September 11, 2026
Ecommerce operators face a persistent challenge: customer acquisition costs (CAC) continue to climb while attention spans shrink. To maintain profitability, brands must extract more value from every visitor who reaches the checkout. This is where Average Order Value (AOV) becomes the most critical lever in the growth stack. However, there is often confusion regarding whether a brand should focus on average order value gross or net. While gross figures look better on a slide deck, net figures determine the actual health of the business.
At Videowise, we focus on helping brands turn video engagement into measurable revenue, which means we look closely at how content influences the final basket size. This article will define the functional differences between gross and net AOV, explain how to calculate each, and provide actionable strategies to increase these metrics without eroding your margins. Understanding these nuances allows you to build a more resilient, revenue-first ecommerce operation.
Quick Answer: Gross AOV is calculated by dividing total revenue (before returns and discounts) by the number of orders. Net AOV subtracts returns, cancellations, and often discounts from the total revenue before dividing by the order count, providing a more accurate reflection of actual retained profit.
Average Order Value (AOV) is a foundational metric that tracks the average dollar amount a customer spends per transaction. To calculate it, you divide total revenue by the total number of orders over a specific period. While the basic formula is simple, the data you feed into it changes the strategic outcome. For a deeper look at the metric, explore this guide to ecommerce average order value.
Gross AOV represents the "top-of-funnel" purchase behavior. It typically includes the full sticker price of products, often including shipping fees and taxes, before any returns or cancellations are processed. Operators use Gross AOV to understand initial purchasing intent and the effectiveness of front-end merchandising, such as bundles or upsells. It tells you what the customer was willing to commit to at the moment of checkout.
Net AOV is the "bottom-line" metric. It accounts for the reality of ecommerce operations: returns, refunds, and discounts. To find Net AOV, you take your total revenue, subtract the value of returned goods and applied discount codes, and then divide by the number of orders. This metric is far more useful for financial planning and calculating your actual Return on Ad Spend (ROAS). If your Gross AOV is high but your Net AOV is significantly lower, you likely have a "return rate" problem or are over-relying on heavy discounting.
Key Takeaway: Gross AOV measures the success of your sales and merchandising tactics, while Net AOV measures the actual sustainability and profitability of your business model.
For a high-growth Shopify brand, ignoring the gap between gross and net AOV can lead to "phantom growth." This occurs when top-line revenue looks impressive, but the cost of processing returns and the loss of margin through discounts leave the business with little actual cash.
In categories like apparel or home goods, return rates can hover between 20% and 30%. If an operator only tracks Gross AOV, they might believe a new "buy two, get one free" promotion is a massive success because the initial basket size increased. However, if customers are only buying the extra items to reach a free shipping threshold with the intention of returning them later, the Net AOV will plummet. The operational costs of "reverse logistics" (shipping the items back, inspecting them, and restocking) further erode the profit.
Heavy discounting is the fastest way to boost Gross AOV in the short term, but it often lowers Net AOV. For example, if you offer a "Spend $100, Get $20 Off" coupon, your Gross AOV might hit $105, but your Net AOV (the money you actually keep) is $85. Operators must balance the psychological win of a "big basket" with the reality of the net contribution margin per order.
| Metric | Includes | Excludes | Best For |
|---|---|---|---|
| Gross AOV | Shipping, Taxes, Full Price | Returns, Discounts, Refunds | Testing merchandising & upsells |
| Net AOV | Retained Revenue, Shipping | Returns, Refunds, Discounts | Profitability & ROAS tracking |
To get an accurate picture of your performance, you must be consistent in your data inputs. Most operators calculate AOV on a monthly basis, though weekly tracking is better for brands running frequent promotions.
Total Revenue (before returns/discounts) ÷ Total Number of Orders = Gross AOV
Example: If your store generates $500,000 in sales from 5,000 orders in October, your Gross AOV is $100.
(Total Revenue - Returns - Discounts) ÷ Total Number of Orders = Net AOV
Example: If that same store had $50,000 in returns and $25,000 in applied discounts, the retained revenue is $425,000. Dividing this by the 5,000 orders results in a Net AOV of $85.
When analyzing AOV, we recommend looking at two other key performance indicators (KPIs):
For more detail on how these metrics work together, review this framework for using AOV analytics to drive sustainable growth.
Increasing the initial basket size requires making the path to a larger purchase feel like a benefit to the customer, rather than a sales pitch.
Setting a free shipping threshold is the most common way to nudge AOV higher. The rule of thumb is to set the threshold roughly 15% to 20% above your current median order value. If your median order is $65, setting the threshold at $75 encourages the shopper to add one "impulse buy" or accessory to the cart to "save" on shipping.
Bundling complementary products creates perceived value. Instead of selling a skincare cleanser, toner, and moisturizer separately, offer them as a "Complete Glow Kit." Operators see higher AOV when they use bundles because it simplifies the decision-making process for the customer. It moves the conversation from "Do I need this item?" to "Do I want the complete solution?"
On-site video is a powerful tool for increasing basket size. By using Videowise's shoppable video platform, we allow brands to feature multiple products within a single video player on the Product Detail Page (PDP). When a customer sees a video of an influencer using a primary product along with two accessories, they are significantly more likely to add all three to the cart. This turns a single-item purchase into a multi-item basket instantly.
Key Takeaway: To increase AOV without hurting conversion, ensure that every "add-on" or bundle offers genuine convenience or a logical solution to the customer's needs.
Boosting the initial sale is only half the battle. You must ensure the customer keeps what they buy and that the sale remains profitable.
