Ecommerce Glossary: 85+ Terms You Must Know in 2020 (Updated)

E-Commerce Glossary Cover

This ecommerce glossary compiles more than 85 of the most common terms you need to know when selling online in 2020.

Whether you are just starting out or are a long-established seller in the ecommerce industry.

This A-Z dictionary will help you navigate through all the jargon, abbreviations and technical terminology you are likely to come across during your ecommerce career.

I always keep this glossary updated, so make sure you bookmark this page and use it as your go-to resource to look up any term in the future.

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A

Above the fold

Describes the visible screen estate of an ecommerce website a user sees without scrolling. It is also often referred to as “above the scroll“.

A/B Testing

The experiment of showing two variants of the same web page, marketing campaign, etc. to different segments of consumers at the same time to compare which variant drives more conversions.

Accessibility

Websites, tools, and technologies designed and developed so that people with disabilities can use them.

ACoS

Stands for advertising cost of sale; a metric used to measure the performance of an Amazon Sponsored Products campaign. ACoS indicates the ratio of ad spend to targeted sales and is calculated by this formula: ACoS = Ad Spend ÷ Sales.

Affiliate Marketing

A marketing arrangement where a publisher and an advertiser join forces to market to the consumer. The publisher promotes a service or product on their website or social media channel. If the consumer buys the product, the publisher gets a commission fee from the advertiser.

A-to-Z Guarantee

The A-to-Z Guarantee is Amazon’s customer protection scheme that ensures the on-time delivery and stated condition of items sold by third-party sellers. If items arrive in a damaged state or are not delivered by the merchant in the first place, Amazon will refund the customer.

Amazon API

Amazon’s Product Advertising API is a web service application programming interface (short: API). It enables third parties to access Amazon’s product catalogue data so that sellers and vendors can streamline their inventory and product catalogue management.

Amazon Brand Registry

Brand Registry is a programme designed to protect brands and their intellectual properties on Amazon. It enables merchants with registered trademarks to accurately represent their brands and to enrol for processes that address infringement on the Amazon marketplace.

Amazon Standard Identification Number (ASIN)

Amazon’s Standard Identification Number (ASIN) is a unique 10-character alphanumeric identifier for a product on Amazon (for example B07ZB5C3ZM). It is linked to a unique SKU/EAN/ISBN code and is used as a reference to manage catalogue attributes, prices and inventory of a product.

Amazon Vendor (1P)

An Amazon vendor operates as a wholesale supplier to Amazon. It is also known as the 1P (first-party) model, where Amazon buys the product from a brand and is free to set their own prices.

ATC Rate

Stands for add to cart rate; the percentage of visitors that add items to the shopping cart.

Average Time On Site

The average amount of time your visitors spend on your ecommerce site.

Average Transaction Value (ATV)

The average dollar amount that a customer spends with your business in a single transaction.

Average Order Value (AOV)

The average total of every order placed with a retailer over a defined period of time. The formula to calculate AOV is revenue divided by the number of orders.

Average Selling Price (ASP)

The average selling price (ASP) refers to the price at which a product is typically being sold. The ASP differs from the Recommended Retail Price (MSRP) because it reflects the actual price at which a product was sold.

A+ Content

A+ content is available for first-party (1P) vendors on Amazon. It allows them to use enhanced multimedia features to better present the value of their products and brands to customers.


B

Basket Building

Basket building refers to the strategy of encouraging customers to build their virtual shopping cart. The more items a customer checks out with, the lower are typically the relative shipping and handling costs to fulfil the order.

Below the fold

Below the fold describes the content of a website a user only can see when scrolling down the page. It usually contains more detailed information about a product or service, compared to the immediately visible above the fold area.

BOGO

Stands for buy one, get one free; a type of promotion for sellers to increase the value of an offer without giving a price discount.

Bottom-line

Also known as net income, is revenues minus expenses. It describes the profit or loss a company makes when selling an item. There is a profit when revenues exceed expenses. There is a loss when expenses exceed revenue.

Bottom-line Growth

Refers to a companies’ ambition to improve their profitability when selling products online. The aim is to either reduce costs or to increase the sales volume to grow the net income of a business.

Bounce Rate

The Bounce Rate is the percentage of visitors that leave an online shop after only viewing one page or product without making a purchase.

