In this ever-evolving world of e-commerce, staying informed about eCommerce terminology is as crucial as understanding the market trends.
Whether you’re an entrepreneur, an online retailer, or a savvy shopper, navigating the digital marketplace requires familiarity with a diverse range of terms and concepts.
Don’t worry! In this comprehensive eCommerce Glossary, we will describe 100+ essential eCommerce terms for you.
From affiliate marketing to customer lifetime value and emerging tech like virtual product bundling, this eCommerce glossary of terms covers it all.
Ready to boost your eCommerce vocabulary? Let’s dive in!
A
Affiliate Marketing
Affiliate marketing is a performance-based marketing strategy where businesses reward affiliates (partners) for each customer brought in through the affiliate’s marketing efforts. Affiliates typically earn a commission for referred sales or leads.
A/B Testing
A/B testing is a method where two versions (A and B) of a webpage or app are compared to determine which one performs better, helping optimize design, content, or calls-to-action.
Average Order Value (AOV)
Average Order Value (AOV) is a key e-commerce metric calculated by dividing the total revenue by the number of orders. It provides insights into the average amount spent by a customer in a single transaction, helping businesses assess customer purchasing behavior.
For example, if you generated $1,000 in sales with 100 orders, your AOV will be $10.
Average Selling Price (ASP)
Average Selling Price (ASP) is the average price at which a product or service is sold over a specific period. Monitoring ASP helps businesses evaluate pricing strategies, product performance, and overall revenue trends.
For instance, if you sold ten items for a total revenue of $1,000, your Average Selling Price (ASP) would be $100 per item.
Average Transaction Value (ATV)
ATV is a metric that calculates the average value of each transaction made by a customer which helps businesses understand the typical amount spent by customers in a single purchase.
For example, If you had $50,000 in monthly sales with 500 transactions, your ATV is $100.
Acquisition Cost
Acquisition cost is the total cost incurred to attract and obtain a new customer. It includes expenses related to marketing, advertising, and any other efforts to bring in new customers to a business.
For example, If you spend $2,000 on marketing and generate 100 sales, your acquisition cost is $20, calculated as $2,000/100 = $200.
B
B2B (Business-to-Business)
B2B refers to transactions between businesses, where one business sells products or services to another. This type of commerce often involves bulk quantities and specialized negotiations.
B2C (Business to Consumer)
B2C denotes transactions between businesses and individual consumers. It’s the most common form of e-commerce, where businesses sell products or services directly to end-users.
BOGO (Buy One, Get One Free)
BOGO is a marketing strategy where customers receive an additional item for free when they purchase one at the regular price. It’s designed to boost sales and attract customers with perceived value.
Brand Loyalty
Brand loyalty is the tendency of customers to consistently choose a particular brand over others. It’s often the result of positive experiences, satisfaction, and a strong connection between the consumer and the brand.
Basket Building
Basket building is a technique used in e-commerce to encourage customers to add more items to their shopping carts. This involves suggesting related products, offering discounts for larger purchases, or providing incentives for completing the order.
Bounce Rate
Bounce rate measures the percentage of visitors who navigate away from a website after viewing only one page. A high bounce rate may indicate that the landing page or website content needs improvement in engaging visitors and encouraging further exploration.
Bundling
Bundling refers to combining multiple products or services into a single package for sale, often at a discounted price compared to purchasing each item separately.
Buy Box
Buy Box is the section on a product detail page where customers can directly add an item to their shopping cart.
Buyer Persona
Buyer personas help businesses tailor their marketing strategies to specific customer segments. It is a semi-fictional representation of an ideal customer based on market research and real data.
Brick and Mortar
Brick and Mortar refers to traditional physical retail stores with a physical presence, as opposed to online-only businesses.
BNPL (Buy Now Pay Later)
Buy now pay later is a payment option allowing customers to make purchases and delay payment, often with interest-free installment plans.
BOPIS (Buy Online, Pickup in Store)
BOPIS is a retail strategy that enables customers to shop online and pick up their purchases at a physical store location.
Black Friday
The day following Thanksgiving Day in the United States often considered the beginning of the Christmas shopping season. Black Friday is known for its significant retail discounts and promotions both in-store and online.
C
Cart Abandonment Rate
Cart abandonment rate is the percentage of online shoppers who add items to their shopping cart but leave the website without completing the purchase, indicating potential issues in the checkout process or user experience.
Imagine 1,000 visitors, 200 add to carts, but only 50 complete the purchase. This yields a 75% Cart Abandonment Rate, signifying the percentage of users who didn’t finish the checkout process.
