Even seasoned ecommerce business owners get caught out from time to time by certain terms used in the industry.
Ecommerce is ever-changing and has developed its own “language”. New terminology emerges frequently and it can be frustrating not to be in the know with the lingo.
Whether you’re a seasoned campaigner or new to ecommerce, the following ecommerce glossary should solve that problem. You may know many of the terms listed below but you can familiarize yourself with those you don’t.
Some terms — like shopping cart — are unique to ecommerce while others — such as affiliate — are frequently used in many types of online businesses.
A/B testing (split testing): a way to test two different variables on a web page to see which one performs best. Ecommerce businesses need to test different versions of the calls to action, for instance. and select the one(s) with the best conversion rate(s).
Address verification service (AVS): a service used by credit card processors to verify that the billing addresses of customers match the addresses on their credit card statements.
Affiliate: when other websites promote your products and earn a commission for sales, they are known as affiliates. They usually have unique, trackable links that identify who generated the sale. Affiliate marketing is an important part of some ecommerce models.
Average order value (AOV): a measurement of the average amount that customers spend per transaction: simply divide the total revenue by the number of orders during the same period.
Blog: an online collection of articles relevant to your market. A blog is an important way to inform and educate target customers and attract traffic and backlinks to your store.
Bounce rate: a measurement of the percentage of visitors who enter your store but leave without taking further action: divide the total one-page visits by all visits to your store and multiply by 100. Aim for a target of 25–30 percent.
Bundling: when multiple products are sold as a package deal for savings over buying the products individually. It can help increase the average order value in stores.
Business to consumer (B2C): the process of selling products and services directly between a business and customers who are the end-users.
Buyer personas: fictional profiles of ideal types of customers. They are an important marketing strategy that allows ecommerce stores to focus on the customers’ goals/motivations, buying habits/preferences and pain points when shaping their messaging.
Buy-to-detail rate: a Google Analytics metric that considers the number of products purchased against the number of times the customer viewed product detail pages. Calculate by dividing unique purchases of a product by the product detail page views.
Call-to-action (CTA): a line that aims to create a sense of urgency and persuade a customer in your store to take a specific action, such as “shop now”, “buy now”, “add to cart” or “download now”.
Cart abandonment rate: a key metric for ecommerce stores, measuring the ratio of shoppers who add items to their cart but abandon the store before checking out: divide the number of completed transactions by the overall number of shopping carts created and multiply by 100 to get the percentage of successful transactions. Then, subtract the percentage of successful transactions from 100 to get the abandoned cart rate.
Chargeback: the reversal of a completed credit card transaction by the merchant’s bank, usually due to a customer disputing a charge.
Checkout: when customers complete a purchase in your store, they go through a checkout process that takes them from clicking a call to action like “add to cart” to payment and the order confirmation page. Generally, fewer steps are best for achieving a good conversion rate and low cart abandonment rate.
Click-through rate (CTR): a measurement of the ratio of customers who click on a link (such as in an ad, organic search or email) versus the number of times it’s viewed: divide the total clicks by the number of page impressions and multiply by 100.
Comparison shopping engines: websites that allow shoppers to browse the same product sold by multiple retailers, e.g., Google Shopping.
Conversion rate: the percentage of visitors to your store who complete the desired action (usually buying a product or downloading a resource) measured against the total number of visitors. The process of tweaking the design, layout and text in your store to boost conversion rates is known as conversion rate optimization.
Content management system (CMS): the software that drives your online store, such as Shopify, WooCommerce, etc. Virtually all of this software is cloud-based these days.
Cookies: small text files that a website sends to visitors’ browsers to store data related to the interactions with the website — mainly used for ad/content targeting and saving shopping cart information.
Countdown timer: a virtual clock that counts down from a certain date or number to indicate the beginning or end of an event — often an offer during a sale. It’s used by ecommerce businesses to create urgency and encourage sales.
Cross-selling: a sales strategy whereby related items are recommended to customers based on the initial item they are buying — to increase the overall value of the order. Amazon uses the “frequently bought together” system of recommendation.
Customer acquisition: the process of attracting new customers to your business, usually through your marketing strategies (SEO, social media marketing, content marketing, etc.)
Customer experience (CX): your customers’ perception of their experience with your ecommerce business. Sometimes called “user experience” (UX).
