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ecommerce accounting

Why Is Average Order Value Crucial For eCommerce Stores?

The decisions that you make as a business owner will decide the fate of your business, family, and overall life. Everything that you do in your business should be planned and measured.

There are tons of different KPI’s, financial ratios, and benchmarks we can use to diagnose and assess your business to drive key financial outcomes.

One important KPI that all eCommerce Stores should be tracking is average order value (AOV).

Your average order value (AOV) is the average amount of money each of your customers spends per order.

Your Average Order Value Is calculated as:

Sales/Total Number of Sales

The Average Order Value multiplied by your Gross Margin Rate show your average margin per order.

This will drive your marketing decisions since this will show how much you can afford to spend on new customers to keep their first order profitable. It is important for eCommerce businesses to focus on improving their AOV while maintaining net profit margins in order to increase the amount of money that they can spend to acquire a new customer. As ads continue to become increasingly competitive and costly, it is crucial to have a strong AOV to when competing with your advertising dollars to acquire new customers.

To increase your average order value, you’ll need to convince customers to add more items, or more expensive items, to their cart. There are many different strategies that can be used to achieve this.

I included an overview of 5 strategies below.

  1. Add product recommendations to product and checkout pages
  2. Upsell or cross sell complementary products
  3. Provide order minimum incentives
  4. Create product bundles or packages
  5. Run effective deals and specials

Wrapping Up:

eCommece store onwers should very carefully consider all the revealnt KPI’s that drive financial results in their business including average order value.It is important to consult with an experienced eCommerce CFO/CPA regarding your specific business.

Here at Camuso CPA, we offer eCommece tax, accounting, and CFO services nationwide. Our team is highly experienced in eCommece.  Contact our team today to discuss your portfolio in detail here.

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How To Accept Cryptocurrency Payments At Your eCommerce Store

Cryptocurrency have been growing in popularity over the past 10 years, with the last 5 years gaining momentum into more mainstream communities. As cryptocurrencies continue to change the way we do business, it’s time to start considering accepting them at your store.

We have notably seen many major brands begin to accept cryptocurrency including Expedia, Whole Foods, Overstock and Mircosoft.

Cryptocurrencies serve many purposes includes a digital medium of exchange and a store of value. They are based on blockchain technology, a decentralized organizational method that is spread across several computers to ensure the integrity of transactional data. The most popular cryptocurrency is Bitcoin, but there are thousands of cryptocurrencies which you can accept and use.

The most practical way to accept these payment methods on your website are to use third party applications such as Coinbase Commerce or Bitpay.

These two exchanges integrate with Shopify a and allow you to receive payments then convert them into fiat currency for a fee. Once you sign up for the payment processor, you can use the merchant service function to convert the coins and withdraw them into your bank account.

Alternatively, you can choose to accept crypto without relying on a third-party service and accept payments manually. To do this, you’ll generate a Bitcoin address for each sale on your website and provide instructions for the amount of money people should send. I do not recommend this method unless you are experienced with cryptocurrency. I also do not recommend this method is selling large volumes since this will require manual invoicing.

It is important to understand both the cash flow considerations when accepting cryptocurrency as a form of payment as well as the tax consequences.  We have covered these topics in detail in our cryptocurrency blog and our definitive cryptocurrency tax guide.

Wrapping Up:

Business owners should very carefully consider all the cryptocurrency tax factors while participating in any cryptocurrency transactions.  It is important to consult with an experienced cryptocurrency and eCommerce CPA regarding your specific portfolio and/or business.

Here at Camuso CPA, we offer cryptocurrency and ecommerce tax and accounting services nationwide. Our team is highly experienced in cryptocurrency as one of the first CPA firms working in the space since 2016. We were the first CPA firm to accept cryptocurrency as a form of payment during 2017. Contact our team today to discuss your portfolio in detail here.

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