How to Increase Average Order Value with Delivery?

This post will teach you how to increase your average order value with delivery.

You will learn:

• What AOV is and what causes it to increase
• The simple formula you can use to calculate the average order value
• Strategies you can use to raise the average order value with delivery
• How AOV affects delivery

The article will provide you with specific steps you can take to increase the AOV of your business.

ON THIS PAGE:

• What is average order value?
• What causes AOV to increase?
• How to calculate average order value?
• 7 ways to increase average order value with your delivery
• How does the AOV impact your business?
• How does AOV affect delivery?
• eLogii can help you raise your average order value

Let’s begin!

What is average order value?

Average order value (AOV) refers to the average amount of money that your customers spend when they place an order at your e-commerce store.

What causes AOV to increase?

In order to increase their AOV, businesses need to consider three different measures that affect it:

• Mean, or the average value of all the orders.
• Median, which is the middle value of all the store’s orders.
• Mode, which refers to the order value that is most frequently recurring.

How to calculate average order value?

You can calculate your average order value with this simple formula:

Divide your total sales revenue with the number of orders, and the result you get is your average order value.

Whatever e-commerce platform you use, it will provide you with the values needed for the average order value formula.

You can also find your average order value with Google Analytics.

7 ways to increase average order value with your delivery

1. Create an order minimum for free shipping
2. Bundle products or bulk options
3. Upsell or cross-sell through delivery
4. Set up loyalty programs for cheaper or free shipping
5. Provide a more personalized delivery option
6. Give free next time delivery with purchase
7. Set up a flexible return policy

1. Create an order minimum for free shipping

Creating a free shipping threshold is one of the simplest ways to increase the average order value in e-commerce. For example, you can offer free shipping on all orders over $50, if that fits your AOV formula.

The best way to do it is by calculating average order value and adding 30% to it. For example, if the AOV is $100, and you add 30% to it, you will get $130, and that number is the value of your free shipping threshold.

Also, you can add a notification that the customers will see when they check out with an order value that does not meet the free shipping threshold. The notification will help you increase the average order value by reminding each customer about the offer.

2. Bundle products or bulk options

Grouping products that are commonly ordered together or just go well together as bundles. The bundles should cost less than if a customer would order all of the products from the group individually.

Creating product bundles will increase the perceived value of the order.

This AOV marketing strategy will make customers that were only planning to order one part of the set actually buy the complete set that costs more money. Whenever that happens, your AOV calculation gives higher results.

Another good AOV e-commerce strategy is to offer a small discount for orders with more than one of the same item. Customers will appreciate the savings they get from ordering in bulk and they will feel encouraged to add more items to the cart.

3. Upsell or cross-sell through delivery

Firstly, let’s differentiate between upselling and cross-selling:

• Upselling is a strategy where a business gets a buyer to purchase the same type of product they have already selected, but for a higher price (the product is then usually larger, or it has more features).
  
  
• Cross-selling refers to a strategy where the customer is offered to buy another product that complements the one they initially chose.

Upselling more expensive product versions or cross-selling additional products directly affects the average order value, and at the same time, it also increases the lifetime value of customers.

An important thing to note is that customers are more likely to accept upsells and cross-sells during delivery.

A simple reason behind that is the fact that shoppers value human interaction. If the person who delivers the order makes a good first impression, the customer will be more willing to listen and trust what they have to say.

If the delivery agent is able to close a sale, chances are that the customer would be ready to buy into the pitch.

Another reason behind the idea of cross-selling and upselling at the doorstep is the fact that the customer has already trusted your business enough to make a purchase. The initial sale has already been completed, and the customer has no problem doing business with you.

If the agent offers a better product for a bit higher price or a different item that increases the value of their purchase, it will spark the customer’s interest.

4. Set up loyalty programs for cheaper or free shipping

Setting up a loyalty program that rewards customers each time they place an order can also help increase the overall AOV.

Having a good loyalty program in place helps return customers come back and shop more often.

Around 82% of companies claim customer retention to be more affordable than getting new customers.

Repeated orders create a bigger base of faithful shoppers who are more likely to order larger quantities. Since repeat customers are cheaper to advertise to, doing business with them increases the AOV sales.

Try to incentivize your loyal customers by creating a program that will offer different delivery options as rewards.

A number of retailers who are aware of the value of customers’ contact information get their clients to create accounts, share their personal data, and join a loyalty program in exchange for free shipping without minimum purchase.

Offering attractive delivery options such as free shipping, next-day delivery, or same-day delivery will encourage your clients to shop more.

5. Provide a more personalized delivery option

Today’s online customers are spoiled with choices, and besides the quality and price of the products, they also form their purchasing decisions based on the range of delivery options available.

Since there is no single option that would satisfy all their customers, businesses must be flexible with deliveries.

It was found that 73% of consumers find that receiving the order in a convenient time slot is more important than the actual delivery speed.

In order to increase their order volume and raise the average order values, companies need to be ready to build a better customer experience through personalized delivery options.

This means creating an efficient logistics infrastructure that will be reliable when it comes to delivering orders at specific times.

So what are some of the most popular delivery options you can offer as personalized service?

• Same-Day and Next-Day Delivery. Just until recently, same-day delivery was close to a non-existing concept, and today a total of 49% of online shoppers say it makes them more likely to order online, while 25% of them claim they would abandon their cart without it. The option of next-day delivery was the concept that lead to the practice of same-day shipping.
  