Brick and Mortar

Refers to the physical stores of retailers, typically found on side-streets in cities and areas with a high density in population. Examples of brick and mortar retailers are Tesco, Walmart, or Sainsbury’s.

Business to Business (B2B)

The term Business to Business ecommerce refers to the sale of goods between two businesses via an online shop or marketplace.

Business to Consumer (B2C)

The term Business to Consumer ecommerce refers to the sale of a product between a business and a consumer for personal use. The financial transaction takes place over the Internet.

Bundling

The process of pairing two or more products together and selling them to consumers as a combined package. An example of a product bundle would be to sell a cutting board together with a set of kitchen knives.

Buy Box

The term Buy Box refers to the area on the Amazon product detail page where customers can choose to add products to their shopping cart.

The buy box area allows customers to make a wide range of choices: Purchasing products with a 1-click-option, selecting the seller to buy the product from, subscribing to buy replenishable products on a recurring basis, etc.

See also: Lost Buy Box


C

Call-to-Action (CTA)

A call-to-action (CTA) stands for a specific instruction towards a user to trigger a certain response or behaviour. Examples of CTA’s include ‘Get Started’, ‘Learn More’, or ‘Join The Newsletter’ buttons on a website.

Chargebacks

A chargeback (also: reversal) is the return of a credit card charge to the customer. Chargebacks are initiated by the card company or bank following a dispute from the card owner as part of customer protection schemes. They protect customers from fraudulent charges. If claimed, the buyer is reimbursed in full.

Churn Rate

The churn rate, also known as attrition rate, describes the rate at which customers typically stop making repeat purchases from a seller within a given time frame. The formula is as follows: Customer Churn Rate = (Lost Customers ÷ Acquired Customers) x 100%

Conversion Rate

The rate at which a consumer completes a desired action. In ecommerce, it typically measures how many users of an online shop convert into buying customers. It is calculated as follows: Number of Converted Users ÷ Number of Total Users x 100

Cookies

An HTTP cookie (also called web cookie, online cookie, or browser cookie) is a data piece that allows online shops to mark, track and recognize their visitors. Cookies allow online shops to personalize the customer journey, based on the stored user settings and preferences.

Cost of Goods Sold (COGS)

Cost of Goods Sold (COGS) refers to the direct production costs of the goods sold by a company. In other words, it describes how much it costs to produce a product. COGS include direct raw material and labour expenses, but exclude indirect cost components, such as marketing and shipping.

Cost Price

The price at which a retailer or merchant buys a product from the manufacturer.

Customer Lifetime Value (CLV)

A metric to describe the expected monetary value of a customer to a business during their lifetime. The CLV helps businesses to evaluate, whether customer acquisition and marketing costs will amortise over the lifespan of the customer relationship.

Customer Relationship Management (CRM)

Refers to the practices, strategies and technologies a company uses to manage and organise its interactions with potential and existing buyers throughout the customer lifecycle.

Customer Reviews

The evaluation of a product or service, published by a customer who experienced or used the product or service. Customer reviews usually evaluate and describe the functionality, ease of use and perceived value-for-money ratio of a product or service.

Customer Returns

Describe purchased items that are returned by consumers. Depending on the country, retailers are legally obliged to offer customers the opportunity to return items within a certain period of time after the purchase.


D

Detail Page

The page of an ecommerce site that presents the details of a specific product. It usually refers to the page from which a customer would place the product in its basket.

Direct Import

Refers to the act of buying products directly from a manufacturer in a foreign country. It removes the need for a middleman to import the goods for sale and the dependency on local suppliers. This typically reduces the operational costs and cost prices of imported products.

Dropshipping

A retail fulfillment method where a retailer or merchant transfers its customer’s orders to a third party to process and ship the products.


E

Ecommerce

Describes all commercial transactions conducted electronically using the Internet. In simple terms, it refers to buying and selling products or services online.

Email Marketing

The use of email to promote a product or service to consumers. It is used as a cost-effective marketing tool to build and develop relationships with (potential) customers and to drive repeat sales over time.


F

Fulfillment by Amazon (FBA)

Fulfillment by Amazon is an ecommerce service with which sellers can store their inventory in Amazon’s fulfillment centers. When customers purchase a product, Amazon picks, prepares and ships the order directly to the customer.

