Ecommerce Glossary
All the words you need to know as an ecommerce retailer.
Some small ecommerce business owners learn the ropes as they go.
But, Googling your way through a skill as difficult as building a business can be hard when there are a million words you just don’t understand.
Industry terms and acronyms like 3PLs, APIs, drop-shipping, and bundling are thrown around in the ecommerce sphere all the time.
So, we created a glossary of all the terms every ecommerce retailer should know to help them grow their business and to do it with confidence.
A
A/B Testing
Also known as “split-testing”, this is a randomized experiment where multiple versions of a piece of marketing collateral (like a webpage, email, etc.) are shown to different audience segments at the same time to determine which one, if sent to a larger audience, will boost business metrics the most.
Advance Ship Notice (ASN)
An ASN is an electronic document that is sent by the shipper to the warehouse to let them know that xyz item(s) has (have) been shipped back to them. When the warehouse gets the ASN, they can take various actions against that return. They could potentially process the return on receiving an ASN, they could kick start an exchange and start to pack the new product. They could also just notate to expect that item.
Annual Recurring Revenue (ARR)
This is an important term for any retailers that sell products on a subscription basis. Annual recurring revenue refers to the expected money to be earned year to year based on current subscriptions. Many retailers like using a subscription-based pricing model because it provides great revenue predictability.
API Key
Used to authenticate developers to give access to a particular API. API keys are generated when creating an app.
Application Programming Interface (API)
A set of programming codes that enables data transmission between one software product and another.
App Store
Similar to the Apple App Store or Google Play Store, there are many other app stores that exist in the ecommerce industry. Ecommerce platforms like Shopify have marketplaces to give retailers feature customizability.
Automation
The process of computerizing systems to save time, and money and collect data. For example, automating your returns would mean using a returns management app or software to facilitate returns rather than doing them all manually via emails and phone calls.
Average Order Value (AOV)
The average dollar amount customers spend on an individual order. The average order value goes up if customers purchase more items or higher valued items per order.
B
Black Friday, Cyber Monday (BFCM)
Black Friday, Cyber Monday refers to the day after Thanksgiving and the following Monday. This is a decades-long American retail tradition that has customers shopping for billions of dollars worth of products in one weekend. As a retailer, this can be an exciting and stressful time of the year.
Bracketing
When a customer buys multiple variations of the same product online so that they could try them all out and return the ones that weren’t a good fit, this is referred to as bracketing. Apparel retailers will see this often.
Bundling
Buy Online, Pick-up Curbside (BOPAC)
This refers to when customers buy products online, then travel to a physical location to pick up the order at the door. A good example of this would be grocery shoppers when they place an order online and then head to the grocery store to pick up their goods.
Buy Online, Pick-up in Store (BOPIS)
This refers to when customers buy products online, then travel to a physical location to pick up the order.
Buy Online, Return In-Store (BORIS)
This refers to when customers buy products online, then decide to return that item to a physical location once the product arrives. Leading apparel retail brand, Zara, aims to shift customer behavior towards BORIS with their new returns policy that charges customers for facilitating online returns.
C
Call to Action (CTA)
A marketing strategy that involves giving instructions to the target audience to encourage them to take a particular action. Examples of this would include telling viewers to like, comment, or subscribe or having buttons with phrases like “Read Now.”
Cart Abandonment Rate (CAR)
The rate at which potential customers leave your site before completing their purchase. This could be an indication that something went wrong in the shopper’s journey that caused them to abandon their order. High cart abandonment rates may mean the shopping experience needs to be looked at further.
Cascading Styles Sheets (CSS)
Used to style and layout web pages. For example, to alter the font, color, size, and spacing of your content, split it into multiple columns, or add animations and other decorative features to match a retailer’s brand.
Churn Rate
The rate of customers that choose to stop buying from your store. A high churn rate is an indication that your company has poor customer retention.
Collection Page
Products are grouped together to make it easier for shoppers to browse all products of a certain category. The webpage that holds all similar products together is referred to as a collections page.
