EASY Ways To Scale Your E-commerce Business
Gabriel Gutierrez | Oct 06, 2021Reading Time: 7 minutes
Alright, let’s talk about your average order value …
So, average order value is a critical metric in terms of being able to buy traffic and profitably run an ecommerce store, right?
AOV (average order value) is the total number in revenue you’ve made from sales, divided by the number of sales you made in a specific time period.
The higher the AOV is, the better off you are, the more profit you’re making, typically, and the better you’re able to buy traffic at higher and higher costs. Obviously, if you want to scale a business, you’re going to need to be able to acquire more and more expensive traffic. To do that, you need to have a good AOV.
Now, the problem is … many, many ecom stores struggle with AOV. Either they’re selling lower-priced products (e.g., $10, $20 products) and they’re AOV is around $10 or $20, or potentially, they have a high AOV but their product cost is also super high and their acquisition cost is super high, so their AOV needs to be even higher. The AOV is a big deal. Your AOV should actually be significantly higher than your cost per acquisition, but how do you get a good AOV? What can you do?
So, let’s talk about a couple really cool, easy ways that you can boost your AOV.
Test Your Price Elasticity
The very first and simplest thing you can do to boost your AOV is start testing your price elasticity.
Price elasticity means the range of prices that you can sell your product for and there are different impacts they have on conversion. So, just because you’re selling your product for $9.99 doesn’t necessarily mean that that’s the best price for it or the maximum profit for it when you average everything out. So, an example: We used to sell a kitchen slicer called a mandolin. It slices, it dices, it chops, it has all these different attachment type things. We started selling it at $19.95, then we raised it to $24.95, and then we realized that “Hey, they’re still buying” … so we kept testing it and actually found out that the magic price point for us was $37.50. Or I’m sorry $34.50, excuse me.
That’s a big difference from nineteen bucks, right?
Now, not every product works that way. But we kept raising the price, testing it, and realizing that we were still making more money, still making the same sales, and we were able to test price. So, simply by raising your prices, you can get a nice boost to your AOV. That’s the easiest way to do it.
Offer a Bundle
The next thing you can do, besides raising your prices, is offer a bundle.
Put things together. Sell three or more items, two or more items. Put three products together, four products together … even if they’re the same product.
Let’s say you were selling supplements. You could put three protein bags, or six protein bags, together and give them a bundle deal. Or maybe you’re making some kind of a fitness thing, you can give them a pre-workout, some BCAAs, and their protein in a bundle—like the “performance bundle” or something like that. You could do the same thing with jewelry … the bracelet, earrings, necklace combo. Anything you can do to bundle them together.
For print-on-demand people, you could do a t-shirt, hoodie, hat … or a t-shirt, hoodie … or a t-shirt, tank top, hoodie. All kinds of things, right? Or, potentially, you could add in a mug or a pillow. There are so many different programs and options these days. You could take the same design, put it on multiple items, and give them an option. Somebody who wants it on a t-shirt might also want it on a sweatshirt.
Simply by bundling, that allows you to raise your price. You can bundle it (combine the three together), offer them a discount if they spend more to buy the bundle, and still raise your AOV and your profit per item up significantly.
So, bundling is one of the easiest ways to do that.
Use an AOV-Boosting App
Another thing you can do—that is actually what most people are already doing or are at least attempting to do but not necessarily doing right—is use some sort of average order value type “boost” … which is typically an app that you can use on your store somewhere. You see a lot of the apps that will add a “related products” or Amazon-style “customers frequently bought” and then the three items that customers frequently bought together.
Now, on Amazon, that’s proven to work really, really, really well. And there are a bunch of app companies that make apps and plug-ins for ecommerce stores that have duplicated that. Then, the little script or widget will be injected into the site and somewhere down the product page, it’ll show, “Hey, customers usually buy these three items together.” And you can obviously just put whatever you want in there to show up.
Other In-Cart Boost Methods
Another way of doing it is below the add-to-cart button. And then, other popular ways, which are not necessarily “good” ways, are:
- When the add-to-cart button is clicked, a pop-up comes up and offers an upsell … which is basically an add-to-cart order bump boost.
- Once you’re in the cart, below or above the cart will be a little offer box that says, “Hey, would you like to add the sunglasses cleaner to your sunglasses order?” or “Would you like to buy a case for your sunglasses?” Something like that.
Those are in-cart boosts.
Then, of course, there are also post-purchase flows where, after the purchase (i.e., they click the checkout button and process their credit card), you could use an app or a software to go do upsells and downsells post-purchase.
