Ecommerce Glossary

Businesses new to ecommerce, whether you are a seller, buyer or enabler, should be well-versed in the ecommerce jargon that gets passed around in everyday conversation. This is a list of the most popular keywords, buzzwords, and phrases used in the ecommerce industry.

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301 Redirect: 

A method of telling web browsers and search engines that a web page or site has been permanently moved to a new location.

3rd Party Payment Processor:

The alternative to Merchant Accounts – some ecommerce platforms can accept payment through providers like PayPal.

A

A/B Testing:

Also known as Split Testing is comparing two versions of a web page to see which one performs better. You compare two web pages by showing the two variants (A and B) to similar visitors at the same time.

Abandoned Carts:

Occurs when customers add products to their carts but leave your online store before making a purchase.

Address Verification Service (AVS): 

A system used to verify the address of a person claiming to own a credit card. Used when the merchant verifies credit card data, such as billing address and ZIP code, against the Visa/MasterCard billing information of the cardholder.

Affiliate Marketing: 

Type of performance-based marketing in which a business rewards one or more affiliates for each visitor or customer brought by the affiliate’s own marketing efforts.

Affiliate:

A publisher or site owner that forwards qualified web traffic to an online merchant on a pay-for-performance basis is called an affiliate in the context of online marketing.

Affiliate links:

A unique link provided to affiliates to promote an online service that is then used to credit sale commissions to the affiliate. A typical link starts off with the original domain then ends with the affiliate ID number.

Attribution Model:

A set of rules or rule, that determines how credit for sales and conversions is assigned to touchpoints in conversion paths. Click here for more.

Average Order Value: 

The average value your customer spends with you in a typical visit.

Average Order Value = Total Sales Revenue / Total Number of Orders Taken

Average Time on Site: 

In Web analytics, including Google Analytics, it is a type of visitor report that provides data on the amount of time (in minutes or seconds) visitors have spent on your website.

Application Programming Interface (API):

An API is a protocol created to allow separate software solutions to communicate over a relatively simple interface. Developers will often use APIs to connect or integrate systems and services.

B

Big Data

The name given to large amounts of customer information collected through ecommerce. There is a growing trend and interest in leveraging this data to make smarter business decisions.

B2B (Business to Business): 

Is where one business makes a commercial transaction with another. This typically occurs when a business is sourcing materials for their production process (e.g. a food manufacturer purchasing salt).

B2C (Business to Consumer): 

Is a business or transactions conducted directly between a company and consumers who are the end-users of its products or services.

Bounce Rate: 

The percentage of people who visit one page on your website and leave without clicking on anything.

Bootstrapping:

In business, bootstrapping is the concept of self-funding a new company, meaning that a business pays its operating expenses either with profits or from its founder’s own investments, rather than accepting external capital.

Brick & Click Store: 

A retail outlet or business with at least one physical location and at least one ecommerce enabled website.

Brick & Mortar Store: 

Refers to a physical presence of an organization or business in a building or other structure. The term brick-and-mortar business is often used to refer to a company that possesses or leases retail stores, factory production facilities, or warehouses for its operations.

Bundling (or Product Bundling): 

Is offering several products for sale as one combined product. It is a common feature in many imperfectly competitive product markets.

L

Landing Pages: 

The section of a website accessed by clicking a hyperlink on another web page, typically the website’s home page.

L

Logistics:

The management of products or other resources as they travel between a point of origin and a destination. In ecommerce, logistics might describe the process of transporting inventory to a merchant or the act of shipping orders to customers.

Long Tail:

The Long Tail is an idea that markets and marketplaces, especially online, are moving away from mainstream, broad-appeal products toward niche products. In ecommerce, new retailers may find it easier and more cost effective to focus on niche products. Think large number of products that sell in small quantities, as contrasted with the small number of best-selling products.

Long-Tail Variations:

In search engine optimization and pay-per-click advertising, they are keywords similar in meaning or root to other high-volume keywords, but less competitive. Long-Tail variations are often employed when a business is just starting out and cannot gain traction or afford to bid on top performing keywords.

Long-tail keywords

Credit: NeilPatel

Long-Tail Traffic:

Website traffic derived from Long-Tail variation keywords or from niche searches and keywords in general.

M

Manufacturer:

A company that makes goods for the purpose of sale.

Manufacturer’s Suggested Retail Price (MSRP): 

Also known as Recommended Retail Price (RRP), is the price the manufacturer recommends that the retailer sell the product. The intention is to help standardize prices among locations.

Margins:

The difference between what a retailer pays for a product and what the retailer’s customer pays for the product. Margin calculations may consider only the cost of the goods sold or may take into account overhead and other variable costs.

M-commerce:

As mobile internet usage continues to grow, mobile commerce has naturally followed – especially booming in Southeast Asia.

Minimum Order Size:

Manufacturers or distributors may require retailers to place orders that meet a minimum value or unit count. This requirement would be the minimum order size.

Merchant Account:

An online bank account which accepts credit card payments, i.e. where payments made to an ecommerce store are submitted.

