Average Order Value (AOV)
Average order value is the average revenue value assigned to each order under a report’s stated revenue definition.
What is Average Order Value?
AOV describes basket size in money terms. It divides a revenue measure by the corresponding number of orders, so it answers a different question from revenue per customer: one customer can place several orders.
The revenue definition matters. Some operational reports use product sales after discounts at the moment an order is placed. Other analyses use revenue after later refunds. Neither should be silently substituted for the other when comparing results.
AOV = Revenue assigned to eligible orders ÷ Number of eligible orders
Use a matched population and state the treatment of discounts, taxes, shipping and later returns. With no eligible orders, AOV is undefined.
A $65 average basket
A store records $13,000 of product sales after discounts across 200 orders, excluding tax, shipping and later adjustments. AOV is $65. If those orders contain 400 units, the average item revenue is $32.50, but that is not AOV: the denominator has changed from orders to units.
How to interpret it
AOV can rise when customers buy more items, choose more expensive products or use smaller discounts. A shift toward one high-priced product can move the average even if typical shopping behavior is unchanged. Review the basket mix before assigning a cause.
A larger basket does not guarantee more contribution. Low-margin add-ons, free-delivery subsidies or heavier parcels can consume the additional revenue. AOV is a commercial metric; contribution per order measures what the basket leaves after its variable costs.
Shopify’s standard AOV definition focuses on product value when orders are placed: gross sales less discounts, excluding post-order adjustments. A separate net-of-refunds cohort measure can be useful, but label it as a different calculation and retain the matching order population.
Averages also hide spread. A small number of wholesale-sized orders can raise AOV even while most shoppers spend much less. Comparing channels, customer types or periods can reveal that mix without changing the definition.
Common mistakes
Dividing by customers or units
Revenue per customer and revenue per item are valid measures, but they answer different questions. AOV uses orders.
Mixing an adjusted numerator with an unrelated denominator
Removing some refunded sales while excluding different orders creates an inconsistent average. Define eligible orders and revenue together.
Definition reference: Shopify sales report definitions.