Getting Average Order Value completely wrong

I started reading another book on data analysis for ecommerce but ended up putting it down, which is rare for me.

This section caused me to sit up and scratch my head:

Simply constructed, AOV [Average Order Value] is the sum total cost of the items purchased, divided by the number of items.

The cost? Not the amount spent?

Divided by the number of items in the order? Not the number of orders in the store as a whole?

Huh?

This wasn’t just a simple wording mistake as it restates the definition in the next sentence:

It’s the average cost of all the items purchased

One could weasel out that the author meant cost to the customer but that’s an odd phrasing for order total. I’ve been in and around ecommerce since 2005 and I’ve never heard of AOV described like this.

Seems like a pretty 101-level mistake that wasn’t caught by any of the editors.

That definition they gave is for a completely different metric, average cost (if they meant store-wide) or average order cost (if they meant individually). Both useful metrics but rare and used for completely different purposes.

The book had some interesting sounding chapters and sub-chapters but that mistake eroded my trust in the author. Who knows what else they got wrong.

I’ll probably do a scan of the book and see if there are any nuggets in it I can add to Repeat Customer Insights but I’ll be making sure to check other sources on the actual definitions and implementations.

(And in case you haven’t heard of Average Order Value, it’s the total revenue divided by the number of orders. You’d describe it to someone in a conversation by saying “our customers spend around $75 per order”)

Eric Davis

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