Consumer Behavior
The study of how people are making purchase decisions and interacting with your retail brand. Using your understanding of consumer behavior to make business decisions and marketing strategies will be your number one competitive advantage.
Conversion Rate Optimization (CRO)
Tactics used to increase the conversion percentage for traffic that visits an ecommerce website —a.k.a., optimizing the user experience and web design to encourage completing a purchase or completing another call to action before abandoning the cart or bouncing off the page.
Cross-Selling
The act of offering a shopper additional products that complement, enhance, or relate to a product currently in their cart. This marketing tactic can be used to increase your average order value.
Customer Acquisition
Refers to the methods used to attract and acquire new customers.
Customer Centricity
An approach that retailers take to understand their customers’ situations, perceptions, and expectations. Having a customer-centric brand means the customer is thought about and prioritized in all business decisions.
Customer Lifetime Value (CLV)
The predicted revenue that a single customer will generate for your business over a lifetime, based on their previous shopping history and interactions with your store. It estimates the total monetary value that an average customer will contribute to a company over the customer’s expected lifetime and is calculated by summing up all transactions for an individual.
Customer Retention
Focuses on keeping customers that have already purchased from the brand.
Customer Relationship Management (CRM)
CRM is a technology that’s used to manage all interactions and communications with customers. It’s important to choose a good CRM for your ecommerce retail business because it is a key part of interacting and building a relationship with your customers. Zendesk is a great example of a CRM.
Customer Retention
A retailer’s ability to turn a one-time customer into a repeat buyer and to keep them from buying from their competitors.
D
Discount Rate
Sometimes, retailers will offer products at a lower price than their retail value as a promotional strategy. The difference between the product’s original price and the new asking price is referred to as the discount rate.
Direct to Consumer (D2C)
Direct to Consumer; refers to selling products directly to customers, bypassing any third-party retailers, wholesalers, or any other middlemen. If you have your own Shopify store or ecommerce website, then you sell D2C.
Draft Order
A Shopify order that has yet to receive payment. Until recently, due to technical challenges retailers were unable to edit orders within Shopify after payment for that order was received. Due to this limitation, draft orders were created to enable retailers to edit orders before receiving payment. NOTE: Most other platforms allow order editing, therefore they do not have the concept of a draft order.
Drop-Shipping
The process of online stores working with wholesale suppliers to deliver products. This keeps retailers from having to hold inventory, making it a cost-effective method of delivering goods to your customers. Drop-shipping is dependent on the retailer being able to communicate customer shipping information of each order to their supplier.
E
Ecommerce
Buying and selling products and services electronically on the internet. Shopify is an example of an ecommerce platform that allows retailers to have an online presence and sell products.
Email Capture
A pop-up that appears on an ecommerce site requesting a shopper to share their email address to be added to the brand’s mailing list for discounts, updates, and more.
Endowment Effect
An emotional bias that a customer grows toward a product that causes them to value it higher than its market value. A study done by researchers at the University of Texas – Dallas found the endowment effect occurs the longer the customer owns a particular product.
Enterprise Resource Planning (ERP)
Complex business software that integrates and centralizes core business processes. Examples include: SAP, Netsuite, BrightPearl
Event-Triggered Email
A marketing strategy where emails are set to automatically send to subscribers when a particular event occurs. Examples of such events would be when they click on a “learn more” button on your website or when it’s the person’s birthday.
Exchanges
A method of returning a product; the customer will return their original product in exchange for a new item. Retailers will often incentivize customers to exchange items in an effort to lower refund rates.
F
Fulfillment
The process of receiving, packaging, and shipping goods and getting them in the hands of your customers.
G
Gift Return
A method of returning a product; the gift recipient will return the product in exchange for a new item or store credit, without informing the original purchaser of the transaction.
Go To Market (GTM)
Your go-to-market strategy is the plan you have in place to bring your products to the hands of your customers, grow your brand awareness, and gain a competitive advantage.
