If you’re an Amazon seller who is facing increased costs and decreased profit margins – or you just want to make more profit – then increasing your Amazon average order value is essential.
By improving this vital metric you can grow your business faster and more profitably.
But with Amazon limiting the marketing strategies third-party sellers can deploy on the platform, what can you actually do to increase the size of the orders customers are placing in your store?
We’ll cover all that and more in this guide to increased order values, so read on!
What is Amazon Average Order Value?
Amazon Average Order Value (AOV) is the average amount that a customer spends per order when purchasing your products on Amazon.
How do you calculate Average Order Value?
To calculate AOV, simply take the total revenue your online store has driven over a given period of time and divide it by the number of orders placed during that same period.
For example, let’s say you sold 100 products in January and your total revenue for the month was $10,000. Your AOV for January would be $100 ($10,000 / 100 orders).
What is a good Average Order Value?
A recent study placed the average order value across all transactions in the Amazon US marketplace at $47.31.
Common logic, then, would suggest that anything over this figure is a “good” average order value.
However, it’s not quite as simple as that and context is important.
If you’re an online store selling mattresses on Amazon a $47 average order value will likely put you out of business quicker than a flash.
However, if you’re an online store selling fidget spinners? Then it’s likely a $47 AOV would be cause for a company-wide party.
For this reason, I’d highly recommend accessing a free Benchmarker report.
The Benchmarker report from Perpetua will analyze the data of your direct competitors and give you numbers with context that you can use to “benchmark” your performance and as a result make informed decisions.
It’s as simple as syncing your Amazon data once and receiving a new and updated report every single month on autopilot. And, it’s completely free!
Ultimately, the best average order value is the one that is increasing. For tips on how to make sure that it does increase, read on!
Why is Average Order Value important for Amazon sellers?
Average order value is a metric that has increased with importance over time.
As more competition comes into the eCommerce market there are more online stores willing to spend more money in order to acquire a customer.
This pushes customer acquisition costs upwards and squeezes the margins in the market.
As such it can become harder and harder to acquire customers profitably without taking some kind of action to increase profits.
Increasing AOV is one of the clearest opportunities to do that, and amidst continually increasing costs Amazon sellers should be proactive in increasing average order value across their store.
How can Amazon sellers improve Average Order Value?
Increasing average order value on Amazon is a different proposition to increasing the AOV on your own eCommerce store on a platform like Shopify.
Whereas Shopify gives you complete control over your eCommerce store, Amazon sellers face many more restrictions on what they can and can’t do.
As such, tips on how to increase average order values on different platforms will differ and to help avoid confusion sellers looking to increase AOV on their off-Amazon platform should study this separate but related guide.
If you are an Amazon seller wanting to increase your average order value, here are some of the best ways to go about it.
Sell premium products at premium prices
If you want to increase what your customers spend, one of the best things you can do is sell premium products.
Premium products with a higher perceived value tend to have high prices and as such will automatically lead to a higher AOV.
The challenge then becomes how to get Amazon customers to purchase your more expensive items when they are used to Amazon being a platform for low prices.
There are a few ways Amazon sellers can do this:
- Use Amazon Advertising to target higher-end customers who may be willing to spend more on your products.
- Create unique product offerings that solve the problems customers express with existing products in reviews.
- Find the best keywords and use Amazon SEO to ensure your more expensive products are appearing in search results and Amazon customers are seeing them helping you make more sales.
A premium pricing strategy should be the first consideration for every seller looking to improve AOV.
Whilst sellers may be concerned charging higher prices will have a negative impact on conversion rates, this is not always the case.
The best thing to do is test raising prices, monitor conversion rates and adjust accordingly.
Improve your Amazon product photos
Another way Amazon sellers can increase their AOV and see revenue growth is by improving the quality of their product photos.
Product photos are one of the most important elements of an Amazon listing and can make a big difference in whether or not a customer purchases your product.
Quality photos also help create a higher sense of perceived value which, as already discussed, will help increase order value.
If you want to improve your Amazon AOV, focus on making your product photos as clear, professional and eye-catching as possible.
Use Amazon’s Enhanced Brand Content
Amazon’s Enhanced Brand Content (EBC) – or A+ Content as it is now known – is a feature that allows Amazon sellers to add more visual elements and text to their product listings.