The primary reason for returns in ecommerce is "product mismatch"—the item didn't look or function like the customer expected. High-quality video commerce reduces this friction. When customers can see the drape of a fabric, the true color of a cosmetic, or the assembly of a piece of furniture in a real-world setting, their purchase is more "informed." In our experience, brands that prioritize video on their PDPs see a more stable Net AOV because the return rate drops.
For additional guidance, see this resource on using product videos to improve ecommerce sales and reduce returns.
Instead of offering "20% off everything," which slashes the margin on every item, use "threshold-based" rewards. For example, "Spend $100, get a free mystery gift." The cost of the gift to the brand is often lower than the 20% discount, but the perceived value to the customer is high. This keeps the Net AOV higher because you aren't discounting the core products in the basket.
Digital add-ons, such as extended warranties, priority processing, or shipping insurance, have nearly 100% margins. Because these items are rarely returned, they contribute directly to Net AOV. Adding a small checkbox for "Carbon Neutral Shipping" or "Route Shipping Protection" can add $2 to $5 to every order with zero inventory cost.
Modern ecommerce operators are moving away from static images and toward interactive experiences. At Videowise, we provide the infrastructure to host these experiences without compromising Core Web Vitals (the standardized metrics Google uses to measure page speed and user experience).
A common fear among ecommerce directors is that adding video will slow down the site, hurting the Conversion Rate (CVR) and search rankings. We solve this by using performance-first delivery. Our video components use "lazy loading" (loading only when they enter the viewport) and advanced compression. This ensures that the page remains fast, which is critical because even a one-second delay in load time can significantly reduce AOV and conversion.
Scaling a video strategy often breaks down at the production stage. Operators can use AI Clips to take long-form content—like a 10-minute YouTube review or a Live Shopping recording—and automatically cut it into "shoppable" snippets. These snippets can then be tagged with products and deployed across the site in bulk. By populating your site with more relevant video content, you increase the "time on site" and the likelihood of a larger, multi-item purchase.
For teams exploring live content, Videowise's live shopping feature supports interactive commerce experiences that can continue generating sales through replayable content.
Bottom line: Increasing AOV is a balance of psychological triggers (thresholds/bundles) and technical execution (page speed/video clarity). Gross AOV gets them to buy; Net AOV ensures you stay in business.
If you want to move the needle on your AOV over the next 30 days, follow this structured approach:
Step 1: Audit your current Net AOV vs. Gross AOV gap.
Pull your data for the last 90 days. Calculate your Gross AOV and your Net AOV. If the gap is wider than 20%, focus on reducing returns or lowering your discount frequency before you try to "increase" the basket size. There is no point in filling a leaky bucket.
Step 2: Deploy Shoppable Video on your top 10% of SKUs.
Identify the products that drive the most traffic. Use a platform like ours to embed shoppable video carousels on these pages. Ensure the videos show the product in use alongside complementary items. This is the fastest way to increase multi-item orders without changing your pricing structure.
Step 3: Test a "Gift with Purchase" (GWP) threshold.
Set a threshold 20% above your current Gross AOV. Offer a high-perceived-value, low-cost item as a reward for hitting that number. Monitor the impact on your Revenue Per Session (RPS) to ensure that the higher AOV isn't coming at the expense of total conversion.
You cannot optimize what you cannot measure. Most standard analytics tools struggle to attribute revenue to specific content assets. They might tell you a page had a high AOV, but they won't tell you why.
When evaluating video's impact on AOV, we look at:
Our Content Performance Analytics provide a full-funnel view of these interactions. By understanding which videos lead to the highest AOV, you can double down on those creative styles—whether it’s UGC (User Generated Content), expert tutorials, or high-production brand films.
The final step in professional AOV optimization is testing. Test a "Free Shipping at $50" banner against a "Free Shipping at $75" banner. Test a PDP with video against a PDP with only images. By using data-driven experiments, you remove the guesswork from your merchandising strategy.
For a real-world example of video testing and AOV growth, see how MudMixer increased AOV with shoppable video carousels.
Understanding the difference between average order value gross or net is essential for any Shopify operator who wants to build a sustainable brand. While Gross AOV is a useful metric for gauging customer interest and merchandising effectiveness, Net AOV is the true indicator of profitability. By reducing return rates through better product education—specifically using high-fidelity shoppable video—and using strategic bundling, you can increase both metrics simultaneously.
Our mission is to help you turn video into a measurable revenue channel. We build tools that allow you to scale your content without slowing down your store, ensuring that every video view contributes to a higher AOV and a better bottom line.
"A small increase in AOV, when multiplied across thousands of orders, can be more impactful than a massive increase in traffic—and it usually costs far less to achieve."
Ready to see how shoppable video can lift your brand's AOV? Install Videowise from the Shopify App Store or book a demo with our team today.
Both are important, but for different reasons. Gross AOV helps you evaluate your marketing and merchandising effectiveness, while Net AOV is necessary for understanding your true profit margins and actual return on ad spend. You should monitor the "gap" between the two to identify issues with returns or excessive discounting.
Gross AOV typically includes everything the customer pays at checkout, including taxes and shipping fees. However, many operators prefer to calculate "Product AOV" by excluding these fees to get a clearer picture of how many items and what value of items are actually being sold. Net AOV almost always excludes taxes and shipping to reflect retained revenue.
A large discrepancy usually points to one of three things: high return rates, heavy use of discount codes, or a high volume of order cancellations. If your return rate is high, consider improving the product information on your site with better descriptions and shoppable videos to ensure customers know exactly what they are buying.
Yes, if the friction created by a higher price point or shipping threshold outweighs the perceived value of the offer, your conversion rate (CVR) may drop. The goal is to increase AOV while maintaining or increasing Revenue Per Session (RPS), which accounts for both order size and conversion probability. Always A/B test major changes to your pricing or shipping thresholds.