Green Business
A company that has minimal negative or even a positive impact on the environment through the way they run their business through sustainable processes and manufacturing.
Greenwashing
When a company spends more time and money on advertising the fact that they’re environmentally friendly over actually offsetting their carbon footprint. Greenwashing can be detrimental to your business and the environment. Retailers that aim to position themselves as sustainable should focus their efforts and creating waste-reducing practices rather than focusing on sustainable marketing campaigns that don’t actually help the environment.
H
Hero Image
This is website design terminology that refers to the banner that appears at the top of your website and landing pages.
HTML
Fairly simple language made up of elements, which can be applied to pieces of text to give them different meanings in a document (Is it a paragraph? Is it a bulleted list? Is it part of a table?), structure a document into logical sections (Does it have a header? Three columns of content? A navigation menu?), and embed content such as images and videos into a page.
I
Ideal Customer Profile (ICP)
Otherwise known as the Buyer’s Persona, your ICP describes the ideal customer that would benefit from your product. ICPs are used to guide customer-facing decisions without losing the scope of the overall project. Remember, ICPs are fictitious people that are created to represent a segment of customers.
IQ Analytics
ReturnLogic feature; our data analytics software gives insights into top returning customers and products. This data can be used to make observations about how your customers are reacting to your products and messaging to make changes accordingly.
In-house
Suppose a retailer decides not to outsource their warehouse logistics to a 3pl and decides to use their own space and employees to manage the incoming and outgoing inventory and logistics internally. In that case, it’s referred to as “in-house”.
International Shipping label
Cross-border shipping labels.
Inventory Management System (IMS)
A system that tracks inventory count.
J
JavaScript
A cross-platform, object-oriented scripting language used to make webpages interactive (e.g., having complex animations, clickable buttons, popup menus, etc.)
K
Key Performance Indicator (KPI)
These are the exact metrics your company is trying to reach in order to validate that the current business strategies are having the desired results. Examples of KPIs would be a monthly sales goal, a certain percent increase of average order value by the end of the quarter, or the number of new customers acquired by the end of the year.
Kitting
(see bundling)
L
Landing Page
A single webpage that customers are directed to from an email or link that usually encourages a call to action, such as subscribing to an emailing list, buying a product, or purchasing a ticket.
Last Mile Courier
As an ecommerce retailer, your products will reach a lot of different destinations before they finally get into the hands of your customer. Last Mile Courier is defined as the movement of those products from the final courier to the purchaser’s shipping location, aka the final destination.
Lifecycle Stages
The stages of the customer lifecycle are: 1) Awareness 2) Interest 3) Desire 4) Action 5) Loyalty 6) Advocacy. Customers will interact differently with your brand depending on where they are in the lifecycle. A good marketing strategy caters to each stage of the lifecycle to funnel shoppers into loyal customers.
Logistics
Logistics refers to all the processes you have in place to run your business and get your products to your customers. Having a sustainable logistics strategy is essential to scaling your business.
M
Metadata
Metadata refers to all the unseen HTML elements on your website that communicates your site information to search engines. This includes texts like headings and titles, article tags and categories, image captions, and so on. Understanding metadata is important for boosting your SEO strategy.
Mobile Commerce
The use of smartphones and tablets to buy and sell products and services online.
Multi-Warehouse Management
As the name suggests, this involves a retailer’s management of multiple warehouses. Warehouse management refers to any of the operational processes involved with inventory, warehouse staff, shipping, storage, and the movement of products.
N
O
Omnichannel Selling
A multi-channel approach to selling that aims to meet the customer wherever they are, providing opportunities to shop online, in-store, and in third-party locations such as Amazon or Target.
P
Parcel Pick-Up
This is a postal service some customers are offered when initiating a return. Customers have the option to request a package to be picked up when their mail is delivered.
Partial Shipment
When a retailer sends a customer’s order in separate deliveries, due to arrive at different times.
Point-of-Sale (POS) System
Software and hardware that lets online retailers accept transactions, manage inventory, add products, process payments and send receipts digitally. Shopify is a common POS system for many online retailers.
