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Glossary » AOV

AOV

What is the Average Order Value?

AOV, also known as the average order value, is an essential part of the E-commerce Industry. 

AOV is an E-commerce metric that tells about the average amount of dollars spent when a customer makes a purchase or places an order and also helps identify consumer behavior by seeing whether the AOV is high or low. A low AOV usually means that the customer prefers making small purchases. 

How to Calculate AOV

The average order value is calculated by dividing the revenue a firm earns over a specific period by the number of orders placed during that period.

So, the average order value is the revenue as per the orders.

Pros of Average Order Value 

The Pros of Average order value include the following:

  1. Increased Profits
  2. Better Prices at lower cost
  3. Good Reputation
  4. More exposure to social media

Cons of Average Order Value

  1. AOV doesn’t account for your cost
  2. A wide Price range can skew your AOV

Frequently Asked Questions

Question: What does the Average Order Value Indicate?

Answer: Average Order Value indicates the average amount of dollars spent when a customer makes a purchase or places an order at that time period.

Question: What is a good AOV for Shopify?

 Answer: Anything more than US$ 192 would put you in the best 20% of Shopify stores

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