What is average order value?
The average sale amount per customer or per order.
In detail
It is calculated as sales over a period ÷ number of orders (or customers). Sales can be broken down into “number of customers × average order value”, so adding customers and raising average order value are the two basic paths to growth.
For example
A wholesaler has monthly sales of RMB 1 million from 400 orders, so the average order value is RMB 2,500. If bundled selling raises it to RMB 3,000 with the same number of orders, sales increase by RMB 200,000.
How companies use it
Raise average order value through bundles, spend-threshold offers, recommending related products and similar methods. Also look at it separately by customer type, because averages easily hide differences.
Common misconceptions
Assuming that any rise in average order value is good. If it rises because small customers have left and only large ones remain, the increase is a warning sign.
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