What Is Average Basket Size (ABS) in E-Commerce?
Any retail business owner will tell you that one of the most important metrics to track is average basket size. Let's take a closer look.
Kelli Harrison July 31, 2022.
In retail, average basket size is a metric of your shopping behavior report used to track the average number of items per transaction. This metric is important because it can give insights into basket checkout behavior and help retailers optimize their inventory and pricing.
How to Calculate Average Basket Size
The most common method is to take the total units sold in a period of time and divide it by the total number of transactions in that same period. This will give you the average number of items per transaction.
Use this handy formula:
Average basket size = total number of units sold / total number of transactions
Here Is a Breakdown of Each Component
- Total units sold By counting the number of units you sold per transaction, you can find your total number of units sold. Tracking total units sold is easier with a point-of-sale (POS) system that includes inventory management.
- Number of transactions Second, you have to take into account the total number of transactions during the time when you sold your total number of units. Using retail software's automated reporting and product analytics features, you can track the number of transactions easily.
The Importance of Average Basket Size
Whichever method you use, understanding your shopping basket size is a helpful way to track the health of your business and can also help you identify trends and make strategic decisions about pricing, promotions, and product mix.
Calculating your average basket size has many benefits. First, by running checkout behavior analysis, you can track marketing and price effectiveness. If your average basket size decreases, your prices may be too expensive, or your marketing may not be reaching the right demographic. Second, average basket size helps forecast sales. Knowing how much each consumer spends on average helps predict revenue. Finally, average basket size is a key metric for measuring customer satisfaction and can be used to improve the customer experience.
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