Post-Purchase Experiences
There are 5 steps to the customer journey. 1) Awareness 2) Consideration 3) Decision 4) Service 5) Advocacy. The last two are part of the post-purchase experience. Once the customer brings home the product, they will either keep it or decide to initiate a return. Either way, a positive post-purchase experience increases the likelihood of them speaking highly of your brand to their friends.
Prepaid Return Label
As with their standard outbound labels, the retailer pays for the label upon creation.
Printerless Return
Printerless returns allow customers to get a scannable shipping label on their phone so that they don’t have to print it out with their returning package. Printerless returns offer a greater convenience to product returns for your customers.
Product Description
The written explanation of the features and benefits of a particular product. From basic facts to the story behind the product, the product description should entice the shopper to purchase the product.
Product Detail Page (PDP)
As an ecommerce retailer, each of your products should have a product detail page; that is a single webpage dedicated to the product, describing the features and benefits of the product, variations (color/size options), shipping information, product reviews, and any other relevant information that may entice the shopper to purchase the product.
Product Dispositions
A set of conditions used to classify the grade of products once they are returned. For example, “New w/ Tags,” “Dirty,” or “Damaged,” etc. Dispositions are important for larger retailers who route returned products differently throughout a warehouse for disposal, liquidation, resale, or repair.
Public App
Public apps allow for a retailer to install a third-party integration at the click of a button. Unlike a private app, retailers do not need to contact a developer to install a public app.
Q
Quarterly Business Review (QBR)
Each quarter is an opportunity to connect with your customers and review their biggest challenges, top priorities, goals, and objectives. The best way to do this is by analyzing any data gathered over the last 3 months on how your customers are behaving with your products.
R
Refund
A method of returning a product; the customer will return their original product and receive all or part of their money back in return.
Renting
When a customer buys many items online with the intention of trying them all on and returning what doesn’t fit or look flattering.
Reserve Online, Pick-up in Store (ROPIS)
This refers to when customers reserve an item online, then go in-store to purchase the item with the confidence of it being available.
Retail Sustainability
Retail sustainability refers to all the efforts retailers are taking to protect the environment. From using sustainable material and manufacturing methods to optimizing reverse logistics processes to lower environmental impact, sustainable business practices have become a significant value proposition to environmentally conscious shoppers. See also Green Business.
Returnalytics
Returnalytics is the title of ReturnLogic’s podcast show. On Returnalytics, we discuss the latest retail trends, technology, and best practices for managing an ecommerce business and retail returns Listen in as we uncover how retailers can manage and optimize their returns strategy, saving time, and labor, and ultimately increase customer loyalty and lifetime value.
Return Authorization Slip
The slip that’s included with a customer’s return label. Information includes the RMA #, Order #, and barcodes for the RMA and individual return SKUs.
Return Center
A customer-facing portal where shoppers create a return following the rules and policies set by the retailer. Sometimes called the “Returns Portal.”
Returns Comments
The comments a customer leaves when initiating a return online as to what was unsatisfactory about the product. Returns comments can be used by retailers to understand which products are underperforming and why to make the appropriate changes.
Returns Data
The data generated by customers, products, orders, and resulting returns, and the unique connections between each. Returns data is a gold mine for understanding your customers and deepening your relationship with them. Working with a returns management company that gives you reports and observations on your returns data gives you insight on how best to move forward with your business. (See IQ Analytics to learn how this is done.)
Return Reason
The reason why the customer is initiating a return. Knowing why customers are returning items gives you insight as to where you are not meeting your customers’ needs. The best way to gain the most information from your customers’ return reasons is by covering as many use cases as possible with no overlap between reasons. For example, you would not want to put “Too Big” “Too Small” and “Size”
Returns Management
All the policies, rules, workflows, and processes that build a return for a shopper as well as the systems used by the retailer to receive, grade, and complete the return. In short, returns management is all the systems in place to make returns possible.
