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Average Order Values fall 4%, should E-tailers be Worried?

Posted by Roz Thomasoo on Jul 2, 2015 12:59:22 PM

IMRG and Capgemini’s recent e-Retail Sales Index recorded a fall in average order value (AOV) across e-commerce. Comparing Q1 2015 to the same period of the year prior, the report found AOV’s to have fallen 4% YoY, sustaining the metrics general downward trend over the past few years which has seen the average UK e-commerce basket value fall 7% since 2010.

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 Across Shopping Search, analysis of Intelligent Reach data shows AOV to have fallen by 15% over the q1 2015 period YoY.

Should e-retailers be worried about this trend? The short answer is no, far from it. 

Whilst AOV's may be declining, The UK online retail industry is currently thriving, with sustained double digit growth and spending per capita higher than anywhere else in the world. Furthermore, the total sales value from UK e-commerce is set to reach a staggering £52.25bn in the UK this year.

Carefully analysing the retail landscape, one can see that this decline in AOV is a sign of market evolution and increased consumer use/ confidence with online shopping. Across Shopping Search, Intelligent Reach data shows that whilst people may be spending less per purchase, they are partaking in far more online transactions with 57% more online orders within q1 2015 YoY. This trend can be attributed to several factors including: 

Retailers listing wider product ranges online:

As more retailers utilise the online realm, more products become available to buy online. These include products with lower price points as well as heavily discounted items (which online retailers may be more able to offer due to their combatively lower overheads and thus wider margins).

Increased consumer confidence with online:  

Consumers are becoming more comfortable with online retail with many shifting their purchasing behaviour towards making smaller purchases more frequently. This rise in consumer confidence has been aided by the existence of trusted Shopping Search sites to compare prices. 

Multi-channel simplicity and increased convenience: 

Speedier check out processes and simplified, faster journeys to check out have made it ever easier and more convenient for consumers make frequent small purchases. Additionally, the rise of mobile commerce and fast, flexible, free delivery options encourages consumers to shop online often, even for items of very low value.

Overall, the increased adoption of e-commerce is causing consumers to consider online shopping for a wider range of purchases. Retailers needn't fear this trend, however they should ensure that their offering is fully optimised for online in order to succeed. With UK household spending currently rising at a strong rate (Office of National Statistics), the future of UK online retail continues to look extremely promising. 

If you are an online retailer looking to increase your product performance and profitability, Intelligent Reach can help.
 

Topics: Industry News