  
• Flexible Time Slots. Speed is not always the thing customers value the most. Sometimes you can earn their loyalty by offering flexible but still time-specific delivery slots. The majority of shoppers will appreciate scheduled delivery with two-hour time slots.
  
  
• Click and Collect. This delivery option lets shoppers select where they want to have the package delivered by choosing from a variety of available locations.

6. Give free next time delivery with purchase

Everyone loves getting free gifts, and your customers are no different.

If the customers are offered an incentive such as a free delivery coupon, they will be encouraged to repeat the purchase in order to redeem it, especially if it comes with an expiration date.

Orders that come with free shipping get 30% higher in value than those with paid shipping.

According to Statista, 48% of US shoppers claim that they’ve added more items to their shopping carts than they planned, just to qualify for free shipping.

Free delivery is an important part of consumer psychology and a sure way to boost customer satisfaction.

Online shoppers place a lot of value on the speed and quality of delivery as well, but they still often feel like they’re overpaying for the order when the shipping cost is added to the price.

It is clear how the customers can benefit from an extra free delivery, but let’s see what’s in it for businesses, and how it all builds up and leads to increasing AOV:

• Boost in sales - free delivery will entice the existing customer to return for another order.
  
  
• Increased lifetime value - it improves the lifetime value of the current customer base.
  
  
• Expansion of the business - one attractive reward makes customers more approachable to all other offers.
  
  
• More brand awareness - offering a free next time delivery can be a great marketing tool for increased brand awareness followed by more customer satisfaction.

7. Set up a flexible return policy

Now more than ever, online shoppers appreciate transparency and flexibility when it comes to potential returns.

Offering a simple and flexible return policy will minimize any concern that a customer may feel about ordering from your store. Once you create a return policy, you must present it clearly to the customers.

Social media accounts, order confirmation emails, and website banners are some of the most common places where stores showcase their return policies.

In fact, 92% of shoppers would order from a company again if the returns are simple.

The best way to cut the costs on product returns is to set up functional reverse logistics.

Reverse logistics covers the management or further distribution of returned items. It deals with products that go back from the customer to the warehouse center, as opposed to traditional logistics that brings products to the customer.

Many companies are improving their reverse logistics as they realized that returns cause huge expenses.

It is important for e-commerce businesses to set up a cost-effective way to manage returns. By evaluating their reverse logistics processes, companies can lower the costs and increase customer loyalty.

How does the AOV impact your business?

The AOV impacts your business as an important benchmark that helps you understand customer behavior.

Raising average order value can help you increase the overall sales revenue, get more revenue over a period of time, and increase the existing customers’ lifetime value.

How does AOV affect delivery?

#1 Need for faster delivery
#2 Need for agile delivery
#3 Need for efficient delivery logistics

#1 Need for faster delivery

Businesses that focus on increasing average order value also need to increase delivery speed so they could meet their customers’ expectations.

Consumer expectations for delivery speed have skyrocketed in recent years, and businesses of all sizes are in need of flawless fulfillment networks that can enable them to achieve high speeds such as two-day delivery.

There are three factors that help the improvement of delivery speed:

• Optimized warehouse operations and protocols. Delivery speed highly depends on the fulfillment speed. Businesses looking to achieve fast deliveries need to find fulfillment partners that can provide them with efficient warehouse slotting protocols.
  
  
• Inventory distribution. Merchants who choose to distribute their inventory to multiple fulfillment centers have the chance to get as close as possible to some of their customers and meet their expectations with ease.
  
  
• Technology. When it comes to scaling fulfillment operations, small and mid-sized businesses should try to rely on technology more than on their staff. Advances tools available nowadays can help merchants spot patterns in demand that can help them quickly modify their strategies for higher delivery performance.

#2 Need for agile delivery

Working on the growth of the average order value in retail creates the need for building an agile delivery operation.

Agile delivery is a new approach to product delivery where businesses can improve the efficiency of all the activities, even at scale.

With agile delivery, companies can react to day-to-day events in delivery management and cut costs in the meantime.

Since the agile approach affects every component of delivery operations, businesses need to center their strategy around the technology, processes, structure, and the people involved in the operations.

Some of the biggest benefits of having an agile delivery in place are:

• Planning deliveries in real-time and on the go
• Gaining a competitive edge
• Faster delivery of products and services
• Easily meeting new market and customer standards

#3 Need for efficient delivery logistics

Implementing strategies of increasing the average order volume through delivery and managing higher order volumes that may come with increased AOV both require efficient delivery logistics.

Efficient delivery operations require automation of taste, streamlined warehouse and delivery processes, fewer human errors, and improved customer service.

Automating your chain of delivery operation through software will improve the efficiency of order fulfillment and increase overall productivity.

Good delivery management software helps businesses save time and money by automating manual and repetitive tasks.

The integration of technology also helps companies get real-time visibility of their fleets, find the most efficient delivery routes, mitigate risks, reduce delivery costs, and improve customer satisfaction through regular communication and updates on the delivery progress.

eLogii can help you raise your average order value

eLogii’s powerful suite of cloud-based software that covers planning, routing, and dispatch can help you raise the average order value of your online store.

Its end-to-end delivery platform can easily be integrated with your existing systems, and is ready to improve your operations in no time.

eLogii provides their clients with:

• Automated logistics
• Real-time tracking
• Route optimization
• Bullet-proof security
• and more.

But we can help you beyond this.