Customer journey: the path and sequence of interactions that customers go through from the first visit to purchase: this can involve multiple channels and different timelines for different customers. Customer journey “maps” are visual representations of every interaction that customers have with your ecommerce business, helping you understand your customers better.
Customer lifetime value (CLV): an estimate of the total worth of a customer throughout their relationship with the ecommerce business.
Customer profiles: an overview of the customer using quantitative data, including demographic information such as age/gender and purchase history, etc.
Customer retention: the process of retaining existing customers in your ecommerce business or encouraging those who have bought previously to buy again (as opposed to acquiring new customers).
Direct-to-consumer (DTC): when products are sold directly to consumers without the need for third-party retailers or wholesalers.
Discount codes: an ecommerce sales strategy that incentivizes purchases from new or existing customers with in-store discounts. Also known as discount coupons or promo codes, online shoppers enter the codes at checkout for discounts.
Dropshipping: when an ecommerce store doesn’t own the stock or inventory it sells but partners with a third-party manufacturer who ships the items once ordered (meaning lower overheads for the dropshipping business).
Event-triggered emails: automated emails sent to ecommerce store subscribers based on specific events, such as a special offer tied to a birthday.
Google Analytics: a free tool that enables you to track traffic and customer interactions, providing valuable insights into your ecommerce store’s performance. The industry standard for analytics.
Inventory: the physical goods (“stock”) that are sold and which must be carefully managed by ecommerce businesses to be successful.
Landing pages: a webpage that potential customers are directed to after clicking through from a search engine, ad or email — usually designed to encourage a specific action.
Logistics: the process of getting your stock in and out, turning what you buy into what you sell to customers. This is outsourced by many ecommerce businesses as they start to grow.
Margin (“profit margin”): the profit percentage of a sale after the cost of goods and expenses have been factored in.
Mobile commerce (m-commerce): the use of cellphones, smartphones, and tablets to buy and sell products and services online.
Multi-channel ecommerce: the process of selling goods and services across many different channels, including an online store, mobile, social media, etc.
Order fulfilment: the process of delivering ordered products to customers’ doors, including inventory management, picking/packing products and shipping. It may be managed in-house or through a third-party service.
Payment gateway: the technology that securely processes credit card payments on ecommerce sites, such as Shopify Payments, PayPal, etc. It can be on-site or off-site.
Payment Card Industry (PCI) compliance: a set of requirements to ensure that a customer’s credit card information is secure and protected when stored, processed, or transmitted.
Payment service provider: a service that enables online stores to accept and process multiple payment methods, such as credit cards, direct debits, bank transfers, and real-time online banking.
Point-of-sale system (POS): software and/or hardware that enables transactions, helping ecommerce companies to manage inventory and sync online/offline sales data.
Product descriptions: a key part of any online store that informs potential customers about the products and their main features. Product descriptions are usually included on product pages, along with images, similar product suggestions, and a call to action.
Product filters: interactive elements that allow ecommerce customers to focus on the products they are interested in from a larger range of products.
Reviews: testimonials from previous customers that provide social proof for ecommerce businesses and help to drive sales.
Segmentation: an important marketing strategy that divides potential customer lists into different groups based on their characteristics, behaviors, preferences, etc. It aids targeted marketing campaigns, such as email marketing.
Shipping: the transfer of a product from a seller’s warehouse to a customer’s delivery address.
Shopping cart: every online store needs a shopping cart or “bag” that allows customers to hold the items they select before reviewing and checking out.
Social proof: ratings, reviews and user-generated content are all types of social proof, which increasingly influences people’s online shopping behavior.
Stock keeping unit (SKU): a unique alphanumeric identification code for each product in an ecommerce business’s inventory.
Upselling: a technique that offers customers an upgrade to a purchase or to buy a more expensive version of the product.
Value proposition: the unique benefits you offer that help to persuade customers to buy from you rather than a competitor.
Wholesale: the stage in the supply chain before retail, dealing in bulk volumes when buying stock or selling to another party.
Wish lists: an alternative to holding items in a basket or shopping cart, allowing customers to temporarily hold items while they are further assessed or compared.
Getting to grips with ecommerce
There you have it — most of the key ecommerce terms you need to know. There are plenty more besides the 55 or so detailed above but this is enough to be getting on with for now if you’re new to ecommerce.