Conversion Rate
Conversion Rate is the percentage of website visitors who take a desired action, such as making a purchase or filling out a form, measuring the effectiveness of a website or marketing campaign.
Consider an online course page with 1,000 visitors. If 100 of them make a purchase, the Conversion Rate would be 10% (100/1000 x 100).
Conversion Funnel
The conversion funnel is the step-by-step process that a user goes through on a website, from initial engagement to the completion of a desired action (e.g., making a purchase), often represented as a funnel to visualize user drop-off at each stage.
Churn Rate
The rate at which customers stop doing business with a company, often used in subscription-based services to measure customer retention. For example, if you acquire 200 customers and lose 20, your churn rate would be 10%.
Cookie
Cookie is a small piece of data stored on a user’s device by a web browser, often used to remember user preferences, track online behavior, and personalize the user experience.
CMS (Content Management System)
Content management system allows users to create, manage, and modify digital content on a website without needing advanced technical skills, facilitating efficient content publishing and updates.
CPC (Cost-per-Click)
CPC is an advertising model where advertisers pay a fee each time their ad is clicked, commonly used in online advertising platforms like Google Ads. If the advertising cost is $50 for 500 clicks, the CPC stands at $0.10, indicating the cost per click for the campaign
CRM (Customer Relationship Management)
CRM is a system or strategy used to manage a company’s interactions with current and potential customers. It involves data analysis to improve customer relationships, sales, and customer service.
CRO (Conversion Rate Optimization)
CRO involves optimizing a website or app to increase the percentage of visitors who take a desired action, such as making a purchase or filling out a form.
Customer Acquisition
Customer acquisition is the process of gaining new customers for a business, often involving marketing and sales strategies to attract and convert potential buyers.
Customer Lifetime Value (CLV)
CLV is the predicted net profit generated from a customer throughout their entire relationship with a business, helping companies assess the long-term value of their customer base.
CTA (Call-to-Action)
A CTA is a prompt that encourages users to take a specific action, such as making a purchase, signing up for a newsletter, or clicking a link.
CTR (Click-through Rate)
CTR is the percentage of people who click on an ad or link after seeing it, providing insights into the effectiveness of a marketing campaign.
Chatbot
Chatbot is a computer program that simulates conversation with users, often used in customer support to provide instant responses and assistance.
Cross-Selling
Cross-selling involves offering customers additional products or services related to their initial purchase which increases the value of their transaction.
Cyber Monday
Cyber Monday is the Monday following Thanksgiving commonly known for online shopping deals and discounts. It’s kicking off the holiday shopping season after Black Friday.
Customer Retention
Customer retention focuses on strategies and efforts to keep existing customers engaged and loyal to a brand which eventually reduces churn rates.
Cryptocurrency
Cryptocurrency is a digital or virtual currency that uses cryptography for security, providing a decentralized and secure means of financial transactions.
D
Dropshipping
Dropshipping is a retail fulfillment method where a store doesn’t keep the products it sells in stock. Instead, when a store sells a product, it purchases the item from a third party and has it shipped directly to the customer.
Discount Code
A discount code is a series of letters or numbers customers can enter at checkout to receive a price reduction on their purchase. Businesses use discount codes as part of marketing strategies to attract customers and promote sales.
Direct-to-Consumer (D2C/DTC)
Direct-to-consumer (D2C or DTC) refers to companies that sell their products directly to consumers, bypassing traditional retail channels. This approach allows brands to establish a direct relationship with their customers.
Drip Marketing
Drip marketing is a communication strategy that involves sending a series of pre-planned messages to prospects or customers over time. These messages are often automated and timed to nurture leads or guide customers through a sales funnel.
Domain Name
A domain name is the unique address that identifies a website on the internet. It’s used in URLs to direct users to a specific web location. Domain names are purchased and registered through domain registrars.
Digital Wallet
A digital wallet is a software-based system that securely stores users’ payment information for online transactions. It allows users to make electronic transactions using a computer or mobile device, eliminating the need for physical credit cards.
E
Ecommerce
eCommerce, short for electronic commerce, refers to the buying and selling of goods and services over the Internet. It encompasses online retail, electronic payments, and various other online business activities.
eBay
eBay is a popular online marketplace where individuals and businesses can buy and sell a wide range of products through auctions or fixed-price listings. It connects buyers and sellers globally.
