Ecommerce Glossary
The explosion of the Ecommerce space in the last few decades also came with an entirely new vocabulary that can sometimes be overwhelming to fully understand. To help make things a bit easier, we decided to put together an Ecommerce glossary of terms.
While the glossary largely focuses on B2B Ecommerce terms, we’ve also included a number of general definitions that apply to both B2B and B2C.
If you would like to add an entry to our Ecommerce glossary or have any alternate definitions you want to share, feel free to contact us.
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- 301 RedirectA type of webpage redirect that tells browsers that a page that was once present has now been permanently moved to a new location. When a web browser encounters a 301 redirect, they should automatically bring the user to the new page (via the URL specified in the redirect). Creating a redirect is not only helpful for your customers but is incredibly important for search engines so your existing content will remain in the search index even if its moved.
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- A/B testingTesting methodology that involves presenting at least two versions (i.e. the "A" version and the "B" version) of an asset to users and measuring to see which version(s) perform better. Assets could be landing pages on your site, lifestyle or product images, site styling, transactional or marketing emails, etc. Products like Google Optimize can make the process of measuring performance much easier so you can focus on the actual creation of the asset versions.
- Abandoned CartA user's cart is considered "abandoned" when they've added items to their cart as if they intend to purchase but, for some reason, decide to leave your site with those items remaining in their cart. It's important for merchants to be able to measure abandonment so they can a) continue to market to those users in order to drive the sale and b) determine if there's something happening in the purchase process that's causing people to abandon (e.g. high shipping costs, pricing that's not transparent, etc.)
- Account-based PurchasingA purchasing model where multiple buyers purchase under the umbrella of a single company account. This typically applies to B2B use cases where customers have large purchasing departments with several individuals responsible for purchasing at different locations/facilities. In modern ecommerce platforms, companies can set up their own company accounts and manage the individual users who can purchase, including setting purchasing quotas, approval workflows and activating/deactivating buyer accounts.
- Affiliate MarketingAn advertising model where merchants work with outside parties to help promote their brand and offerings. Affiliates are really an extension to a merchant's marketing team and will often implement their own marketing tools/strategies to help sell for the merchants they represent. Affiliates will usually get a share of the revenue generated from orders that are placed by customers that were sourced by the affiliate.
- Annual Recurring Revenue
The amount of revenue attributed to subscriptions on goods and services that recurs on an annual basis.
For example, if a merchant has two customers on an annual subscription the first of which is for a $100 item and the second of which is for a $50 item, the overall ARR for that merchant is $150.
- Application Programming InterfaceA software specification that helps establish protocols and guidelines to facilitate data exchange between different systems. Modern software platforms will typically publish an API that developers can use when they need to connect to those platforms. By using APIs, the end-developer doesn't need to know how the platform is implementing their functionality, they only need to know the "contract" that's defined by the API and as long as they code against that contract, they can safely assume that the platform will fulfill its responsibilities of that contract. These days, APIs are a key component for integrating disparate systems on the Internet like ecommerce, marketing automation and CRM platforms.
- Average Order Value
The average dollar amount of all orders placed over a specific time period.
For example, if a site has 2,000 orders in a month totaling $600,000 then the AOV for that month would be $600,000/2,000=$300. Tracking AOV can be helpful when evaluating the performance of marketing efforts and/or site enhancements intended to have customers buy more product or higher-dollar product than they typically would in a single order.
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- Bounce RateBounce rate is a measure of the number of users that visit a site and subsequently leave without navigating to other areas of the site. Bounce is one data point that marketers can use in order to determine effectiveness of site content. If the bounce rate for a particular page is considered high relative to other pages, it may be content or images that aren't compelling enough for the user to continue interacting with the site. Once adjustments are made to the site content, bounce rate can be compared to the baseline to see if those changes have had a positive result.
- BundlesProduct bundles allow customers to "mix and match" what would normally be individual products into a collection of products. A bundle gives customers flexibility in terms of how they can select the elements of the bundle but it also provides convenience and simplicity in that the bundle appears to be a single item when they enter into the check out process. Typically, merchants will still see the individual SKUs that make up each product in the selected bundle and will fulfill as if the customer added the products individually.
- Business-to-BusinessB2B businesses are those that primarily sell their services and goods to other businesses. Depending on what's being sold, those businesses may, in turn, sell those items to another business or end-consumer (wholesalers, resellers, etc.). B2B ecommerce can have significant differences when compared to B2C - account-based purchasing, buying on terms, bulk orders, highly configurable products/services, specialized shipping methods, etc.
- Business-to-ConsumerB2C businesses are those that utilize wholesalers or retailers in order to sell their goods and services to the end-customer. In some cases, these business may also have ways to sell directly to their end-customers (D2C).
