Increasing average order value (AOV) is crucial to building a successful e-commerce store. With ad and shipping costs constantly eating into margins anything you can do to increase cash flow will make your life a lot easier.
Outside of increasing your number of sales, increasing the dollar value of every sale that comes through your store is the best way to boost your revenue. You might be tempted to steadily increase your pricing, but be careful - increasing prices can quickly result in a dip in conversions.
It's important to find the right balance of price and value for your product offer. Once you have hit that balance it's time to shift to other tactics that can increase your store's revenues.
Cross-selling means to offer up complimentary items to your main product. For example, if you are selling an elastic exercise bar, you could add on a workout matt is a cross-sell.
The workout mat is probably already seen in your product images, and it's easy for your customer to see the value of getting the matt with their new exercise band.
Cross-sells are generally cheaper, but high margin items, that you can tack on to the product page, or even the check out flow. Here's how the economics work out in our workout matt example:
Excersise bar set costs $15, sells for $49.99 ($35 profit).
Average order value per 100 orders = $49.99, revenue = $4,999, profit = $3,499.
Now with the cross-sell:
Workout matt cost $3, add-on for $19.99 ($17 profit) add-on conversion rate 30%.
Average order value per 100 orders = $55.98, revenue = $5,598, profit = $4,009.
Total profit goes up 13%
Now a 13% jump in profit may not seem like a big deal, but think about the ROI as your scale. 13% on 100 hundred orders isn't that significant, but 13% on 1,000 orders is - in the workout matt example that equates to $5,100 for not a lot of work. The added bonus is that you can play with pricing of the add-on to improve its conversion rate, test multiple combinations of add-ons with your main product, or even retarget those who purchased your main item to convert them on the secondary item after their main product arrives.
Here is an example of a cross-sell during the checkout flow from Away Travel:
Notice that the items are less expensive then the item in my cart and complementary to it.
Up-selling is the practice of marketing higher-end (and higher price) products to your customer. For example, if you manage an electronics store that sells a small, medium, and large speaker you would want to sell more larger speakers than small (assuming they have more profit). So on your small speaker product page or checkout flow you could add calls to action to updgrade to the larger speaker.
The economics of upsells are simple.
If item A has a profit of $20 and item B has a profit of $40 - you want to sell more of item B. Converting even a small amount of users from upsells can have a big impact on your average order value.
There are different strategies and ways to implement upsells. Using an app like ReConvert makes it easy to test and track the effectiveness of your upsells.
Here is an example of an upsell from Away Travel:
The bag on the left is the product I was looking at, but this popup tries to up-sell me to the slightly larger version. The item is essential the same but it costs an extra $20.
Bundling items and offering discounts is an extremely effective way of boosting your average order value. If you are selling any sort of item where buying more than one make sense (clothing, accessories, gadgets, etc.) then you want to give bundles a try.
Start by downloading an app like Bundle by Thimatic and test offering discounts for buying 2,3 or more items at the same time. We usually start by offering 10% then work to 15%-20% for higher quanities.
Here is an example of the app in action: