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Ecommerce Guide: Frequently Used Terms to Know

The ecommerce industry often introduces new or frequently used terms throughout day-to-day conversations and across various industries. When you’re running or managing a successful ecommerce website, it’s important to know frequently used terms to help enhance and optimize your ecommerce operations and stay updated with the latest trends.

If you’re not familiar with terms like Git, A/B Testing, SaaS or B2B, we’re here to help and catch you up to speed with this comprehensive ecommerce guide and glossary.

At the very basic level, ecommerce, also known as electronic commerce, is known as any type of business or sales transaction that happens over the internet. As the ecommerce industry continues to grow exponentially at 23 percent every year, there are several key terms to familiarize yourself with.

Whether you need clarification or just a simple refresher session, we’re here to break it all down for you.

We’ve put together an informative glossary guide to help you stay on top of current terminology you might come across. The following glossary is a list of just a few of the many terms that every ecommerce expert and business owner needs to know.

*We will be updating this guide periodically, so check back for more terms.

 

Ecommerce Glossary

A

Authorization: This is required to verify whether a credit card has sufficient funds for the transaction to be able to successfully go through. The electronic authorization request by a merchant may include an authorization approval or decline option. Authorization is required for every sale and transaction.

Abandonment Rate: This refers to the percentage or number of visitors or potential customers that leave a particular website without making or following through with a purchase. For instance, a consumer could have put a few items in an online shopping cart but decided to abandon the transaction.

A/B Testing: This is primarily used as a method by companies to determine the effectiveness of one page versus another for promotional and marketing purposes.

Affiliate Marketing: An advertising and digital marketing tactic used to generate online revenue for promoting a brand’s products. For example, an influencer or loyal customer might work as an affiliate to provide recommendations and promote an online product. If that particular product link is clicked or purchased based on recommendations, the publisher of the marketing post will receive a commission from the sales they make.

Average Time on Site: The average duration of time a user spends viewing your site. This is also known as Session Duration in Google Analytics.

B

Banner Exchange: A networking exchange where websites will display and promote certain types of banner ads on their site in exchange for receiving credit for a similar exchange of ads on another website or business page.

B2B: This is an acronym for “Business-to-Business,” which refers to the type of ecommerce exchange when a business sells a good or service between business rather than consumers.

B2C: Known as Business-to-consumer, this retail process happens when businesses sell products or services directly to the consumer.

BigCommerce: A privately-held ecommerce company with a SaaS ecommerce platform that helps businesses build a successful shop and scale seamlessly with technology they can trust. Features allow businesses to easily sell products, manage orders, process payments, and use many of its various features such as search engine optimization, web hosting, and more.

Bounce Rate: This happens when a certain number or percentage of visitors click on a web page and end up exiting (bouncing) without clicking or visiting other pages on the website.

Brick and Mortar Shop: A business or retail operation that has at least one physical location. Many customers still prefer walking into a physical, brick and mortar shop while alternatively using online shopping to identify products before making an in-store purchase.

C

Cache: This involves the process of storing several copies of files in a temporary storage location known as a cache for easy access.

Call-To-Action: A distinctive, clear marketing message that aims to persuade and encourage a site visitor or consumer to take the desired action whether that is purchasing a product, or taking advantage of a product discount.

Card Present: These transactions are common in brick and mortar stores. Typically, during checkout, you will be asked to physically swipe your credit or debit card to go through with the transaction in-person. The sale is then considered to be, “card present.”

Card-Not-Present: These are transactions that can be processed without the cardholder present at the time of purchase. Typically, transaction processing fees are arguably higher than for Card Present transactions.

Cart Abandonment Rate: This term is associated with a virtual shopping cart and the rate at which a shopping cart is abandoned. A cart being abandoned means that a purchase or sale did not occur. This could be due to a variety of reasons such as complicated, non-user friendly booking, lack of streamlined web design, or a customer changing his/her mind about a product purchase.

Churn Rate: The percentage of customers or subscribers that decide to halt business with a particular company.

Click-to-Open Rate: Also known as CTOR, this term compares the number or rate of people who initially opened an email to the number of people who clicked on a link in that email. The purpose of this is to distinguish and decipher the quality of email content and whether it is able to get customers to click on email links and engage with it. The CTOR can be measured by the following mathematical formula: # of Clicks ÷ # of Opens × 100 (to get a percentage) = CTOR.

C2C: Known as Consumer-to-Consumer ecommerce, this process involves consumers trading various services and products with other consumers online.

