eCommerce: Benchmarks
Which Country Has the Highest Average Order Value? Market Analysis & Strategy
Online shopping is booming, but every country differs in terms of the Average Order Value (AOV). Which country leads with the highest average order? It might not be who you think.
Article by Cihan Uzunoglu | February 15, 2024Average Order Value: Key Insights
Top Countries: Israel leads the world in Average Order Value (AOV) in eCommerce, growing the fastest at 21% to reach US$159.1 in 2023. Following are Singapore, Switzerland, Ireland, Norway, United States, Iceland, Germany, Denmark, and Japan.
China’s Case: China's declining AOV, dropping to US$84.9 by 2023, emphasizes high transaction volumes over individual order values.
How to Increase AOV: Businesses can boost their online store's average order value by focusing on strategies like offering incentives like free shipping, bundling products, creating loyalty programs, personalizing shopping experiences, and using time-sensitive promotions and social proof to encourage larger purchases.
The average amount people spend for each online purchase offers a unique lens into the health and trends of eCommerce markets globally. This key metric, known as the average order value (AOV), sheds light on consumer behavior, market maturity, and economic dynamics in various regions.
With this understanding, we'll take a look at the top 10 countries leading the charge in AOV as of 2023, focusing on their performance over the years.
What is Average Order Value?
As per our glossary, AOV calculates the typical amount customers spend per order. It's considered a crucial measure of performance and can be observed over any duration, though businesses often check the monthly average that keeps updating.
Revenue / Number of Orders = Average Order Value
At ECDB, AOV is calculated without including Value Added Tax (VAT), returns, and cancellations – simply by dividing the total sales by the number of orders.
Countries with the Highest AOV: Israel on Top
Based on our Benchmarks data, Israel is the country with the highest AOV globally, showcasing a consistent rise from 2020’s US$131 to US$159.1 in 2023. Besides being the top country in terms of AOV, Israel has also seen the fastest AOV growth (21%) in this time period. Singapore follows, with its AOV reaching US$137.4 in 2023. From US$120.8 in 2020, the country's AOV has climbed steadily.
At number 3, Switzerland's AOV stood at US$127.2 in 2023, recovering from a slight dip in 2021 to surpass its initial figures in 2020. Ireland's AOV grew to US$121 in 2023, despite a slight decrease in 2022. The overall upward trend from US$109.9 in 2020 suggests a healthy growth in Irish eCommerce, driven by an expanding online retail environment.
Reaching the middle of our list, we have Norway in fifth place. The Nordic country's AOV stood at US$120.5 in 2023, showing a gradual increase from US$111.2 in 2020. The United States, the second biggest eCommerce market globally, has seen a rise from 2020’s US$112.1 to US$118.1 in 2023, despite a slight leveling off.
The seventh-placed Iceland‘s AOV stays below the global average (US$114), reaching US$113.5 in 2023, following a consistent rise from US$99.7 in 2020. Germany's 2023 AOV was US$109.6, showing a recovery after a drop in 2022. From 2020’s US$106.1, the German eCommerce sector indicates a resilient market with recovering consumer confidence.
Denmark scored an AOV of US$106.2 in 2023, with slight fluctuations over the years but ultimately showing a small increase (3%) from US$105.5 in 2020. Japan at the tenth spot, on the other hand, saw a decrease of 5% from 2020’s US$112.4, going down to an AOV of US$106.1 last year.
Average Order Value in China: Why is It Low?
Given the impressive growth across various countries, one might wonder why China, the world's largest eCommerce market, doesn't appear on this list. Analyzing China’s AOV from 2020 to 2023 reveals a consistent decline: 2020’s U$90.2 dipped slightly to US$88.2 in 2021, then to US$86 in 2022, and reaching US$84.9 in 2023. The explanation lies in the unique dynamics of China's eCommerce environment.
China has over 800 million internet users, with a significant percentage engaging in online shopping, driven by massive events like Alibaba's Singles Day that far exceeds sales of similar events in other countries. The country's eCommerce is supported by a vast logistics network enabling efficient order delivery and a strong mobile payment system with high penetration. Additionally, in lower-tier cities, the lack of retail infrastructure pushes consumers online, offering them more variety and choices.
This setup favors a high volume of transactions with potentially lower individual order values, contrasting with the AOV metric where other countries might lead due to different consumer behaviors and market dynamics.
How to Increase Average Order Value?
To enhance AOV in their online stores, businesses can consider consolidating effective strategies into five key areas:
Optimize Shipping and Discount Incentives: Implement free shipping thresholds and discounts for minimum purchase amounts to encourage larger orders. Offering free gifts or special discounts when orders exceed a specific amount can also motivate customers to add more items to their cart.
Bundle Products & Upsell: Combine products into bundles for a discount, and use upselling techniques to recommend higher-priced items or additional products that complement what the customer is already purchasing. This approach not only increases the order value but also enhances the customer's shopping experience by making it easier to find related products.
Loyalty Programs & Exclusive Offers: Develop a loyalty program to reward repeat customers, increasing their lifetime value and encouraging higher spending. Special offers for first-time buyers or exclusive deals for loyalty program members can further boost AOV.
Leverage Personalization and Product Recommendations: Utilize customer data to personalize shopping experiences with targeted product recommendations. Highlighting trending products or best-sellers can also guide customers toward higher-value purchases.
Engage with Time-Sensitive Promotions and Social Proof: Create urgency through time-limited promotions and leverage social proof, such as customer reviews and feedback, to build trust and encourage higher spending. These strategies can effectively increase the perceived value of products and encourage customers to make larger purchases.
By focusing on these five areas, businesses can create a comprehensive approach to increase their AOVs. Each strategy works by either directly encouraging larger purchases or by enhancing the customer experience in a way that naturally leads to higher spending.
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