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- Call to ActionA CTA is a very specific action that a marketer wants a prospect/customer to take (e.g. clicking a button, signing up for a newsletter, completing a survey) in response to communications/messaging to that person. CTAs are a key element of a marketing strategy as the actions generally align to the defined conversion goals for marketing campaigns. If CTAs aren't clear or compelling enough to the audience, marketing efforts can fall flat as the customer will exit the funnel too early, preventing the marketer from gaining valuable information about the prospect/customer's interests.
- ChargebackA chargeback can happen when a customer disputes a financial transaction related to the sale of a good or service from a merchant. In this scenario, the bank that issued the payment method to the customer will hold funds from the merchant until a decision can be made about the dispute. If the bank finds that the dispute is valid, the funds will be credited back to the customer. Otherwise, those funds will be released to the merchant. Chargebacks can cost merchants time and money as they often need to be very involved in the dispute process. Merchants can implement processes (like fraud detection) into their purchasing flow to help minimize chargebacks.
- Comma-separated ValuesA row-based file format where field values are separated by a comma delimiter. CSVs are a common way of importing and exporting data between systems and can be opened and edited in software like Excel.
- Content Management SystemSoftware that allows organizations to manage all aspects of their content including version control, renditions, publishing, access rights, etc. In the context of ecommerce solution, a CMS can be used to help marketing and product teams have tighter control over the content that's shown to customers on websites, in ads and in company/product literature.
- Conversion rate
Conversion rate is a measure of the percentage of customers that achieve a defined goal with regards to their interactions with your brand. People often assume a conversion means a customer placed an order but the goal can be arbitrary.
For example, a conversion could be a prospect clicking an ad which leads to a conversation with your sales team, even if that prospect doesn't place an order.
- CookiesNo, we're not talking about these cookies, we're talking about little bits of data that websites store in your web browser. Cookies started out as being an easy way for websites to store information about your browsing session in order to help make your experience better. Over the years, cookies have fallen out of favor due to their use in marketing - to the extent that some fear that too much information about a user can be gleaned from their browser's cookies. Companies like Google and Apple are exploring options for removing cookie support altogether in their browsers which would have a significant impact on the functionality of sites, particularly ecommerce sites, that rely on them.
- Cross-sellA sales strategy used by merchants to highlight to customers products that are related to a product they're in the process of buying or for something they've ordered in the past. Cross-selling often happens during the cart/checkout process on ecommerce sites but it can also happen after an order is placed via transactional and/or marketing emails to the customer.
- Custom CarrierWhen a B2B customer wants to ship an order using their preferred shipping method, this is known as "custom carrier". As part of the order process, customers wishing to use their own carrier will often need to specify the shipping company, their account number with that company and a shipping contact. B2B customers will typically choose a custom carrier because of negotiated rates with the carrier that are better than what the merchant is offering through their carriers.
- Customer Acquisition CostThe total cost to a business for acquiring a new customer. The CAC can be used to help understand if there's a positive return on the investments being made to attract new customers. CAC can also be measured against a customer's LTV in order to determine if the CAC is worth it relative to that customer's subsequent purchases. Some of the factors that are included in the cost range from direct marketing expenses (ads, keywords, etc.) to salaries for sales/marketing teams to affiliate marketing fees.
- Customer AttributesProperties that are used to describe customers on an ecommerce site. Most modern commerce platforms have their own, OOTB customer attributes (e.g. "First Name", "Date of Birth", "Phone Number") and many offer merchants the ability to define their own custom attributes for customers. These custom attributes may be something that's collected directly from the customer at the time they first register or these attributes can be populated from other sources like a CRM or ERP. These attributes can also be passed along to other systems like MAPs in order to help segment customers and provide them with more personalized messaging.
- Customer Data PlatformA central repository that aggregates an organization's customer-specific data and makes that data available to "downstream" applications that need that data in order to perform specific tasks. The type of data that's collected in a CDP is usually dependent on what the merchant wants to collect and what they have access to. The types of data that would typically be stored in a CDP include customer website activity, customer social media activity (as it relates to the merchant), customer data from backend systems like ERPs and CRMs. Modern CDPs generally have pre-built connectors (API-based) to allow for integrations with Cloud-based systems. Additionally, CDPs help to facilitate the flow of information from the CDP to other systems that need the data (e.g. a marketing automation platform may utilize data from a CDP to deliver highly personalized messaging to a customer).
- Customer Group PricingA pricing model that's based on the assignment of a customer into defined groups or segments. In most ecommerce platforms, a merchant has the ability to create groups and place their customers into those groups (either manually or using defined rules based on customer data - orders, status with the merchant, etc.). A customer in one group may see different pricing than another customer in a different group for the same item.
