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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.