This can be a great way to make your listing more engaging and improve the chances of a customer converting.
If you want to use A+ Content to increase Amazon AOV, focus on adding images and text that highlight the features and benefits of your products.
Plus, be sure to include engaging elements like infographics, lifestyle images and visual illustrations of the benefits.
Finally, this is a great location in your product listing to cross-sell your products.
Cross-sell your catalog
Cross-selling means promoting additional products at the time of purchase and is a great way to increase Amazon AOV without having to raise your prices.
Whilst the Amazon platform does limit the flexibility sellers have with cross-selling in comparison to something like your own Shopify store, there are still some options available.
- Branded PPC. You can run product targeting PPC ads and target your own SKUs meaning the customer sees more of your products.
- A+ Content. By utilizing branded A+ Content you can allocate a section of your design to promote your entire range and direct customers to your Amazon storefront.
- Amazon Storefront. Registered brands have access to their own storefront with the ability to promote their entire catalog. Using this feature can be another great cross-selling opportunity.
By cross-selling your catalog you can ensure that customers get maximum exposure to your brand, buy as many different products as possible and ultimately increase AOV.
You also improve the chances of your products being bundled together in the frequently bought together section which will give a further bump to AOV.
Bundle products together physically & virtually
Another great way to increase average order value is by bundling products together.
Both types of bundles can be effective in increasing average order value, but sellers will need to decide which makes the most sense for their products.
If you want to create a physical product bundle, make sure the products complement each other and are packaged together with one barcode so they can be listed as a single item and therefore save on Amazon fulfilment fees.
This means you can create bundle offers at a discount compared to purchasing the items individually and make them more enticing for customers.
For virtual bundles on Amazon, remember that you will still need to pay individual fulfilment fees for each product separately so ensure your bundle is priced correctly to remain profitable.
Create multi-buy promotions
Another way to increase Amazon AOV and generate more revenue is by creating multi-buy promotions.
Multi-buy promotions are where customers get a discount for buying more than one unit of a product.
For example, you could offer a 10% discount when customers buy two units or a 20% discount when they buy three units.
Multi-buy promotions can be a great way to increase Amazon AOV as they encourage shoppers to buy more than one unit of a product.
It’s important to make sure the promotion is structured in a way that is still profitable for you as Amazon sellers typically need to absorb the cost of the discount.
A great benefit of creating this kind of promotion is that Amazon will automatically create a special promotional landing page.
You can then use this page to drive traffic to and increase your average order value by encouraging customers to buy multiple products.
Utilize variation listings
Variation listings are another great option for eCommerce sellers to increase AOV.
Amazon allows sellers to create listings with variations based on a number of different criteria such as size and color.
Variation listings tend to have a higher conversion rate than those without any additional options as it increases the customer’s options and therefore the likelihood of them finding an option they like.
For instance, if a customer is looking to buy a yoga mat they may not be a fan of the black version, but may love the bright red option and buy straight away.
However, the big improvement this can provide to AOV is you when customers see the range of options available and add more than one to their basket.
By giving this immediate display of a range of products you can encourage customers to spend more with you and increase your overall AOV.
Ensure Prime is activated for free shipping
With 42% of Prime members spending more than $100 per month on Amazon, it’s safe to say Prime eligibility plays a huge role in average order value.
Amazon now has a whopping 200 million Prime members worldwide making it essential for sellers to position their products for Prime eligibility.
To get the Prime shipping badge, make sure you are using the Amazon FBA program which involves shipping products into an Amazon fulfilment centre and allowing them to handle all fulfilment aspects.
Conclusion – The Key To Improving AOV
Average order value (AOV) can be improved on Amazon in a number of ways, some of which we’ve outlined above.
Utilizing product bundling, multi-buy promotions, variation listings and ensuring Prime eligibility with the Amazon FBA program are all great methods for increasing AOV.
By increasing your average order value you can afford to spend more money on customer acquisition allowing you to increase total net revenue and scale your business faster and more profitably.
But, once you’ve improved AOV, don’t stop there.
Make sure you maximize the potential of every customer in your eCommerce business by building post-purchase communication channels with your buyers to increase lifetime value too.