Cloud Hosting: This type of web hosting is different from traditional web hosting and provides customers multiple connected servers that make up a cloud. Users can access a cluster of resources from multiple servers instead of retrieving data from a single server. Everything is interconnected in the cloud and more resources may be added to the cloud. Sometimes cloud hosting can also be referred to as “server on-demand hosting” or “cluster server hosting.”

Comma Separated Value: Also known as CSV, this refers to a text-only file that saves data in a simple table format that can be imported into almost any program.

Content Management System: Referred to as CMS, this term is a platform that allows for the publishing, monitoring, and various other editing or content modifications to the website. A few popular CMS platforms include WordPress, Drupal, Squarespace.

Conversion Funnel: An ecommerce phrase that is commonly used to represent a consumer or potential visitor’s journey on a company’s website. The goal is to create actionable plans to encourage visitors to either sign up for a service, subscribe, or purchase a product.

Cookies: Data from a website that is stored in the user’s browser. A user’s information–everything from passwords to location data is stored in these cookies. Websites are required to have cookie disclaimers, allowing users to opt-in or opt-out.

Conversion Rate: The equivalent of the percentage or number of visitors on a website that converts into customers.

Conversion Rate Optimization: The process involved with optimizing a website or landing page based on prior website visitor behavior in order to achieve better conversions and facilitate better user experience.

Customer Lifetime Value: Also known as CLV, this term represents a customer’s lifetime value and measures the amount of revenue or value the customer brings to a business. To calculate CLV, a business should be able to factor in and analyze the following aspects of customer behavior: Average order value, customer purchase frequency, customer lifespan and retainer, including profit margin.

Customer Relationship Management: Also known as CRM, this is referred to as an approach that helps businesses improve customer relationships while nurturing new customer relationships as well.

Cyber Monday: Sales and promotions that are typically launched the Monday after Black Friday.

D 

Data Migration: Referred to as the process of successfully migrating, or transferring a set of data to another improved location for website infrastructure efficiency and website optimization purposes.

Digital Commerce: The digital infrastructure that comprises ecommerce and involves communication and exchange via mobile search engines, mobile apps, social platforms, and anything else related to online or digital.

Directory: A systematic search platform that arranges web pages into organized categories and subcategories.

Domain Name: This refers to a unique name that establishes a particular organization or entity on the Internet. This is done through the guidelines provided by the Domain Name System (DNS), which provides addresses to web servers and pages.

Dropshipping: This is where the manufacturer ships items directly to the customer in generic packaging.

D2C: Also known as direct-to-consumer, this refers to the process in which a company cuts the middle process and instead, sells directly to the consumer.

E

eBay: One of the most successful early ecommerce companies based in San Jose, California, which gives power to C2C and B2C ecommerce sales through its website. The site features sellers and buyers and allows for the selling of new or used products on the platform in an auction-like online retail setting.

Ecommerce: Known as electronic or internet commerce, this refers to the buying or selling of goods and products over the internet.

Ecommerce Merchandising: A marketing concept that involves strategic arranging and the displaying of products, offers, or services on website pages to increase sales and visibility through personalization and other techniques.

Email Marketing: This is a component of digital marketing and is associated with communicating through an email subscription to develop and nurture relationships with consumers and promote items or special deals.

Encryption: The process of scrambling or rearranging a message to ensure data security and secrecy. There are two main types of encryption methods: Private Key and Public Key Encryption.

Enterprise Resource Planning: Also known as ERP, this is a backend business management software that helps small and large-scaled businesses manage their data utilizing a system of automated integrated applications. ERPs are used to handle various backend items such as product information, inventory, shipping, payments processing, and more.

Etailing: Also known as “electronic retailing,” this term refers to the sale of retail goods on the internet. Consumers can browse products virtually and complete their purchase online through a virtual shopping cart system.

Event-triggered email: Automated email messages that are sent to a customer or company subscribers in relation to an annual, recurring, or particular event such as a registration date or birthday date.

Evergreen content: Online or digital content that stays relevant enough to be continually promoted or featured regardless of timeliness.

F

Favicon: Also known as a shortcut icon, this small feature is a 16 x 16 icon logo that appears at the top of the web browser and serves as a branded icon to represent and convey a website’s function or primary brand logo.

Front End: This is known as the website user interface, or the “front end” of what a user sees and interacts with when they first visit a website.

Fulfillment: The process involved with receiving, packaging, and shipping various orders through an ecommerce site.

G

Gated Content: Content that is guarded or put under an embargo until a user fills out a form or provides further information in order to access, download, or read the rest of the content.

Git: This is the most commonly used version control system and is becoming the standard for version control, according to Microsoft Word. There’s a booming Git user community that helps train developers and get help when you need it.

Google Analytics: A web analytics service by Google that analyzes and examines your website traffic with detailed reports. This free service also gives you the tools to better understand your site performance and ranking.

H

HTML: Text-based language or a standardized system for tagging text files that have been used to build web pages.

HTTP: Also known as HyperText Transfer Protocol. You’ll often see it written as http://. The HTTP is the standard protocol used by the World Wide Web and it essentially shows what messages are transmitted and what browsers should do in response to commands.

Hypertext: This refers to the text that is hyperlinked. Once a user clicks on the link, another web page with content will appear. The link can either be opened in another tab, or programmed to have the user stay on the current website.

I

Impressions: The number of times in which ad, images, content, or particular items are displayed to a user to produce and deliver results.

Inbound Links: Also referred to as backlinks, these links are found on other web pages and help direct customers to your website.

Inventory: An organized amount of items or products that are intended to be sold to customers.

Infinite Scroll: This refers to content being loaded and showcased continuously as a web visitor scrolls down a web page.

IP Address: Internet Protocol Address, or a specific unique number that represents a computer in a network setting. All computers have a unique IP address and the format is listed as the following: 194.403.387.6

J

Javascript: A type of scripting language that is used to make web pages both interactive and dynamic for the user.

JPEG: Also known as Joint Photographic Experts Group, this term refers to a type of image file that can be saved and used on the Internet. JPEG files are compressed and go by the extension, “.jpg”.

K

Keywords: These are SEO terms, words, or phrases that are added to a website for the purpose of helping optimize and improve search engine rankings.

Keyword Stuffing: A term used in SEO to refer to overloading your webpage with too many SEO keywords to increase your site’s ranking, and as a result, affecting the readability of the content.

KPI: This is known as Key Performance Indicator or a type of performance measurement tool that is used to evaluate the success of a particular campaign, department, or organization in regards to strategic goals.

L

Landing page: The page visitors or customers will “land on” either through means of paid traffic or generic search traffic, referrals, or hyperlinks.

Listing Fee: A fee that several ecommerce sites–particularly online auction sites–will require for vendors who wish to list certain products, goods, or services on their website.

Lorem Ipsum: This is commonly used as filler text or temporary placeholder copy for website pages or in the design stage.

M

Magento: This is defined as an ecommerce platform and CMS that was created in 2008. It is currently an open-source solution and has gained immense popularity among retailers, and is one of the most comprehensive and preferred online retail software of choice by major global brands like Nike, Samsung, Ford, and more.

Margin: Referred to as the metric that establishes the percentage of profit in a given sale or product after all expenses have been accounted for.

Merchant ID: A unique identification number or business code for merchants that sends a signal to payment processing systems as to where to direct and send funds.

Meta Description: This is the description and information that appears below the link of a search engine result. The purpose is to provide a brief summary of the contents on a particular web page.

Mobile Commerce: Also known as m-commerce, this term refers to any type of transaction that is completed on a mobile device. According to stats, by 2021, mobile commerce will account for 54 percent of total ecommerce sales.

N

Native Advertising: A form of online advertising or infographic and blog-heavy content that focuses on emphasizing editorial content rather than traditional banner ads. These ads are commonly found on social media feeds or recommended, sponsored content on a web page that doesn’t read or come across as a traditional ad.

Network: Digital communication or a system of computers that are interconnected for the purposes of sharing and sending out information. In general, a network can consist of two or more computers that are linked together to share or exchange information through various mediums such as telephone lines, cables, etc. Two of the most common networks include Local Area Network (LAN) and Wide Area Network (WAN).

News Bots: Automated programs that send users customized information or content based on interests or the way in which you respond to questions and interact with previous content.

O

Omnichannel: A cross-channel content strategy that provides a seamless, streamlined shopping experience for consumers. This occurs through a multichannel sales-driven approach through multiple platforms a customer may engage with: Online shopping, desktop, mobile device, telephone, or a brick and mortar store.

Open Rate: The number of email subscribers who actively open content or an email that was sent to their email address.

Open-Source: Unique computer code in which a copyright holder generally grants all users rights to freely access, modify, and distribute the software for any use.

Outsource: A business practice in which companies use third-party vendors to perform services in an effort to decrease business-related costs.