- Customer Relationship ManagementSoftware intended to help organizations have better visibility into how prospects and customers are interacting with their brand. Modern CRMs provide tools for sales teams to track customer behavior and communications as they progress through the sales funnel. Some CRMs also offer marketing automation tools that can help businesses connect with their prospects and customers in well-timed, highly personalized ways. Popular CRMs include HubSpot, Salesforce and Zoho.
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- Direct-to-ConsumerBusinesses that manufacture their products and sell directly to their customers, without any other party in the middle of that transaction (e.g. wholesalers, reailers), are considered D2C.
- DropshippingMany online merchants will sell products that they don’t actually carry in their inventory. When an order comes in for one of these products, the merchant will pass along order details, including shipment information, to the supplier/manufacturer who will then fulfill and ship the order to the end customer. This process is known as "dropshipping". In some ecommerce solutions, the process of sending the dropship order to the supplier is entirely automated through EDI or API calls between the merchant's ecommerce solution and the suppliers fulfillment solution.
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- Endpoint (API)
An API endpoint is typically a URL that represents a specific resource in an overall API for a system.
For example, an ecommerce platform may have an API that includes specific endpoints for creating a new customer, performing a catalog search or placing an order. Each endpoint in an API has a specification in terms of the data that it expects and the response it will give, along with any possible status codes that will be returned when invoking the endpoint from a calling application.
- Enterprise Content ManagementEnterprise Content Management is a set of tools, processes and methodologies that large organizations use in order to have complete control over the content that they create and distribute both internally and externally. People tend to assume that ECM is really just about document management. However, ECM is far more encompassing and covers areas such as business process management (usually with documents at the center of those processes), enterprise search, web content management, records management/governance, intelligent capture, etc. For B2B commerce solutions, enterprise content management can play a key part in facilitating transactions that tend to require associated documentation (e.g. application/registration forms, documents that requires signatures and approvals, tax exemption form submissions).
- Enterprise Resource PlanningERP platforms are often the backbone of an organization. This type of software is usually responsible for orchestrating the operations of a business, including accounting, operations, supply-chain and inventory management, order fulfillment and purchasing. ERPs tend to be very complex but with that level of complexity comes great flexibility such that the software can be highly customized to meet the specific needs of a business. Modern ecommerce platforms are often integrated directly with an ERP in order to facilitate order fulfillment, sync product and inventory levels and manage customer data.
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- Headless CommerceA relatively new architectural approach for ecommerce platforms where the commerce engine is clearly separated from the front-end code. The engine is responsible for all of the "plumbing" of the ecommerce solution (e.g. customer/product management, order management, payment transactions, etc.) and is fully exposed via APIs. Headless platforms are front-end agnostic meaning that developers can build full ecommerce solutions in any user interface that can utilize APIs.
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- Integration Platform-as-a-ServiceSpecialized Cloud-based software that connects disparate systems in order to facilitate business processes. In the context of ecommerce, iPaaS solutions could take an order placed in an ecommerce platform and sync it to an ERP system for fulfillment. iPaaS platforms often have pre-built "connectors" for a variety of technologies and provide an easy-to-use interface for designing connections between systems. In cases where a connection to a specific technology doesn't exist, developers can often create their own connectors that can be used by the iPaaS platform. Finally, iPaaS solutions can not only move data between systems but can also be used to manipulate or transform that data along the way (e.g. for data cleansing, data enrichment, etc.).
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- Less than Truckload Freight ShippingA specialized shipping method that's commonly used in B2B scenarios where products being sold are too large for parcel shipping but not big enough to require an entire truck to haul the items. LTL providers effectively rent out leftover space on trucks to merchants in order to be as efficient as possible in terms of the number of trucks being used to ship goods. Product dimensions are one factor in determining if items should be shipped using parcel, LTL or truckload freight. Another consideration is weight. While requirements vary between LTL providers, typical weight ranges suitable for LTL are 150 to 15,000 pounds (68 to 6,800 kg).
- Lifetime Value
The total order value of a merchant's customer since their first order.
For example, if a customer placed their first order last month for $350 and another order this month for $150, their LTV would be $500. LTV can be used as a measure of customer affinity with a brand and can also be used to reward customers who continue to do business with a merchant over a specific time period.
