In the digital age, the world of business is dynamic. The trends and technology of today could change overnight and cause a complete overhaul of your business strategies and tactics.
It’s vital that your business stays up to date with the latest trends and developments. In order to do so, it’s good to keep an eye on marketing statistics. Whatever your focus, there’s a plethora of data out there to help you better reach your targets (audience and sales) and boost conversions. The 2 things we’ll focus on in this piece are average order value and conversion rates. First things first, what are they?
What Are Average Order Value and Conversion Rates?
Average Order Value (AOV)
AOV is used as a direct indicator of what is actually happening to your profits. It’s used to track the average (preferred currency) amount spent for each time a customer places an order via a website or mobile application. The formula for it is AOV = Total Revenue/Number of Checkouts. Here’s an example:
- Your total revenue for October was 50,000
- The total number of orders through your ecommerce channels for the month was 807.
- 50,000 / 807 = 61.96
- Based on those numbers, your AOV during October was 61.63
It’s important to be able to know this because it helps you understand consumer behavior and how much they’re spending on your products. This will help you to then plan pricing and marketing strategies in order to improve it! When you improve your AOV, your profits and revenue growth will scale upwards.
Conversion Rate (CVR)
A conversion is defined as the activity you desire visitors to your site to perform. If you’re an eCommerce business, that would be to checkout. The formula for conversion rate is CVR = Number of checkouts/Number of Unique Visitors. Just to clarify, say you have an average of 500 visitors to your website and 50 of them become customers. That makes your CVR 10%. By optimizing for conversion rate, you’ll make more visitors into paying, and hopefully returning, customers.
Some Stats Pitching 2019 vs 2020
Let’s Start With Conversion Rates
The global conversion rate by device is down for Desktops and Tablets, although the change is unremarkable for Tablets while being quite significant for Desktops. The CVR for mobile phones show an increase from 1.82% up to 2.12%. This is also supported by the increase in CVR for various operating systems. The computer ones show a drastic decrease, while the mobile ones like Android, Chrome OS, Windows Phone, and even iOS show a nice increase.
What does it mean?
The data is open to interpretation, and could signify many things. It’s pure speculation, but my theory is that as people got stuck at home during the Covid-19 pandemic, it just became more comfortable to surf the internet and shop while lazing on the couch or bed rather than getting up to sit at your computer. Also, because everyone was working from home, it could also include those who didn’t have computers at home and relied on mobile devices. I know it sounds unlikely in this day and age, but if you believe that to be the case then you’re most likely in a different demographic. Data shows that particularly in developing countries, less than a third of the population have access to computers.
The pandemic has probably lent itself to changes in the conversion rate. By the end of 2020, we may see an actual decrease in ecommerce conversion rates as people have more time to spend on doing research across multiple platforms or websites before deciding to make purchases. The amount of data that is available for this statistic will vary. It depends on if you want the overall data for ecommerce websites, or if you want to be more specific. You can look at data across industry, product type, country, channel/source, device, platform, and even payment method. The same can be said for Average Order Value.
Looking at Average Order Value
AOV has decreased across all devices and it seems that the cause can be directly linked to the Covid-19 pandemic, as can be seen in the graph below. According to the World Bank, “The pandemic is expected to plunge most countries into recession in 2020, with per capita income contracting in the largest fraction of countries globally since 1870.” This definitely has an impact on Average Order Value in relation to eCommerce. With the economy sliding into recession, people losing their jobs, and just having less money in general, people are unlikely to spend as much as they used to.
Thailand Business News makes a statement on the conditions here at home saying, “Thailand’s economy is expected to be impacted severely by the COVID-19 pandemic, shrinking by at least 5 percent in 2020 and taking more than two years to return to pre-COVID-19 GDP output levels, according to the World Bank’s latest Thailand Economic Monitor.”
So far this year, average order value has decreased overall across most categories as can be seen in the graph above on the right. Like I mentioned earlier, this could be because people have, or are just spending, less money. But, another factor which is also related to the pandemic, is that businesses could be running promotions. The reasoning behind this is in order to counter the adverse effects on the economy which the global crisis had. The hope being that people who weren’t willing to pay full price, would cave and make purchases when they saw attractive promotions.
So, What’s Next?
Average Order Value can tell you the health of your eCommerce business and in general of the world or country by country. It’s like a thermometer to tell you if you’re healthy or if your body is fighting some infection. Conversion Rates will let you know if you’re successful in getting those visiting your website to become paying customers. They are among some of the most, of many, important metrics to stay up to date on. As we get through this global crisis, keep your head up and stay tuned for the latest news and updates. If you find it difficult to know how to read, understand, interpret, or even just what to do with all this information, don’t hesitate to contact us. We’re ready to lend our expertise in SEO services and data analysis and consultation to help you get through this.
References:
Chaffey, D. (2020, October 07). E-commerce conversion rates 2020 compilation – How do yours compare? Retrieved November 10, 2020, from https://www.smartinsights.com/ecommerce/ecommerce-analytics/ecommerce-conversion-rates/
HubSpot. (n.d.). 2020 Marketing Statistics, Trends & Data – The Ultimate List of Digital Marketing Stats. Retrieved November 10, 2020, from https://www.hubspot.com/marketing-statistics
The Impact of COVID-19 on Thailand’s economy. (2020, July 30). Retrieved November 10, 2020, from https://www.thailand-business-news.com/economics/79869-the-impact-of-covid-19-on-thailands-economy.html
Tabitha Cassidy | Sep 25, 2. (2020, September 25). Average order value and conversion rates decrease in Q2 2020. Retrieved November 10, 2020, from https://www.digitalcommerce360.com/2020/09/25/average-order-value-and-conversion-rates-were-down-in-q2-2020/
Wolfgang Digital. (n.d.). E-Commerce KPI Report 2020 – Must-Know Metrics. Retrieved November 10, 2020, from https://www.wolfgangdigital.com/kpi-2020/
World Bank. (2020, June 8). The Global Economic Outlook During the COVID-19 Pandemic: A Changed World. Retrieved November 10, 2020, from https://www.worldbank.org/en/news/feature/2020/06/08/the-global-economic-outlook-during-the-covid-19-pandemic-a-changed-world