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Seven Strategies to Increase Average Order Value in Your FMCG Business

Boosting average order value in FMCG is essential. Strategies like cross-selling, bundling, and personalized recommendations can help the bottom line of your business. Learn what strategies will help you excel in the industry.

October 13, 2023

Anastasia Hamurari

In the fast-moving consumer goods (FMCG) industry, where competition is fierce and margins can be razor-thin, increasing your average order value (AOV) as an ecommerce business is not just a growth strategy – it's a necessity.  

With ecommerce serving as a bridge between retail and digital, offering consumers the convenience of shopping for everyday products online is the omnichannel solution worth adopting.

Here, AOV serves as a crucial metric for FMCG businesses with a digital presence, shining a spotlight on the average amount customers spend in a single transaction.  

In this article, we will dive deep into AOV – what it means, and how to calculate it—and explore seven actionable strategies to boost it.  

Whether you're exploring the ecommerce opportunity for your FMCG brand or looking to maximize the impact of your current omnichannel offering, these strategies will fortify your financial standing and foster lasting customer relationships in an industry where staying ahead of the curve is essential. 

What is AOV? 

Simply put, AOV represents the average amount of money a customer spends on a single order when purchasing products. 

According to the latest ecommerce data, the average order value (AOV) in ecommerce is £99.26, which is approximately $122.82. This is the third consecutive annual increase in the metric that follows 2020’s dip of 13.8%.

How to calculate AOV? 

Calculating AOV is relatively straightforward, but it provides invaluable insights into your FMCG business's performance. By understanding how to calculate it and what factors influence it, you can make data-driven decisions to increase your AOV effectively.

To calculate AOV, use the following formula: AOV = Total Revenue / Total Number of Orders.

For instance, if your FMCG business generated $5,000 in total revenue from 100 orders in a month, your AOV would be: 

AOV = $5,000 / 100 = $50

This means that, on average, each customer spends $50 per order. 

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Seven effective strategies to increase average order value

Now, let's dive into the strategies that can help you increase your AOV and drive higher revenue.

1. Cross-sell and upsell

When finding ways to encourage consumers to spend more, cross-selling and upselling are every salesperson’s trusted tool that delivers great results.

Cross-selling entails offering complementary products or services that enhance the customer’s main purchase. For example, when a customer buys shampoo, you can suggest a conditioner to go with it.

Upselling, on the other hand, entails persuading customers to upgrade to a higher-priced product or opt for a premium version. In fact, 10% to 30% of most ecommerce revenue comes from upsells.

These tactics can significantly boost AOV by enticing customers to buy more or invest in better options. 

2. Offer bundles and bundle discounts 

Bundles can be a great way to increase AOV.

By grouping related products together and offering them at a bundled price, customers are more likely to add multiple items to their cart. Additionally, providing a discount for purchasing the bundle can incentivize customers to buy more than they originally intended.

Take a company that sells coffee.

To increase its average order value and enhance the overall shopping experience, it can offer a bundle that includes coffee beans, a grinder, and a travel mug at a discounted price.  

3. Make personalized recommendations  

Leverage data and technology to provide personalized product recommendations to your customers. By analyzing their past purchases and browsing behavior, you can suggest products that are tailored to their preferences.

Personalization not only improves the customer experience but also encourages them to add more items to their cart.

Whether it's suggesting complementary items, highlighting new arrivals that align with their interests, or reminding them of items left in their cart, these tailored recommendations create a sense of attentiveness that can drive higher AOV and strengthen their loyalty to your FMCG business.

4. Reward loyalty 

Speaking of loyalty, by offering customers incentives to return and make repeat purchases, you foster customer loyalty and boost AOV. An effective strategy here is to implement loyalty schemes.

Loyalty programs typically involve rewarding customers with points, discounts, or exclusive access to products in exchange for their continuous support.

As customers accumulate points or receive benefits, they often feel encouraged to consolidate their purchases into larger orders to maximize the value of their loyalty rewards.

Furthermore, these programs provide valuable data on customer behavior, enabling you to personalize offers and recommendations, which, in turn, can drive even higher AOV.  

5. Create a minimum order threshold  

Implementing a minimum order threshold is a strategic move that can nudge customers toward spending more on each transaction.

By offering incentives such as free shipping, exclusive discounts, or special perks on orders that meet or exceed a certain amount, you motivate customers to add extra items to their carts.

This approach not only increases AOV but also helps you cover the costs of providing those perks. It's a method that capitalizes on the psychological principle of "spend a little more to save a lot" and can effectively boost your bottom line while enhancing customer satisfaction.

6. Advertise limited-time promotions 

Creating a sense of urgency through limited-time promotions is a powerful strategy to increase your average order value. By highlighting time-sensitive deals and offers, you tap into customers' fear of missing out and encourage them to make larger purchases.

These promotions can take various forms, from flash sales to holiday specials or exclusive discounts on bundles. The key is to effectively market these limited time offers across your channels, including your website, email newsletters, and social media.

By skillfully advertising limited-time promotions, you can create a win-win situation where customers get a great deal, and your business experiences a boost in AOV and overall sales. 

7. Explore a subscription-based business model 

Exploring a subscription-based business model is a forward-thinking strategy to enhance your AOV while fostering long-term customer relationships.

Subscriptions offer predictability in revenue by securing recurring purchases, often at a higher total spend than individual transactions.

What’s more, subscription models allow you to gather valuable insights into customer preferences and tailor your product offerings to meet their evolving needs.

Whether you choose a monthly coffee delivery service or a quarterly delivery of prebiotic food supplements, subscriptions can help you build a community of dedicated customers who rely on your FMCG brand for their everyday needs.

This loyalty leads to a higher AOV as subscribers trust your offerings and often explore additional products or services, all while enjoying the convenience of scheduled deliveries.

Leverage an omnichannel approach to increase your AOV 

Integrating a comprehensive commerce solution is pivotal to unlocking the full potential of AOV-boosting strategies. Leveraging advanced technology lies at the core of this approach.

From cross-selling and upselling to offering bundles and personalized recommendations, each strategy can significantly increase your AOV and, in turn, your business’s revenue.

Additionally, a robust marketing strategy is indispensable for reaching consumers across the omnichannel landscape. By tailoring your marketing efforts supported by data-driven insights, you can bolster brand visibility and increase sales.

Furthermore, optimizing operations is essential to complete the customer journey and nurture loyalty. Efficient fulfillment and delivery services, powered by technology, can delight customers and foster a sense of loyalty, compelling them to return for more.

THG Ingenuity's expertise in direct-to-consumer and digital omnichannel solutions spans 18 years, making us well-equipped to guide your business toward comprehensive commerce success.

Through our partnership, you can harness technology-driven solutions, refine marketing campaigns and optimize fulfillment, allowing you to implement AOV-enhancing strategies effectively. 

Download our report to learn what you should focus on when launching and evolving an omnichannel approach.

To take your FMCG business even further, get in touch and see how we can empower your brand in the fiercely competitive FMCG industry with our comprehensive commerce solutions.

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