Saturday Brain Storming Thought (267) 22/03/2025
MINIMUM ORDER VALUE(MOV)
Minimum Order Value (MOV) is the lowest amount a customer must spend on a product or service to complete an order, ensuring businesses cover costs and potentially increasing average order value
Purpose of Minimum Order Value
1) Cost Coverage
MOV helps businesses cover the costs of processing and fulfilling orders, especially smaller ones
2) Increased Profitability
By encouraging larger orders, MOV can lead to higher average order values and increased profitability
3) Free Shipping Threshold
Many businesses use MOV to offer free shipping, incentivizing customers to spend a certain amount
Benefits of MOV for Businesses
1) Reduced Handling Cost
Fewer, larger orders means less time and resources spent on processing and shipping smaller orders
2) Improved Profit Margins
Larger orders lead to higher revenue and potentially better profit margins
3) Streamlined Operations
Businesses can optimize inventory management and logistics for larger orders
Considerations of MOV for Businesses
1) Customer Perception
MOV should be reasonable and not deter potential customers
2) Competitive Analysis
Businesses should consider their competitors MOVs and adjust accordingly
3) Flexibility
Businesses might offer different MOVs based on customer segments or product categories
Establishment of Minimum Order Value
1) You can determine your MOV by looking at the price of the similar products you wants to sell
2) You can add your minimum Order Amount here and also enter the error message that will be displayed when customers try to checkout with an amount lower than that
3) You need to give a clear sign to your customers related to the minimum order policy
4) Customers should be aware that the amount that you have listed
5) You can even include additional information such as the amount before coupons or taxes
6) You can even decide if you want to improve a fee for customers who do not meet the minimum order value requirement
7) You can go the your E Commerce settings to implement your policy
Setting of Minimum Order Value
1) Setting a MOV ensures that the cost of goods sold (COGS) is not too high for each order placed
2) MOV helps online retailers avoid losing money on smaller orders
3) MOV helps increase order size so that customers can meet the minimum order requirement
4) It reduces the risk of profit margin loss by establishing MOV after analyzing the customers average spend and the average delivery cost
5) Motivating customers to spend a minimum amount on their order to get free shipping will instantly boost the chances for more conversions
Economic Order Quantity (EOQ)
It is the quantity of an item that should be ordered to minimize ordering and holding costs
Minimum Order Quantity (MOQ)
It is the smallest number of items a supplier will accept for an order
Minimum Purchase Value
Minimum purchase value is also known as Minimum Order Value
Meaning of Minimum per order
It refers to the smallest quantity (in units or rupees value) of a product that supplier or manufacturer is willing to sell
COMPILED BY:-
Er. Avinash Kulkarni
9822011051
Chartered Engineer, Govt Regd Valuer, IBBI Regd Valuer
