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E-Commerce Glossary

A

A/B Testing:

A method to compare two versions of a webpage, email, or advertisement to analyze which performs better by measuring metrics like click-through rates or conversions. 

 

Affiliate Marketing:

A strategy where individuals or businesses promote a company’s products and earn a commission for every sale or lead generated through their unique referral links. 

 

Analytics:

The practice of collecting, analyzing, and interpreting data to understand customer behavior, improve performance, and make data-driven decisions.

 

Automated Email Marketing:

Using software to send personalized, pre-scheduled emails to customers based on triggers like cart abandonment or birthdays. 

 

Average Order Value (AOV):

The average revenue generated per transaction, calculated by dividing total revenue by the total number of orders over a specific period. 

 

B

Backorder:

A situation where an item is temporarily out of stock but is still available for purchase with the promise of delivery once restocked. 

 

Bounce Rate:

The percentage of visitors who land on a webpage and leave without interacting further, often indicating issues with content relevance or user experience. 

 

Breadcrumb Navigation:

A user interface feature that shows the path a visitor has taken to reach a specific page, improving navigation and user experience. 

 

C

Cart Abandonment:

The phenomenon where customers add items to their shopping cart but leave the site without completing the purchase, often addressed through email reminders or retargeting ads. 

 

Channel Attribution:

The process of determining which marketing channels contributed to a sale or conversion, helping allocate resources effectively. 

 

Churn Rate:

The percentage of customers who stop doing business with a company over a specific period, indicating customer retention effectiveness. 

 

Conversion Rate:

The percentage of website visitors who complete a desired action, such as making a purchase or signing up for a newsletter, reflecting the effectiveness of a website’s user experience. 

 

Customer Lifetime Value (CLV):

A metric predicting the total revenue a business can expect from a single customer during their relationship with the company, helping inform retention strategies. 

 

D

Data-Driven Marketing:

Using customer data and analytics to create targeted and personalized marketing campaigns for better results. 

 

Discount Codes:

Promotional codes that customers can enter during checkout to receive discounts on their purchases. 

 

Dropshipping:

A fulfillment model where eCommerce businesses sell products without holding inventory, relying on suppliers to ship directly to customers. 

 

Dynamic Pricing:

A strategy where product prices fluctuate based on real-time factors like demand, competition, or seasonality, aiming to maximize revenue. 

 

E

E-wallet:

A digital payment system that allows users to store money and make transactions electronically, providing convenience for online shopping. 

 

Email Marketing:

The use of email to promote products, nurture leads, and build customer relationships, often personalized and targeted for higher engagement. 

 

Enterprise Resource Planning (ERP):

Software systems that integrate various business processes, like inventory management, accounting, and order processing, into one platform. 

 

Express Checkout:

A streamlined checkout process allowing customers to complete purchases quickly by saving their information. 

 

F

Flash Sales:

Limited-time sales offering significant discounts to create urgency and encourage quick purchases. 

 

Freemium:

A pricing strategy where basic features are offered for free while advanced features or services require payment, commonly used in software and subscription models. 

 

Freight Forwarding:

A service that organizes the shipment of goods from one location to another, handling logistics and customs. 

 

Fulfillment:

The process of receiving, packing, and shipping customer orders, which can be handled in-house or outsourced to third-party logistics providers. 

 

G

Gateway:

A technology that connects an eCommerce store to a payment processor, enabling secure transactions between customers and businesses. 

 

Geotargeting:

Delivering personalized marketing messages or content to users based on their geographic location. 

 

Gross Merchandise Value (GMV):

The total sales value of goods sold through an eCommerce platform during a specific time, reflecting overall marketplace performance. 

 

Gross Profit Margin:

A measure of profitability, calculated as the difference between revenue and the cost of goods sold (COGS), divided by revenue. 

 

H

Headless Commerce:

A decoupled eCommerce architecture where the frontend (user interface) is separate from backend systems, offering greater customization and flexibility.