Return Merchandise Authorization (RMA)
When a customer uses a returns portal to start a return, an RMA is created. This becomes the virtual identity of that return.
Returns Optimization
Continuous improvement strategies that use returns data to enhance the experience for the shopper, improve retailer operational efficiency, and grow profits. As an ecommerce retailer, returns are something that you’ll always deal with. Just like all other parts of your business, you want your returns management to get better with time.
Return Policy
The rules a retailer creates to manage how customers return an unwanted product that they purchased. Return policies include information on products that are eligible for a return and the process to initiate a return.
Returns Window
The length of time a customer has after the initial purchase to return any unwanted products.
Reverse Logistics
The supply chain management process that deals with physically moving goods back up the supply chain to the sellers and manufacturers.
S
Sales Qualified Lead (SQL)
An SQL is a prospective customer that has moved through the sales pipeline.
Sales Qualified Opportunity (SQO)
An SQO is a customer lead that is further down the sales funnel and has been accepted by sales into the pipeline. SQOs are likely to become customers.
Search Engine Optimization (SEO)
The process of improving the quality and quantity of website traffic to a particular website from a search engine.
Shipping
the process of physically transporting an item from the warehouse or manufacturer to the customer.
SMS Marketing
A marketing strategy that allows retailers to send promotional text messages directly to their customers.
Social Commerce
Standard Shipping Label
A shipping label for a return that’s charged upon generation.
Stock Keeping Unit (SKU)
A scannable barcode, often seen printed on product labels which allow retailers to automatically track the movement of the inventory.
Store Credit
A method of returning a product; a customer will return the original product and get store credit redeemable in a future purchase in return.
Subscription
Some retailers may offer their products on a subscription-based model. This is when products and payments are set on a regular basis, usually monthly or annually.
T
Theming
Theming, like branding, is the overarching idea that’s weaved through your entire marketing strategy. Theming helps your brand be recognizable and entertaining for your audience. It establishes an emotional connection with customers. An example of theming would be having a branded returns portal.
Third-party logistics (3PL)
A service that allows you to outsource operational logistics from warehousing, all the way through to delivery. Common 3PLs – Bergen Logistics, RubyHas
U
Upselling
The act of encouraging a shopper to purchase an upgraded version of the product they’re already considering purchasing. This marketing tactic can be used to increase your average order value.
User Interface (UI)
User interface refers to what the front-facing end of your ecommerce shop or website looks like. This includes how each page is displayed, where buttons and product descriptions appear, what navigation looks like, etc. Having an optimized UI design keeps customers shopping on your site for longer.
User Experience (UX)
The user experience (UX or UE, also referred to as CX or Customer Experience) is how a user interacts with and experiences a product, system, or service. It includes a person’s perceptions of utility, ease of use, and efficiency.
V
W
Wardrobing
When a customer purchases a product, typically clothes, with no intention of keeping it. Instead, they will buy the product, where it a few times or for an event, then return it for a refund. Many tight-fitting clothing companies like swimwear or fitness apparel may see this sort of customer behavior.
Warehouse Management System (WMS)
Software used to run a warehouse or distribution center. A warehouse management system communicates to warehouse employees so that they know when products are coming in and out of the warehouse.
Warranty
A warranty is a guarantee the manufacturer of a product gives towards its quality and the compensation promised in the event that the product received is not up to par.
Webhooks
Webhooks are a type of API that uses one-way data sharing that enables applications to share data and functionalities. When you do this with multiple webhooks, the result is a web that’s greater than the sum of its parts.
Workflows
Workflows are a visual representation of each of the processes in play to run your retail business. This is integral to your day-to-day operations because it ensures that everyone on the team is on the same page about what the steps are to success and keeps everyone organized.
X
Y
Z
And there you have it! All the terms you need to know to keep yourself from getting lost when talking about ecommerce retail.
Be sure to save this page so that you have it to refer back to anytime you need a refresher on a particular term.
Hope this was helpful for you. If there are any terms we’re missing that you want to see, reach out to us and we’ll add them to the list!
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