Multi-Channel Retailing:

Retailing products through more than one channel where channels include online stores, online marketplaces like Amazon, physical stores, physical catalogs, and similar.

N

Net Profit:

The difference between a business’ revenue and its costs – all of its costs. Net profit may be thought of as the money left over after every bill is paid.

Niche:

A distinct market segment.

O

Organic:

In the context of search engine optimization and search engine marketing, organic results are those listings search engines show because of their relevance to a query, not because a site owner paid for an ad or paid to be featured.

Order Tracking:

The process in which a customer views the progress of their order leading up to delivery. This is generally orchestrated using a tracking code provided when a purchase is completed.

Outsource:

The process of contracting work to external, third-party organizations.

Overhead:

The ongoing expenses associated with operating a business.

Business – to – Business (B2B)

Website following B2B business model sells its product to an intermediate buyer who then sells the product to the final customer. As an example, a wholesaler places an order from a company’s website and after receiving the consignment, sells the end product to final customer who comes to buy the product at wholesaler’s retail outlet.

B2B Model

Business – to – Consumer (B2C)

Website following B2C business model sells its product directly to a customer. A customer can view products shown on the website of business organization. The customer can choose a product and order the same. Website will send a notification to the business organization via email and organization will dispatch the product/goods to the customer.

B2C Model

Consumer – to – Consumer (C2C)

Website following C2C business model helps consumer to sell their assets like residential property, cars, motorcycles etc. or rent a room by publishing their information on the website. Website may or may not charge the consumer for its services. Another consumer may opt to buy the product of the first customer by viewing the post/advertisement on the website.

C2C Model

Consumer – to – Business (C2B)

In this model, a consumer approaches website showing multiple business organizations for a particular service. Consumer places an estimate of amount he/she wants to spend for a particular service. For example, comparison of interest rates of personal loan/ car loan provided by various banks via website. Business organization who fulfills the consumer’s requirement within specified budget approaches the customer and provides its services.

C2B Model

Business – to – Government (B2G)

B2G model is a variant of B2B model. Such websites are used by government to trade and exchange information with various business organizations. Such websites are accredited by the government and provide a medium to businesses to submit application forms to the government.

B2G Model

Government – to – Business (G2B)

Government uses B2G model website to approach business organizations. Such websites support auctions, tenders and application submission functionalities.

G2B Model

Government – to – Citizen (G2C)

Government uses G2C model website to approach citizen in general. Such websites support auctions of vehicles, machinery or any other material. Such website also provides services like registration for birth, marriage or death certificates. Main objectives of G2C website are to reduce average time for fulfilling people requests for various government services.

G2C Model

C

Cache

Temporary data a computer stores to help websites load quicker. To clear your cache is to reload a web page with new data generally to see changes made during web development.

Call-to-action (CTA):

Is an instruction to the audience to provoke an immediate response, usually using an imperative verb such as “call now”, “find out more” or “visit a store today”.

Cart Abandonment Rate: 

An online shopping metric which shows the ratio of number of abandoned shopping carts to the number of completed orders. An abandoned shopping cart is when a user places products on his virtual shopping cart but does not complete the order.

Chargeback: 

Is the return of funds to a consumer.

Cohort Analysis: 

A segmentation technique that creates a unique group of visitors that share a common characteristic within a certain period of time. It’s used to understand visitor behavior.

Conversion: 

An online marketing concept where you transform an online store visitor into a paying customer.

Conversion Funnel: 

A Google Analytics metric which shows the series of events that your visitors follow to finally achieve conversion. It’s called a funnel because in each event, a percentage of visitors leave your website so at the end of the funnel where the sale happens, there are fewer users than there were at the beginning.

Conversion Rate:

An online marketing concept which gives the percentage of online store visitors who transform into paying customers divided by visitors who are given the chance to fulfill it but did not.

Conversion Rate Optimization (CRO): 

A process in online marketing wherein the online marketer is involved in improving their ecommerce website layout, content and design, landing pages and sponsored search ads in order to increase their conversion rate.

Cookies: 

Is a small piece of data sent from a website and stored in the user’s web browser while the user is browsing.

Cross-selling: 

A marketing tactic where sellers present additional products that can complement, enhance or improve the main product they are selling (for example, mobile phone cover for a mobile phone purchase)

Content Management System (CMS): 

Is a computer application that supports the creation and modification of digital content using a simple interface to abstract away low-level details unless required, usually supporting multiple users working in a collaborative environment. Eg. WordPress, Drupla, Joomla!

Corporation: 

A company or group of people authorized to act as a single entity (legally a person) and recognized as such in law.

Customer Relationship Management (CRM):

A software solution specifically devoted to organizing, synchronizing, and automating a business’ customer relationships.

Customer Lifetime Value (CLV): 

Is a prediction of the net profit attributed to the entire future relationship with a customer.

D

Distributor:

A distribution business that inventories products from a number of manufacturers and sells to many retailers. Often distributors are able to offer shorter lead times than manufacturers and may sell in smaller quantities. It is common for distributors to charge a premium over a manufacturer-direct price for the service and convenience provided.