Email Marketing
Email marketing is a digital marketing strategy that involves sending targeted messages or promotions to a group of recipients via email. It is an effective tool for engaging customers, promoting products, and building brand loyalty.
EPOS (Electronic Point of Sale)
EPOS, or Electronic Point of Sale, refers to a digital system used for processing sales transactions. It typically includes features like inventory management, sales reporting, and integration with other business operations. EPOS systems are commonly used in retail and hospitality.
F
Fulfillment
Fulfillment is the process of receiving, processing, and delivering customer orders. It involves tasks like picking, packing, and shipping products to ensure timely and accurate order delivery.
Fulfillment Center
A fulfillment center is a third-party facility that handles various aspects of order processing for online retailers. It often includes storage, inventory management, and shipping services to streamline the e-commerce supply chain.
Freemium
Freemium is a business model where a company offers a basic version of its product or service for free, with the option to access premium features or content through a paid subscription.
G
Google Ads
Google Ads is an online advertising platform by Google where businesses can create and run ads to reach their target audience. Advertisers bid on keywords to display brief advertisements, product listings, or video content to web users.
Google Analytics
Google Analytics is a web analytics service by Google that provides detailed statistics and analytics for websites and apps. It helps businesses understand user behavior, track website traffic, and make data-driven decisions to improve their online presence.
GDPR (General Data Protection Regulation)
GDPR is a regulation in EU law designed to protect the privacy and data of individuals. It imposes rules on how organizations handle personal data, giving individuals more control over their information. Compliance is crucial for businesses that collect or process data from EU citizens.
I
Inventory
Inventory refers to the goods and materials a business holds for the purpose of resale. Effective inventory management ensures products are available to meet customer demand without excessive overstock.
K
Keywords
Keywords are specific words or phrases that users enter into search engines. In digital marketing, selecting relevant keywords is crucial for optimizing content and advertising campaigns to improve search engine rankings.
KPI (Key Performance Indicator)
Key Performance Indicators (KPIs) are measurable metrics that reflect the performance of a business in achieving its goals. They help assess progress and make informed decisions based on data.
L
Landing Page
A landing page is a standalone web page created for a specific marketing or advertising campaign. Its purpose is to capture visitor information or prompt a specific action, such as making a purchase or signing up for a newsletter.
Lead Magnet
A lead magnet is a valuable incentive offered by businesses to attract potential customers. This could be in the form of free content, discounts, or other offerings designed to generate leads and build customer interest.
Loyalty Program
A loyalty program is a marketing strategy that rewards customers for their repeat business or engagement. Customers earn points, discounts, or other perks, fostering brand loyalty and encouraging continued patronage.
Logistics
Logistics involves the management and coordination of the movement of goods, services, and information throughout the supply chain. It encompasses processes such as transportation, warehousing, and distribution to ensure efficient operations.
M
Marketplace
Marketplace is an online platform where multiple third-party sellers can list and sell their products or services, providing a centralized location for buyers to browse and make purchases.
M-commerce (Mobile Commerce)
M-commerce refers to e-commerce transactions conducted on mobile devices, such as smartphones and tablets, allowing users to shop and make purchases on the go.
Multichannel eCommerce
Multichannel e-commerce involves selling products or services through multiple online and offline channels, providing customers with various ways to make purchases.
Mega Menu
Mega menus are expanded navigation menus that display multiple options and subcategories when hovered over, offering a user-friendly way to navigate complex websites.
Further Reading: Best WordPress Mega Menu Plugins
N
Net Profit
Net profit is the total revenue a company earns minus its total expenses, representing the final profit after all costs have been deducted.
O
Open rate
Open rate is a metric in email marketing that measures the percentage of recipients who open an email, providing insights into the effectiveness of email campaigns.
Omnichannel
Omnichannel refers to a seamless and integrated approach to sales and marketing across multiple channels, ensuring a consistent customer experience whether online or offline.
Out of Stock
Out-of-stock is the situation where a product is not available for purchase due to depletion of inventory, impacting potential sales until the product is restocked.
P
PCI (Payment Card Industry) Compliance
PCI compliance refers to adherence to the security standards set by the Payment Card Industry, ensuring the secure handling of credit card information during transactions.
PPC (Pay Per Click)
PPC is an online advertising model where advertisers pay a fee each time their ad is clicked, commonly used in search engine advertising.
Payment Gateway
A payment gateway is a technology that securely authorizes and processes payment transactions, enabling online businesses to accept electronic payments.
