Ecommerce Glossary 2023

1P: First party

3P: Third-party

A/B Testing: Testing two versions of something to the same audience to see which one drives more conversions

ACoS: An acronym used by Amazon to calculate advertising cost of sales it is calculated this way: ACoS = Ad Spend ÷ Sales.

Affiliate Marketing: A marketing tactic that enables the brand to partner with a publisher, content creator or influencer to promote a brand to their audience. If the consumer buys the product, the publisher gets a commission fee from the advertiser.

Amazon Brand Registry: Brand Registry is a program for brand owners that have registered trademarks and helps brand owners maintain more control over the representation of their brand on Amazon and also helps them fight infringement claims.

Amazon Standard Identification Number (ASIN): Amazon’s Standard Identification Number (ASIN) is a unique 10-character alphanumeric identifier for a product on Amazon, and is generally linked to a unique SKU/EAN/ISBN

Average Transaction Value (ATV): Average single transaction amount

Average Order Value (AOV): Average total of every order placed with a retailer over a defined period of time. AOV is calculated as revenue divided by the number of orders.

Average Selling Price (ASP): The average selling price of a product is typically being sold.

Basket: The ecommerce cart

BOGO: Buy one, get one free

Brick-and-mortar: A physical retail store

B2B: Business to business, trade between businesses, versus consumers and a business

B2C: Business to consumer

Bottom-line: Revenue minus expenses. It describes a company’s profit or loss.

Bundling: When two or more products are sold together as a combined package. Generally a way to improve AOV and basket size.

Buy Box: The spot on an Amazon product detail page where customers can add products to their cart.

CTA: Call to Action, a term used by marketers to describe a statement that prompts the customer to make a decision on their next step, examples include: Buy Now, Learn More, Contact Us, etc.

Chargeback: The return of a credit card charge to the customer.

Cold Chain Fulfillment: A specialized shipping method that keeps food beverages and other temperature-sensitive products within the necessary temperature range to preserve their integrity. Specialized containers and shipping methods help with keep these products fresh and frozen during transport.

Conversion Rate: A measurement of how many site visitors convert into buying customers.Number of Converted Users ÷ Number of Total Users x 100

Cost of Goods Sold (COGS): Refers to the direct production costs of the goods sold, excludes indirect costs such as marketing and shipping.

Customer Lifetime Value (CLV): A metric to describe the expected value of a customer over time

CPG: Consumer packaged goods

Digital Shelf: A brand’s digital touchpoints viewed by shoppers to discover, research, and purchase products

Dropshipping: Order fulfillment method where the seller purchases inventory from a third party and to fulfill their orders.

Fulfillment by Amazon (FBA): A service Amazon provides to merchants which enables sellers to store their inventory and ship their orders.

Gross Profit: The total revenue minus the cost of goods sold (COGS). It reflects the profit before operating expenses.

GS1: Global Standards is a non-profit organization that works with manufacturers to standardized business information globally. There are many different GS1 standards that can be used by companies.

GTIN: The Global Trade Item Number is an identifier for trade items, developed by the non-profit, global organization GS1. UPC, EAN, and ISBN are all GTINs. A GTIN is the number encoded into either a UPC, EAN, or ISBN barcode. There are three types of GTINs: GTIN-12 (UPC), GTIN-13 (EAN), and an ISBN.

Hardlines: In the retail world, hardlines refer to goods such as furniture, electronics, appliances, sports equipment and jewelry.

KPI: Stands for key performance indicator, a quantifiable measure of performance over time for a specific objective. KPIs provide targets to gauge progress towards a goal.

Keywords: Keywords are the words and phrases that people type into search engines to find what they're looking for. In ecommerce, they can also be used by algorithms to understand metadata about a particular product or brand.

Logistics: The process of coordinating and moving inventory from one location to another.

Margin: The difference between net sales and the cost of the product sold which is how profits are derived.

MAP: Minimum Advertised Price, brands enforce MAP policies to ensure the retailer makes a profit selling their products.

Marketplace: A platform that connects buyers and sellers.

Minimum Order Value (MOV): The smallest dollar value that may be ordered in one delivery.

Minimum Order Quantity (MOQ): The smallest number of products that may be ordered in one purchase order, typically for ordering products from a supplier.

MSRP: Manufacturer's Suggested Retail Price, the list price, or the recommended retail price that the manufacturer recommends that a retailer sell the product. The difference between MSRP and MAP is that MSRP is the actual price manufacturers set and recommend retailers charge, while MAP is the advertised price.

Net Profit: The total revenue minus the total expenses of a company.

Omnichannel: A multichannel ecommerce strategy designed to create a seamless customer experience across multiple touchpoints along the customer journey.

Out of Stock (OOS) Rate: Also referred to as stockout rate, describes the number of items that are not available for customers to purchase.

PDP: Product Detail Page, the final page on a DTC website or marketplace in which the product is showcased and the customer is able to add the product to their cart.

Private Label: Products that are sold by a retailer under its own brand but produced by a third-party manufacturer.

Purchase Order (PO): A business agreement between a buyer and a supplier.

ROAS: Return on Ad Spend, divide the sales revenue attributed to your ad spend by the cost of that campaign. For example, if you spend $1,000 on ads, and your revenue is $2,000, calculate ROAS by dividing $2,000 by $1,000, which gives you a ratio of 2:1 or 200%.

Revenue: The income from sales of products

RMA: Return Merchandise Authorization (RMA) is a system that manages product returns. It's usually one of the first parts of the reverse logistics process — getting products back from the customer to the seller.

Seed Round: The first official equity funding stage, often times Angel investors are involved at this stage

Series A: The company is ready for primetime and the company has customers and a proven model for scale

Series B: A well-established company with a solid valuation

Series C: Focused on growing the company as quickly and as efficiently as possible.

Shipping: A general term for the services required to transport products purchased online to the customer's delivery destination.

Softlines: Products that are soft like clothing and bedding

Supply Chain: A connected system of resources designed to source, manufacture and move products from a supplier to an end customer.

Stock Keeping Unit (SKU): A stock-keeping unit (SKU) is an alphanumeric code a merchant sets up to track inventory

TACoS: A term used to describe the total advertising cost of sale, measures the relationship between ad spend and total sales, similar to ACoS

Taxation: Ecommerce sales tax is just like the sales tax you pay in retail stores and is charged during the payment process. If your business has a physical presence, or “nexus” in a state, you are typically required to charge sales taxes from online orders in that state. You will want to get the advice of an accountant before launching your store so you know what sort of tax to charge.

Transaction Processing: The process of accepting payments from customers through an ecommerce portal. This can be complex and set up a few different ways, work with an expert to ensure you’re setting this up properly.

Top-line: Revenue that is generated from product sales.

User Experience: Describes a customer's perceptions and responses from interaction with your digital or physical products.

UPC Code: Universal Product Code, a type of code printed on product packaging for tracking purposes that includes a barcode and a unique 12-digit number

Value Proposition: Refers to a simple statement a brand promotes to the customer to demonstrate the brand or product’s benefits.

Wholesale: The practice of buying products in bulk at lower prices, with the intention to re-sell them to other retailers. A wholesaler is typically a middleman between the manufacturer and the seller.

Warehouse: A physical location for storing inventory prior to distribution to a fulfillment center or as a pick, pack and ship facility.

White Label: Manufactured by a contract or third-party manufacturer that is already making the types of products you would like to sell. Think about a winery that bottles wine and has the ability to add any label to the bottle. You work with them to take their products and sell the exact same product under your brand name.