June 17, 2020

How to increase the Average Basket Size in an ecommerce store

Nowadays, more and more people recognize the potential of making an additional income from an online business. I think the options to earn extra money through the internet are endless.

However, the more people entering into an ecommerce business the more competition there will be. This means questions as – how to increase the Average Basket Size in an ecommerce store will become more and more important.

This often means that the profit margin in an online business isn’t as high as most people think. This lead us to the question – what can you do to increase your profitability?

Increasing an average order value can result in increasing the profitability of your ecommerce store. I am going to describe a few tactics. These I was using at my work for increasing the average basket value in ecommerce store.

1) A minimum order value

At this point you may be scratching your head thinking why would I limit an order in an online store with a minimum order value?

I don’t care how much a customer is going to buy as long as she is buying in my online shop. Yep, I thought the exact same thing!

However, I quickly learnt that this is a great way to increase one’s profit margin. Before I continue, let me just be clear about one thing: you need to be strategic with this approach.

Also, it doesn’t work for every online shop. In my case, the company I used to work for had a pretty high average basket size (over 50 euros). We had a minimum order value of 14 euros.

The latter meant we didn’t lose many customers due to the minimum order value. For example, if your average order value is 15 euros, then you should think about what you want to gain by having a minimum order value.

Ok, let’s maybe start at the beginning

What is a minimum order value?

As I already mentioned, the online shop I worked for required the customer to spend at least 14 euros in order to be able to purchase in the online store. Profitability was a main reason behind the decision.

We were operating in an incredibly competitive market, hence our calculations showed that based on the prices and margins in our shop, anything below 14 euros would mean we would have negative margins.

By establishing a minimum order threshold, we simply increased order value, as well as stayed profitable.

Now, I am not saying you should do the same, what I am saying is that the implementation of the minimum order value helped with profitability. Furthermore, this approach helped us to increase average basket size which was our aim. If you are aiming for the same, then give a second thought to this strategy or you can simply test it in your online store.

2) A minimum order value for a discount or freebie

If you still think putting limitations on your customer such as minimum order values is too extreme, you can think of having minimum order value on discounts or freebies. A great tool for this is to give a discount or freebie only to customers who spend a certain amount of money in the online shop.

For example: let’s say your average basket value is $20 and you want to increase it to $34

One of the tactics you can utilize in this case is to offer a freebie or discount for all purchases over $37. In most cases customer will be willing to spend more money in order to get a discount or freebie. Of course make sure the freebie is attractive. However, from what I have seen so far this tactic is one of the most powerful tools.

3) Free shipping if a customer’s order is over a certain amount

You know how it is, right? Most customers see a shipping cost as an unnecessary cost. They will do anything to avoid it.

y offering free shipping on purchases over a certain amount, you will probably notice that your average order value is often slightly over the amount that is required to get free shipping.

In addition to this you can utilize tactics to encourage customers who are slightly below the value that is needed for free shipping to add an additional product in order to avoid shipping costs.

4) Cross-sell & Bundle products

Both tactics are very powerful in increasing the order value. Cross-selling means you will suggest to the customer to buy a complementary product.

For example, someone who is buying a pair of new running shoes might be interested in a new running t-shirt as well.

However, keep in mind that suggested product shouldn’t be more expensive than the main product that customer has in the basket. Usually, the price of the suggested item should be in the range of 10%-15% that of the main product. For example, if the running shoes are 200 euros, the t-shirt should be in around 20 -25 euros.

5) Bundle products

I have already written about bundle products. However, this is also a great strategy to increase your average order value.

These are some tactics you can utilize in your online shop if you want to increase your Average Basket Size.

The optimization of checkout can also be one of the methods you can leverage in order to increase the average basket value. But I will write more about this in one of my next articles.

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