You've likely heard that South Africa reigns as the largest e-commerce market in sub-Saharan Africa. This booming sector might have sparked your enthusiasm to launch your own online store. But what many don't tell you is the fierce competition you'll face.
Acquiring new customers is costly, particularly for newcomers. Many businesses falter because they can't attract enough patrons. However, there's a more efficient route. If you seek cost-effective methods to enhance your online store's revenue, you're at the right place.
Let's start with a question: Which is easier for an online store aiming to grow — attracting more customers or encouraging each one to spend more per transaction? The latter, of course — increasing the average order value (AOV).
Why? Because acquiring new customers demands hefty marketing expenses. Boosting the average order value, on the other hand, focuses on optimizing sales from your current customer base. And this article will guide you on how to achieve that.
What is Average Order Value (AOV)?
Average Order Value (AOV) is exactly what it sounds like — the average amount each customer spends per order. The more each customer spends, the higher your AOV. Companies selling high-ticket items will naturally have a higher AOV. However, this doesn't always equate to higher revenue. For example, selling R20,000 furniture pieces but only moving ten units annually pales compared to a business selling millions of R50 products.
Five Ways to Increase Your Average Order Value
Implement a Minimum Order for "Free Shipping" and Other Gif
Customer expectations around shipping costs are pivotal when aiming to increase AOV. Offering free shipping is a tried-and-true tactic to encourage higher spending. Analyze your common order values to set an optimum free shipping threshold. For instance, if most orders hover around R300, offer free shipping for orders above R500. This makes the free shipping goal attainable for many customers, boosting overall revenue. However, setting the threshold too high might result in abandoned carts. Alternatively, consider volume discounts or fixed discounts for purchases above certain amounts. For example, a R50 coupon for orders over R1000 or a 10% discount for orders over R100. However, percentage discounts can make profits less predictable.
Bundle Products or Create Packages
Encourage customers to buy more by offering product bundles. Bundles are often priced lower than the sum of individual items, making them more appealing to customers. By bundling products, you enhance the perceived value of a purchase. A smart bundling strategy offers a comprehensive solution for a desired experience.
Establish a Customer Loyalty Program
If your store sells consumable products—items customers need to repurchase frequently like rooibos tea or toothpaste—consider a rewards or loyalty program. These programs help retain customers, build relationships, and elevate the overall value they bring to your business.
Ensure your loyalty programs evolve with consumer preferences. For instance, during economic downturns, lavish rewards for high spending may not resonate well with customers.
Leverage Urgency
Urgency is a time-tested strategy for influencing customer behaviour. It can also lead to higher average order sizes.
Implement One-Time-Offers that require immediate decision-making. These exclusive deals, available only now, can significantly boost sales. Use time deadlines, inventory scarcity, and holidays to create a sense of urgency
Raise Your Prices
Adjusting your pricing strategy is the simplest way to increase your average order size. For example, if you're selling 1000 synthetic wigs monthly at R700 each, raising the price to R710 increases your revenue by R10,000. This additional revenue is almost entirely profit since nothing else changes.
Bonus Tip: Seamless Logistics to Encourage Repeat Orders
A dependable shipping partner can dramatically improve customer experience and foster repeat purchases. Research shows that repeat customers are more likely to increase their order value than new ones. This is where a trusted brand like DHL comes in. DHL's dedication to timely and secure shipping helps build customer trust and enhance satisfaction. The best part? It costs nothing to start. Simply open a business account today.
Elevate your online store's success by implementing these strategies and watch your average order value soar.
