The Importance of Optimal Minimum Order Values to New Ecommerce Ventures

Starting an ecommerce business means navigating through many decisions including the optimal Minimum Order Value (MOV) to ensure a feasible store. This article unpacks the process of setting an appropriate MOV while ensuring profitability and customer appeal. We’ll also discuss how preparing your audience in advance can lead to savings and better decision-making.

Decoding Minimum Order Value (MOV)

Setting a feasible MOV is a balance between attracting customers and maintaining profitability.

In general, you want to set your MOV high enough to cover your costs and make a profit, but not so high that it discourages customers from buying.

Keep the following in mind:

• Product Type: Pricier items can bear higher MOVs.
• Audience Insights: A budget-conscious audience might prefer a lower MOV.
• Competitor Pricing: your pricing cannot exist in a vacuum

Deciding Your MOV: Factors to Consider

Consider the following when identifying the ideal MOV:

• Cost Per Click (CPC): The amount spent on each ad click.
• Conversion Rate: The percentage of visitors that buy.
• Product Expenses: This includes the product itself, shipping, and other fees.
• Profit Margin: The amount left after deducting expenses.

For example, if your CPC is $1 and your conversion rate is 3%, you’d need a $33 sale to break even. Under this scenario a typical MOV might be around $60 which would be broadly in line with a typical ecommerce average order value of c.$55.

Boosting profitability could involve strategies such as driving traffic from non-PPC sources (organic SEO & Social) or improving sales conversions through low friction UX.

Harnessing the Strength of an Existing Audience

Jumpstarting an ecommerce business isn’t easy, especially when beginning from scratch. Hence, pre-building an audience or community around an adjacent subject can be a game-changer.

By engaging potential customers with relevant, non-product content, you can:

• Minimize Initial Marketing Costs: with lower customer acquisition costs when you launch your store.
• Sell More with Less: with a familiar brand that appeals, it is possible to target higher MOV’s 

Capitalizing on Customer Lifetime Value (CLV)

Sometimes, making a profit from just one sale isn’t feasible and a longer term sequence of repeat orders is necessary. That’s where the CLV comes in. When considering a CLV strategy check if:

• Customer Loyalty is High: Loyal customers increase the CLV.
• A Long-Term Perspective is Viable: Think beyond just immediate returns.
• CLV Surpasses Acquisition Costs: Even with a low MOV, profitability is achievable if the CLV is high.

Strategies for Low-Priced Items

If you’re selling items on the cheaper side, consider:

• Exploring higher-margin products.
• Limiting free shipping to certain order values.
• Charging extra for fast delivery.
• Bundling products or suggesting additional purchases.
• Rewarding frequent shoppers with special offers.

Conclusion

Careful understanding of MOV’s can be a recipe for success in ecommerce. By striking the right balance of product margins and customer acquisition costs you’re well on your way to creating a viable store which can generate a decent profit.