 

Heatmap:

A graphical representation of user interactions on a website, showing areas of high engagement through color gradients, useful for UX optimization. 

 

Hyper-Personalization:

Advanced personalization techniques using real-time data and AI to create highly customized shopping experiences for individual customers. 

 

I

Inbound Marketing:

A marketing strategy focused on attracting customers through content creation, SEO, and social media, rather than outbound methods like ads. 

 

Influencer Marketing:

Collaborating with social media influencers to promote products, leveraging their audience to drive sales and brand awareness. 

 

Internationalization (i18n):

Adapting a website or platform for different languages, currencies, and cultural preferences to serve global markets. 

 

Inventory Management:

The process of tracking and controlling stock levels to meet customer demand while minimizing overstock or shortages, essential for efficient operations. 

 

J

Jobber Pricing:

A tiered pricing model where wholesale buyers receive discounts based on the volume of goods purchased. 

 

Just-in-Time Inventory (JIT):

A strategy where inventory is replenished only when needed to reduce storage costs and minimize waste, requiring efficient supply chain coordination. 

 

K

Key Performance Indicators (KPIs):

Quantifiable metrics used to evaluate the success of specific objectives, such as customer retention rate or revenue growth. 

 

Keyword Research:

The process of identifying relevant search terms that customers use to find products, which helps optimize SEO strategies. 

 

Knowledge Base:

An online resource with articles, FAQs, and guides to help customers find information about products and services. 

 

L

Landing Page:

A standalone webpage designed for a specific marketing campaign, optimized to encourage a single call-to-action like signing up or purchasing. 

 

Last-Mile Delivery:

The final step in the delivery process, where a product is transported from a distribution center to the customer’s doorstep. 

 

Logistics:

The comprehensive process of managing the movement of goods from suppliers to customers, including transportation, warehousing, and order fulfillment. 

 

Loyalty Program:

A system that rewards customers for repeat purchases, often with points, discounts, or exclusive perks.

 

M

Macro-Conversions:

Key actions that directly lead to a business’s goals, such as completing a purchase.

 

Marketplace:

An online platform where multiple vendors can list and sell their products, often managed by a third-party operator like Amazon or Etsy. 

 

Micro-Conversions:

Small actions that users take on a website (e.g., signing up for a newsletter) that indicate progress toward a macro conversion like a sale. 

 

Minimum Advertised Price (MAP):

The lowest price at which a retailer can publicly advertise a product, set by the manufacturer. 

 

Mobile Commerce (mCommerce):

Buying and selling goods or services through mobile devices, a growing trend driven by smartphones and apps. 

 

N

Native Advertising:

Paid ads designed to blend seamlessly with the surrounding content, creating a less intrusive experience for users. 

 

Navigation:

The design and structure of menus and links on an eCommerce website, crucial for guiding users to products and information efficiently. 

 

Net Promoter Score (NPS):

A customer loyalty metric based on how likely customers are to recommend a company, used to gauge overall satisfaction and loyalty. 

 

O

Omnichannel:

A sales approach that integrates multiple channels—online, in-store, and mobile—to provide a seamless and consistent customer experience. 

 

Order Fulfillment Cycle:

The entire process of receiving, processing, and delivering an order, from purchase to delivery to the customer. 

 

Outsourcing:

Delegating specific business tasks, like customer support or order fulfillment, to external providers to focus on core competencies. 

 

Overstock:

 Excess inventory that hasn’t been sold within a specific time frame, often leading to clearance sales. 

 

P

Payment Gateway:

A technology that authorizes and processes online payments securely, acting as the bridge between an eCommerce store and financial institutions. 

 

Personalization:

Tailoring the shopping experience for individual users by using data like browsing history, purchase behavior, and preferences. 

 

Pop-Up Store:

A temporary retail space used by eCommerce brands to create physical experiences and increase brand visibility. 

 

Product Bundling:

Offering multiple products together as a package deal at a discounted price to increase sales and average order value. 

 

Q

Quality Assurance (QA):

Processes to ensure that products and services meet predefined quality standards, helping to maintain customer trust and satisfaction. 