Domain:

The root address for a web page.

Dropshipping/Drop Shipping: 

Is a supply chain management method in which the retailer does not keep goods in stock but instead transfers customer orders and shipment details to either the manufacturer, another retailer, or a wholesaler, who then ships the goods directly to the customer.

E

Ecommerce: 

Commercial transactions conducted electronically on the Internet.

F

Fulfillment: 

The process of receiving, packaging and shipping orders for goods. Any company selling products directly to consumers through the mail must deal with fulfillment.

G

Google Keyword Tool:

A free keyword suggestion tool included in the Google AdWords Platform. The tool uses data from the many searches conducted on the Google search engine to suggest keywords for a given URL and category.  Click here for Google Keyword Tool.

Google Trends:

A search engine tool that shows how often a particular term or keyword is searched for on Google. Results are shown in a relative scale, making the tool well suited for comparing keywords or phrases. Trends will also show where searches came from and how search volume for a particular keyword has changed over time.

H

HTML (Hyper Text Markup Language):

A markup language specifically created for displaying web pages and applications in web browsers. Like other markup languages, HTML annotates a document, describing its layout and syntax.

I

Inventory: 

Includes the products, raw materials, work-in-process goods and finished goods that make up the inventory that is or will be for sale by a company.

P

Patent: 

License conferring a right or title for a set period, especially the sole right to exclude others from making, using, or selling an invention.

Pay Per Click (PPC):

An online advertising model wherein advertisers pay only when a prospect clicks on an advertisement and is directed to the advertiser’s website. Google’s AdWords platform is an example of pay-per-click promotion.

Payment Processors or Payment Gateways:

Both allow ecommerce merchants to processes payments from sales. They verify the card information with credit card companies who then approve the transaction.

Performance Marketing:

Refers to online marketing and advertising programs in which advertisers (“retailers” or “merchants”) and marketing companies (“affiliates” or “publishers”) are paid when a specific action is completed; such as a sale, lead or click. Click here for more.

Per-Order Fee:

When a manufacturer or distributor drop ships an order directly to a customer on a retailers behave that manufacturer or distributor may change a per-order fee for processing.

Profit Margin:

The difference between what a retailer pays for a product and what the retailer’s customer pays for the product. Margin calculations may consider only the cost of the goods sold or may take into account overhead and other variable costs.

Q

Quantitative Metrics:

In online marketing, quantitative metrics are those measures that may be represented as numbers. Click-through rates, visitor counts, and time-on-site are all examples of quantitative metrics.

Qualitative Metrics:

In online marketing, qualitative metrics seek to measure the quality of a customer interaction, and may be subjective in nature. A retailer, as an example, may implement a new product review campaign, compare reviews written before and after the campaign, awarding each review a qualitative score, and then use the relative scored to decide if the campaign was successful.

R

Reseller:

A company that purchases goods or services for the purpose of resale not consumption. In web economics, a re-seller may also be a form of affiliate marketer, promoting a rebranded service.

Responsive:

Websites that allow users to view and use the website easily on all screen sizes.

Retailer:

A company that sells directly to the end consumer.

S

Search Engine Marketing (SEM):

The promotion of websites by increasing their visibility in search engine results pages (SERPs) primarily through paid advertising.

Search Engine Optimization (SEO):

The process of making a website easier for search engine bots to index and categorize.

Search Engine Results Page (SERP):

A search engine web page displaying the list of responses to a particular search query.

Shipping: 

A charge imposed by a retail company to send merchandise to a customer.

Social Media Marketing (SMM): 

A form of Internet marketing that utilizes social networking websites as a marketing tool. The goal of SMM is to produce content that users will share with their social network to help a company increase brand exposure and broaden customer reach. Vital to an online strategy in Southeast Asia.

Sole Proprietorship:

A type of business entity that is owned and run by one person and in which there is no legal distinction between the owner and the business. It is not a legal entity. It simply refers to a person who owns the business and is personally responsible for its debts.

Supply Chain:

The oversight of materials, information, and finances as they move in a process from supplier to manufacturer to wholesaler to retailer to consumer. Supply chain management involves coordinating and integrating these flows both within and among companies.

T

Traffic:

In Internet marketing, traffic represents the number of visitors a particular page or site receives.

U

Usability: 

Ease of use of a website. Some broad goals of usability are the presentation of information and choices in a clear and concise way, a lack of ambiguity and the placement of important items in appropriate areas. KISS principle (keep it simple, stupid).

UI (User Interface):

The means by which the user and a computer system interact, in particular the use of input devices and software.

UX (User Experience):

Is a person’s entire experience using a particular product, system or service. It includes the practical, experiential, meaningful and valuable aspects of human–computer interaction and product ownership.

V

Vertical:

An industry segment made up of similar business and customers.

W

Web Hosting:

Where data for your ecommerce site is stored. This network of computers allow customers to access the information needed to load your website on their computer.

Further Your Ecommerce Education

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