Nepal Context

Daraz and local e-commerce stores in Nepal see AOVs from NPR 500 (impulse FMCG) to NPR 15,000+ (electronics). COD-heavy markets often have lower AOV due to smaller trial orders — encouraging wallet pre-payment with discounts can raise AOV.

Practical Examples

  1. NPR 200,000 revenue from 80 orders → AOV = NPR 2,500
  2. Add “Complete the look” cross-sells on product pages to lift AOV 15–25%.
  3. Set free delivery at NPR 2,000 when current AOV is NPR 1,600 to nudge basket size.

Key Takeaways

  • AOV = revenue per order; track weekly and by traffic source.
  • Raising AOV improves unit economics without increasing ad spend.
  • Segment AOV by new vs. returning customers — they behave differently.

Common Mistakes

  1. Optimizing AOV with aggressive upsells that hurt conversion rate — net revenue may drop.
  2. Ignoring shipping and discount impact — net AOV after discounts matters.
  3. Using AOV alone for profitability — margin per order is the real metric.