Fulfillment Center (FC)

A fulfillment center is a warehouse where customer orders are received, processed and fulfilled from. This term is predominantly used by Amazon and abbreviated as ’FC’.


G

Glance View

A glance view describes the number of impressions on a product detail page on Amazon. It is a metric used to quantify how many visitors have viewed a product page or product advertisement.

Gross Profit

The gross profit describes the total revenue minus cost of goods sold (COGS). It reflects the profit before operating expenses and is described as an absolute number in the local currency.


H

Headless

The technical separation of the front- and back-end of an ecommerce platform. In other words, the content presentation layer (the customer touchpoint) is decoupled from back-end critical ecommerce processes, such as inventory management and payment processing.


I

Inventory

The quantity or value of the stock position of a manufacturer or retailer. Inventory can describe the number of sellable products or the number of raw materials that are later being used in the manufacturing process.


J

Just in Time Manufacturing

A production method in which products and their components are only being produced when they are ordered by customers. As such, just-in-time manufacturing removes the need to store large amounts of unsold stock in warehouses as excess inventory.


K

Key Performance Indicator (KPI)

A Key Performance Indicator (KPI) is a measurable value that allows businesses to track and analyse their performance over a certain period of time. It enables organisations to evaluate their success at reaching their set targets.

Keywords

Keywords describe the terms used by customers to search for products online. In ecommerce, keywords often describe the product attributes, use cases and functionalities, e.g., ‘bottle’, ‘adjustable’, ‘portable’, …


L

Landing Page

A web page that serves the sole purpose of persuading visitors to take a desired action. It is specifically designed to either drive engagement or sales (e.g., encouraging visitors to sign up to a newsletter or to make a purchase).

License Plate Receive (LPR)

Describes the receiving process of items in an Amazon Fulfillment Center by scanning the barcode of an outside package. LPR eliminates the need to scan each individual item and reduces the time to receive items in the warehouse.

Logistics

Logistics refers to the procurement, maintenance and transportation of raw materials, products, facilities and personnel within an organisation.

Lost Buy Box (LBB)

Describes the situation when an available item appeared on a product detail page on Amazon but was not featured to get directly added to a customer’s cart when pressing the “buy” button. It is calculated as (Glance Views with Lost Buy Box * 100) / Total Glance Views.

Buy Box Logic Amazon

M

Margin

Refers to the difference between a seller‘s cost of acquiring a product and the selling price. Margins are expressed as percentages (%) of net sales revenues.

Reading recommendation: The complete guide to profit margins.

See also: Gross Profit, Net Profit

Online Marketplace

An online marketplace (also: ecommerce marketplace) is an ecommerce platform with multiple third-party merchants selling goods or services, whereas transactions are processed by the marketplace owner.

Minimum Order Value (MOV)

The Minimum Order Value (MOV) describes the smallest dollar value that may be ordered in one delivery or purchasing order.

Minimum Order Quantity (MOQ)

The Minimum Order Quantity (MOQ) describes the smallest number of products that may be ordered in one delivery or purchasing order.

Mix-Effect

The mix-effect describes a profitability change within a product portfolio of a merchant or retailer, driven by a change of the sold product mix. A change in the product mix affects sales and profits even if the average selling price remains unchanged.

N

Net Profit

Also referred to as bottom-line, net earnings or net income. Net profit describes the total revenue minus the total expenses of a company. Total expenses include operating costs, taxes, stock dividends, interest, etc.


O

Omnichannel

The term omnichannel commerce describes a multichannel approach aiming to create a seamless customer experience across multiple touchpoints along the customer journey. An omnichannel approach ensures that messages, prices and marketing offers are aligned across channels.

Out of Stock (OOS) Rate

The Out of stock (OOS) rate, also referred to as stockout rate, describes the number of items that are not available for customers to purchase when they seek to place an order.


P

Private Label

The term Private Label refers to products that are sold by a retailer under its own brand but produced by a third-party manufacturer. These products are typically sold at a lower price point and as a direct rivalling alternative to products from national or international brands.

Purchase Order (PO)

A purchase order (PO) is a commercial document between a buyer and a supplier. It outlines the details about the product, quantity, cost price, delivery date, etc. a buyer agrees to purchase from the supplier.