Ideally, this is the best possible way to do it because once you’ve captured their credit card, you’ve already got the sale. The sale is committed … you’ve got the money. Then you can try, post-purchase, to get one-click upsells or downsells to get them to spend more in that session. But if they don’t, it’s OK. You didn’t cost yourself the sale—you still got the sale. Alright? And that is ideally the best way to do that.
On the Shopify platform, there’s OCU, there is a cart hook, there is a funnel builder … There are a couple different apps out there that allow you to do post-purchase upsells. It’s the best way to do it.
And also, post-purchase, you can offer a continuity subscription and make a really sweet offer to get them onto a rebilling thing, which not only helps your average order value but helps your customer lifetime value. So, that is a really, really great way to do it.
Post-purchase is the best way to increase your average order value. However, post-purchase brings with it its own set of problems.
On Shopify specifically, you have to use a third-party checkout. You can’t use the Shopify checkout, and there’s a little bit of an issue with it. So, if you can’t or don’t use post-purchase, what do you do? Well, people think that because an app has been created that it’s been tested and it’s a good app. But that’s not true.
Most of the big apps that are out there for average order value boosts—they call them “in-cart upsells” or things like that—are ones that either do a pop-up when the add-to-cart button is clicked, or they show up in the shopping cart. Both of these are actually a very, very bad time, from a data standpoint, to offer this.
Now, does that mean it’s not going to work? No, it actually will. You will see your average order value, you’ll see that little green arrow on Shopify, going up. Happens all the time. So, yes, that will happen. But the problem is, you’re only checking that statistic.
We are a data optimization company, so we look at all the data—underlying data, all the different metrics—and what we find is this: Every time a pop-up on the add-to-cart button or the in-cart upsell is used, yes, AOV does go up a little bit. But other metrics, more important metrics, actually go down. And they go down so far and so much that you actually lose more money than you gain in the average order value boost. We’re talking about metrics like “proceed to checkout,” “reach checkout,” “initiate checkout,” “completing add-to-cart,” all of that kind of stuff. Also, “session value,” “visitor value” and a lot of other metrics. OK? All of these other metrics are very important as well.
So, whenever you make a change on a store, you don’t just affect that one thing. It has a secondary effect or a third effect to other areas of the store. So, it’s really important to know that.
We, on any of our stores, any of the ones we consult on, partner with or train, never let our customers use in-cart upsells or pop-up upsells that click on the add-to-cart button.
When they’re in the cart, all you want them to do is purchase. That’s it.
But Wait, There’s More …
Once you’ve gotten the purchase, cool. Now, what else can you do? Well, the product page is a great time—while they’re still in the browsing mode—to offer them some sort of upsell or average order value boost because they’re still browsing, they’re still considering, they haven’t committed to the purchase yet. So, it’s a good time to offer it.
How can you do that? The best way to do that is either with a checkbox bump right above the add-to-cart button or a selector option below the add-to-cart button, right where they’re making the purchase decision.
Second to that, the next best thing would be down below the product description using the Amazon-style “Customers have also bought this.”
Now, one more caveat on this, before we wrap this video up: Whatever you offer on the product page as an upsell, as an add-to-cart boost … Anytime you do that, it needs to be a no-brainer offer. OK? The idea is not for them to have to go do more research about the additional product you’re offering. The idea is that they can click it, add it, and they’re good. They don’t need to think about it. So, for instance, if you’re trying to sell them additional jewelry and then you say, “Customers also buy these” (three other types of jewelry or two other types of jewelry), chances are they’re going to need to go to that product page of each one of those pieces of jewelry to see if they actually like it, if the measurements are right, and if it fits them. That’s not a no-brainer. That actually broke the buying process because they were already considering the item that they were on. Let’s say they were looking at a ring. They’re already there, they’re ready. So, the upsell should be something that is super quick … no-brainer, don’t have to think about it.
Same thing if you use it up by the add-to-cart button. It needs to be a no-brainer—simple, easy to do—that they don’t have to think about it. Anything that requires cognitive load, making them think about it, and breaks their concentration of what they were already doing, is actually going to hurt you more than it helps you, and your average order value and other metrics are not going to rise nearly enough. But, if you do that and do a no-brainer offer, either post-purchase flow or a product page upsell, then you can really do some nice things to boost your average order value. And, you can also combine that with price elasticity testing and bundling to really maximize your average order value.
So guys, if you like this video, watch these two videos over here because they’re going to show you even more ways to optimize your store. And also, don’t forget to click the “Subscribe” button below and the little bell icon to get notified when I release new videos.