 

Queue Management:

Systems used to manage orders during high-traffic periods to ensure fair processing and avoid overloading inventory systems. 

 

Quick Response (QR) Code:

A scannable code used for various purposes, including directing customers to specific web pages or providing product information. 

 

Quote Request: A feature allowing customers to ask for pricing on bulk orders or customized services, common in B2B eCommerce. 

R

Recurring Billing:

An automated payment system used for subscription-based services, where customers are charged at regular intervals. 

 

Retargeting:

An advertising strategy that shows targeted ads to users who have previously interacted with a website, aiming to bring them back to complete a purchase. 

 

Return on Investment (ROI):

A measure of the profitability of an investment, calculated as the ratio of net profit to the cost of the investment, often used in marketing. 

 

Reverse Logistics:

The process of managing product returns, repairs, recycling, or disposal in a cost-effective and environmentally friendly manner. 

 

S

Search Engine Optimization (SEO):

The practice of optimizing a website’s content and structure to improve its ranking in search engine results, driving organic traffic. 

 

Split Testing:

Another term for A/B testing, where multiple versions of a webpage or email are tested to determine which performs best. 

 

Stock Keeping Unit (SKU):

A unique identifier for each product or variation in a retailer’s inventory system. 

 

Supply Chain:

The network of people, organizations, and activities involved in producing and delivering goods to end consumers. 

 

T

Taxonomy:

The categorization and organization of products within an eCommerce store to improve navigation and searchability.

 

Third-Party Logistics (3PL):

Outsourcing logistics and supply chain management to external providers, including warehousing, order processing, and shipping. 

 

Third-Party Payment Processor:

A company like PayPal or Stripe that handles payments on behalf of eCommerce businesses. 

 

Traffic:

The total number of visitors to an eCommerce site, categorized as organic, paid, direct, or referral traffic based on the source. 

 

U

Upsell Funnel:

A sequence of offers designed to encourage customers to upgrade or add complementary products during the checkout process. 

 

Upselling:

A sales technique that encourages customers to purchase a more expensive or upgraded version of a product. 

 

User Experience (UX):

The overall interaction and satisfaction a user has while navigating an eCommerce site, influenced by design, functionality, and performance. 

 

User-Generated Content (UGC):

Reviews, photos, or videos created by customers that promote a brand or product, often used for social proof. 

 

V

Value-Added Tax (VAT):

A consumption tax added to the price of goods and services, commonly applied in international eCommerce transactions. 

 

Value Proposition:

A statement that clearly explains why a customer should choose a product or service, highlighting its unique benefits and solving specific problems. 

 

Virtual Reality (VR):

Immersive technology that allows customers to experience products or environments in a simulated 3D space, often used for enhanced shopping experiences. 

 

Voice Commerce:

The use of voice-activated devices like Amazon Alexa or Google Assistant to search for and purchase products online. 

 

W

Warehouse Management System (WMS):

Software that helps manage inventory, order picking, packing, and shipping in a warehouse, improving efficiency and accuracy.

 

Webrooming:

The practice of researching products online but purchasing them in-store, the opposite of showrooming. 

 

Wholesale Price:

The price charged to retailers by manufacturers or distributors, usually lower than the retail price. 

 

Wish List:

A feature on eCommerce websites allowing users to save products for future purchases, often used as a planning or sharing tool. 

 

X

XML Sitemap:

A file that lists all the pages on a website, helping search engines crawl and index the site more effectively. 

 

Y

Year-over-Year (YoY):

A comparison of performance metrics, such as sales or growth, from one year to the same period in the previous year, providing insights into long-term trends. 

 

Yield Management:

A pricing strategy that adjusts prices based on demand and availability to maximize revenue. 

 

Z

Zero-Click Search:

Search engine results that provide information directly on the search results page, reducing the need to click on a link for more details. 

 

Zero Inventory:

A model where businesses do not hold physical stock but rely on suppliers or dropshipping to fulfill orders.