Learn what AOV is, how to calculate it, and how to strategically improve it across D2C, marketplaces, and offline channels.
What is Average Order Value (AOV)?
AOV (Average Order Value) is the average amount a customer spends per order they place for the products of your brand.
It’s a key performance metric for any consumer brand and an underutilised lever that can dramatically improve your profit margins without increasing your ad spend.
For brands selling across multiple channels like D2C websites, marketplaces like Amazon/Flipkart, and offline retail, tracking AOV by channel helps uncover where you’re earning the most per sale, and where there’s room to grow.
Why AOV Matters
Here’s why AOV is a growth lever you shouldn’t ignore:
- Higher AOV boosts revenue without increasing CAC or conversion costs.
- You can increase ROI and ROAS by making every customer spend more.
- It gives clues about buying behaviour, as to whether customers prefer bundles, single-item purchases, etc.
- AOV improvement has a compounding effect across your retention and LTV metrics.
How to Calculate AOV
Basic Formula
AOV = Total Revenue ÷ Total Number of Orders
Example:
If your total revenue in April is ₹10,00,000 and you had 2,500 orders:
AOV = ₹10,00,000 ÷ 2,500 = ₹400 per order
Types of AOV You Should Track
Not all AOVs are equal, here are the different variations you should know:
1. Gross AOV
Gross Revenue / Total Orders
This includes taxes, discounts, and shipping charges. Useful for top-line tracking, especially when analysing raw sales or platform-wide data.
May inflate perceived performance.
2. Net AOV
Net Revenue (excl. taxes/returns) / Total Orders
Gives the real earned amount per order. Best for evaluating profitability, discount strategy, and business health.
Recommended for internal metrics and reporting.
3. New Customer AOV
Net Revenue from New Customers / Orders by New Customers
Tells you how well new buyers convert into value.
Helps optimise welcome offers and acquisition funnels.
4. Returning Customer AOV
Net Revenue from Returning Customers / Orders by Returning Customers
Helps measure loyalty-driven revenue and impact of retention campaigns.
Channel-Level AOV
| Channel | Why It Varies |
|---|---|
| D2C Website | You control bundling, cross-sells, and offers → higher AOV potential. |
| Marketplaces | High purchase intent but limited bundling → AOV may be lower but volume higher. |
| Offline Retail | Influenced by packaging, in-store offers, and regional buying behaviour. |
Tips to Improve AOV
- Create Product Bundles – Group complementary products, create value packs and offer some discounts to incentivise bulk buying.
- Set Free Shipping Thresholds – Encourage larger baskets by offering free shipping for orders above your current AOV. (Eg: “Free delivery on orders above ₹699”).
- Use Smart Upselling & Cross-Selling – Show better alternatives or add-ons during the browsing or checkout experience.
- Personalised Offers – Recommend based on user behaviour (on-site or through WhatsApp/email/SMS).
- Offer Tiered Discounts – Create smart thresholds like “Buy ₹1,000 worth and get 10% off”, “Buy ₹2,500 worth and get 15% off” to nudge customers toward higher spends.
- 5. Give a Free Gift Above a Spend Limit: Use Freebies and gifts that may become a future repeat purchase.
Bottom Line
AOV is your hidden revenue multiplier.
It’s often cheaper and faster to increase order size and value than to find new customers.
For multi-channel consumer brands, tracking AOV by channel and designing experiences that gently push it higher is one of the most efficient ways to boost revenue, margins, and customer LTV.
As your acquisition costs climb, AOV is how you stay close to profitability.