Q

Qualified Lead

A qualified lead is a prospect (consumer) who has expressed interest in a product or service and meets a set of pre-defined criteria. These criteria are often set by the marketing & sales department of a company.


R

Recommended Retail Price (RRP)

The Recommended Retail Price (RRP) constitutes the officially suggested selling price of a product by the manufacturer to a retailer.

Revenue

Also often referred to as top line or gross income figure. Revenue describes the generated income from sales of goods or services as part of the main operations of an ecommerce business.


S

SAAS

SAAS, or Software as a Service, describes the delivery of a service over the Internet on a hosted application. In other words, the ecommerce software runs on the servers of the provider. This way, users don’t have to download, install and maintain the (ecommerce) software themselves.

Search Engine Optimization (SEO)

Search Engine Optimization (SEO) is the practice of improving the organic search rank of a website to drive visibility and traffic from search engine result pages.

Seller (Amazon)

A seller is a third party merchant that offers its products via the Amazon marketplace. Sellers can either utilize their own supply chain processes or take part in Amazon’s FBA program to deliver products to customers.

Describe featured advertising placements on the search result and product detail pages on Amazon. Sponsored Ads aim to drive conversion and visibility to products sold on the Amazon marketplace.

Stock Keeping Unit (SKU)

A stock-keeping unit (SKU) is a scannable bar code that is assigned to a distinct product. It’s an alphanumerical combination of typically (but not limited to) eight digits, allowing companies to track the movement and levels of inventory in their warehouses.

Supply Chain Management

Refers to the management of the flow of goods and services along the transformation process of raw materials into the final product. In Ecommerce, Supply Chain Management focuses on the processes involved to efficiently source a finished product from the manufacturer, storing (warehousing) it and to effectively deliver it to the end customer.


T

Top-line

Refers to a company’s revenue that is generated from the sales of its products. It is defined as Sales Volume * Average Selling Price. The ‘top-line’ wording comes from the fact that the revenue is being placed at the top of the income statement of a company.

Third-Party Seller (3P)

A 3P Amazon Seller sells products directly to consumers via the Amazon marketplace. They have a direct influence over the retail price and pay a variable commission per sold product.


U

User Experience

Describes the users’ beliefs, preferences, perceptions, physical and psychological responses that result from searching, buying and receiving a product along their customer journey.

Unique Selling Proposition (USP)

The USP highlights the superior benefits of a product or service that are meaningful to consumers and create additional value compared to similar offers in the market segment.


V

Value Proposition

Refers to the promise of clear, measurable and demonstrable benefits a customer gets when buying a particular product. The value proposition should convince customers that the product is better than the other alternatives on the market.

Voice Commerce

The utilization of voice recognition technology that enables consumers to purchase online merchandise or services.

If you want to increase your sales with voice commerce, take a look at my in-depth guide to voice commerce!


W

Wholesale

Refers to the practice of buying products in bulk (at large quantities) at low prices, with the intention to re-sell them to other retailers. A wholesaler sits as the ‘middlemen’ between the manufacturer and the seller.

Warehouse

A warehouse is the location of a building in which raw materials or finished manufactured goods are being stored before they are distributed to retailers or sent to the end-customer.


X

X-Channel Management

Cross-Channel or Multi-Channel Management is the tactic of selling a product on multiple online marketplaces at the same time. It diversifies the revenue source of a company and increases the reach of the customer base.

XML Sitemap

XML Sitemaps provide search engines with a comprehensive list of the URLs on a site. They identify and types of data an ecommerce site offers and help search engines to understand the hierarchy, structure and recency of category, product and landing pages.


Y

Year-over-Year (YoY)

Refers to the financial comparison of key performance indicators in successive years. It is used to determine, whether the performance of a certain metric has improved, worsened or remained flat versus the comparable time period of the previous year.

Year-to-Date (YTD)

Describes the time period from the beginning of the current year (either calendar or fiscal year), up to the present day.


Z

Zero Inventories

Refers to an inventory control mechanism that eliminates any waste due to built-up inventory levels. A company that follows a zero inventory approach will only hold the required items at hand that it expects to sell in a set period of time.


Have I missed anything?

I hope this glossary has helped you understand some of the most common terms in the world of ecommerce. Or maybe you know about a term I haven’t covered here?

Either way, let me know and leave a comment below.

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