Purchase Order
A purchase order is a document issued by a buyer to a seller, specifying the products or services to be purchased, quantities, agreed-upon prices, and terms.
Q
QR Code
A QR code (Quick Response code) is a two-dimensional barcode that can store various types of information, often used for quick and easy access to websites or product information.
R
Recurring Payment
Recurring payments are automatic, scheduled payments that repeat at specified intervals, commonly used for subscription services or ongoing memberships.
Revenue
Revenue is the total income generated by a business from its primary operations, often calculated as the product of the number of units sold and the price per unit.
S
Shopping Cart
Shopping cart software enables online shoppers to collect and manage items they wish to purchase, facilitating a smooth checkout process.
SaaS (Software as a Service)
SaaS is a software distribution model where applications are hosted by a third-party provider and made available to customers over the Internet on a subscription basis.
Social commerce
Social commerce involves the use of social media platforms to facilitate online shopping, allowing users to discover and purchase products directly within the social media environment.
Social proof
Social proof is a psychological phenomenon where people tend to follow the actions of others, used in marketing to build trust by showcasing positive feedback, reviews, or endorsements.
Sales Funnel
A sales funnel is a visual representation of the customer journey, illustrating the stages from awareness to conversion, helping businesses understand and optimize the sales process.
SEM (Search Engine Marketing)
SEM involves promoting a website through paid advertising on search engines, enhancing visibility, and driving traffic through methods like pay-per-click (PPC) advertising.
SEO (Search Engine Optimization)
SEO is the practice of optimizing a website to improve its visibility and ranking on search engines, enhancing organic (non-paid) traffic.
SERP (Search Engine Results Page)
A SERP is a page displayed by search engines in response to a user’s query, featuring a list of organic and paid search results.
SKU (Stock Keeping Unit)
A SKU is a unique identifier assigned to each product in inventory, aiding in tracking and managing stock.
Supply Chain Management
Supply Chain Management involves the coordination and optimization of the processes, activities, and resources involved in the production and distribution of goods and services.
SMB (Small and Medium-sized Business)
SMB refers to small and medium-sized businesses, typically characterized by a limited number of employees, lower revenue, and a more localized market presence.
T
Traffic
Traffic refers to the number of visitors or users who access a website, app, or online platform. It is a key metric in evaluating the popularity and reach of a digital presence.
Transaction
A transaction is a business interaction or exchange between a buyer and a seller, often involving the purchase of goods or services in exchange for payment.
U
User Interface (UI)
UI is the visual and interactive elements of a website, app, or software that users interact with. It includes design elements, buttons, and navigation menus.
UX (User Experience)
UX encompasses the overall experience and satisfaction a user has while interacting with a product, service, or system, focusing on usability, accessibility, and enjoyment. When it comes to your product images, they must be high quality and professionally enhanced using a top-tier photo enhancer to ensure maximum visual appeal and engagement.
Upselling
Upselling is a sales technique where a seller encourages customers to purchase a higher-end or upgraded version of a product or add additional items to their order.
Unique Selling Proposition (USP)
A USP is a distinctive feature or advantage that sets a product or business apart from competitors, influencing customers to choose it over alternatives.
V
Vendor
A vendor is a person or company that sells goods or services to customers. In the context of e-commerce, vendors often refer to third-party sellers in an online marketplace.
Value Proposition
A value proposition is a unique promise of value that a product or service offers to customers, highlighting the benefits and advantages that differentiate it in the market.
W
Wholesale
Wholesale refers to the sale of goods or products in large quantities at lower prices, typically to retailers or other businesses rather than individual consumers.
Wish lists
Wish lists are features on e-commerce platforms that allow users to create a list of desired products, making it easier for them to track and purchase items later.
White Label
White Label products or services are produced by one company and rebranded by another for sale. The end product appears as if it is manufactured by the company that sells it.
X
XML Sitemap
An XML Sitemap is a file that provides information about the pages, videos, and other files on a website, helping search engines understand and index the site’s content more effectively.
Conclusion
The eCommerce industry is characterized by its ever-changing nature. What is considered cutting-edge today might become standard practice tomorrow.
Understanding the nuances of eCommerce terms like Conversion Rate Optimization (CRO), Mobile Commerce (mCommerce), User Experience (UX), and more is akin to wielding a powerful tool.
This eCommerce glossary is more than a compilation of words; it is a gateway to a deeper understanding of the strategies, technologies, and tactics that shape the online selling landscape.
Am I missing something? Please ping me in the comments below if I missed any eCommerce definitions that are worth mentioning.
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