Order Management System: An application that allows merchants to keep track and organize orders to process.

Order Tracking: A tool that allows the consumer to track the status of their shipped item in real-time.

Overhead Cost: This term is associated with three categories: fixed, semi-variable, and variable costs associated with running and managing a business’s finance. This involves categorizing expenses and accounting for indirect costs for starting a business.

P

PayPal: An online payments system that helps customers make online payments, receive or request money, or set up a merchant business account.

PIM: Referred to as Product Information Management, this term serves as the central hub or process for handling data, content, and other material to market and sell various products through various distribution channels.

Portable Network Graphics: A graphics file format that supports data compression. The .PNG file was created to improve the GIF format.

Product Information Management: Also known as PIM, product data is a critical component for ecommerce shops. PIM is used to manage data on a larger scale while collecting and storing data in different formats.

PPC: Also known as “pay per click,” this is a form of internet advertising that helps drive traffic to websites. In general, an advertiser will pay when a user clicks on an ad.

Progressive Web Applications: Also known as PWA, this is a web application that uses the latest web capabilities to deliver an enhanced app experience to users, according to BigCommerce.

*Disclaimer: We are partners of Vue Storefront and we implement it on various ecommerce projects. 

R 

Redirects: When servers direct users to a different URL due to possible site maintenance, or when the original URL pages have permanently changed to a different URL.

Responsive Design: A concept in which a website design provides customized and responsive viewing experiences for users across different browser platforms.

Return on Investment: Also known as ROI, this term is the most common profitability ratio relative to the money invested. It refers to the gain or loss generated on an investment. The formula focuses on dividing net profit by total assets.

S 

Search Engine Optimization: SEO is the process of increasing the number of visitors to a website by improving rankings, as well as getting traffic from organic search results on search engines.

Software-as-a-service: SaaS is a cloud-based method of providing software to users.

Shopify: Shopify is a SaaS (software-as-a-service) ecommerce platform that allows small and large businesses to set up an online store and sell their products to customers. The company started over ten years ago and offers various apps and plugins with added functionalities and resources.

Shopping Cart: Any products or items virtually added to an ecommerce shopping cart, or order. There is usually a shopping icon to help users keep track or remove orders before checking out and placing an order.

T

Trademark: A form of intellectual property in the form of a logo, word, or phrase that is legally protected. It is usually identified as a sign or other distinctive indicator that is owned by a particular company or individual.

Tradeshow: An exhibition privately or publicly held, which displays and showcases new products from various industries. Tradeshows provide an opportunity for retailers, manufacturers, and wholesalers to exchange information, and place orders.

Two-Factor Authentication: Confirming a user’s identity by using a two-step verification method in the form of a one-time generated code via a smartphone text message or an alternative code.

Upselling: A sales technique in which a customer is persuaded to add more to their final order or buy an upgraded product with more features.

Universal Product Code: Also known as UPC, this is a standard barcode that is widely used in the United States, Canada, and other countries. This symbol is said to appear on almost every retail item. It’s a symbol that is used to encode a 12-digital number called a GTIN-12 for scanning, product identification, and retail purchase.

Unique Selling Proposition: The USP is a unique and critical aspect of any successful marketing strategy. This involves understanding what makes your business stand out and how your company is able to serve value to your target market or audience. In a nutshell, a company’s USP is a statement or mission that describes how their products or services are able to benefit customers in a unique way.

UX: Also known as User Experience, this involves the process of designing a user-friendly application or website that a user can easily navigate and use without any difficulty.

Value Proposition: A value proposition consists of convincing prospective buyers or consumers why your product or service is valuable or beneficial to them. Other criteria that this term covers include why a customer should choose your product over another competitor.

Viral Content: Popular online content that spreads rapidly online through various social sharing channels and website links. Viral content is often engaging and appeals to users who share that content with others.

W

Wholesale: The sale of goods in bulk by a wholesaler. These goods are then sold in large quantities to retailers, who then work to resell them to consumers.

WooCommerce: A customizable, open-source ecommerce plugin for building your online business. *Disclaimer: We specialize in the design, development and marketing of WooCommerce Websites.

Z

Zen Cart: A user-friendly, online store management system. It features an open-source online shopping cart software that is PHP-based, using a MySQL database and HTML components.


*Thanks for making it through this guide! This guide was last updated 2/26/20. We will be updating this guide periodically, so be sure to check back for more ecommerce glossary terms.

 

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