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- MACH AllianceThe MACH alliance was founded by several companies in an effort to promote the benefits of using best-of-breed technologies for enterprise-level solutions and connecting them through mature, robust APIs, as opposed to using a single, monolithic solution that promises to be a "one size fits all" option for businesses. From the ecommerce perspective, a core component of MACH (Microservices-based, API-first, Cloud-native SaaS and Headless) is the ability to connect disparate systems to a commerce engine via APIs (i.e. headless commerce)
- Marketing Automation PlatformSoftware that helps organizations automate and personalize their marketing efforts. Early MAPs were simply online mail merge solutions - upload a list of customers, create an email and blast send it to all customers. In this scenario, every customer sees exactly the same messaging. MAPs eventually matured into platforms that could intelligently segment customers based on user-defined attributes (e.g. VIP customers, new customers, etc.) so marketers could target those segments with personalized messaging. Additionally, modern MAPs provide access to performance data so users can gauge the effectiveness of their marketing campaigns.
- Marketplace (Online)A place where merchants come together in order to sell their goods and services to a broad audience. Online marketplaces usually provide merchants with much of the "plumbing" that's needed in order to facilitate online sales (payment processing, shipping providers, the infrastructure for hosting the site, etc.). Merchants are responsible for listing/managing their catalog, fulfilling orders and handling customer service requests (although some marketplaces will "front" customer requests on behalf of merchants). Marketplaces exist for B2C (i.e. Amazon) and B2B (Amazon, Alibaba).
- Monthly Recurring Revenue
The amount of revenue attributed to subscriptions on goods and services that recurs on a monthly basis.
For example, if a merchant has two customers on an monthly subscription the first of which is for a $25 item and the second of which is for a $50 item, the overall MRR for that merchant is $75.
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- OmnichannelThe practice of marketing and selling wherever a merchant's customers buy while providing a seemless experience throughout the overall customer journey. This may include selling online, in-store or over the phone. Technology is often used to connect systems at different locations so the customer can complete their transaction as quickly as possible while at the same time the merchant is able to track the progress of that sales process at each of the customer touchpoints.
- Order Management SystemSoftware that provides a centralized location for the management of an organization's sales orders, regardless of their origin. An OMS is not only responsible for helping to fulfill orders from different channels but is also used to help coordinate inventory across those channels. This ensures that a customer in a store isn't placing an order for a product that went out of stock from an order that was placed on a website. OMS solutions can be a key component to an omnichannel strategy as they're the "glue" that connects the various technologies involved (at least from the perspective of order and inventory management).
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- Pay-per-ClickAn advertising model where those running ads pay the platform hosting the ads whenever a prospect clicks on a click within the ad. Common PPC platforms include Google Ads, Facebook Ads and Bing Ads.
- Payment Card Industry ComplianceA set of compliance standards required for businesses that accept credit cards for transactions with customers. These standards are aimed at ensuring that merchants are protecting sensitive customer payment information both in how they use this data and how they store it. Many modern ecommerce platforms (and particularly SaaS platforms) already have mechanisms in place to securely transmit and store credit card data. However, it's worth pointing out that this alone isn't enough to be PCI compliant. Merchants must also ensure that their day-to-day operations don't include activities that would risk exposing credit card data to unauthorized access (e.g. CSRs taking phone orders and writing down a credit card number on paper before entering the order into the ecommerce system).
- Payment Gateway
A payment gateway is specialized software that helps to facilitate financial transactions between a merchant and the banks/payment methods they accept from their customers.
Some examples of payment gateways include PayPal, Braintree, Apple Pay, Amazon Pay and Stripe.
- Payment on TermsA common payment method for B2B transactions where the customer is effectively buying on credit. The "terms" of payment are typically negotiated between the customer and the merchant. Purchases made using terms are often (but not always) accompanied with a purchase order and do not require the customer to enter payment details at checkout. Those customers are then invoiced by the merchant and expected to pay within the negotiated term period (e.g. 30, 60, 90 days).
- Payment VaultingVaulting is a secure way of storing credit card data so that it can be easily used for subsequent purchases. Vaulted payments are generally a "token" that the merchant stores which was generated by the payment gateway either on the initial order with that payment or when the customer added the payment method to the vault. This token can only be used for transactions from the merchant for that customer. Since there's nothing specific to the actual payment information (e.g. the credit card number) in the token, it's a secure way for the merchant to offer the convenience of stored payments for customers without having to worry about PCI compliance.
- Personally Identifiable InformationAny information related to an individual that could be used to directly or indirectly expose the identity of that individual. Nearly every website collects some information about its customers but not all of it is considered PII. Data such as zip code, gender, ethnicity isn't technically considered PII but data like a person's full name, social security number, passport number is. Merchants that collect PII must be confident that this data is protected from unauthorized access, and ideally, would encrypt this data. In some cases, regulations such as GDPR and CCPA require merchants to provide customers the ability to request that their PII be removed from that merchants data storage.
- Point-of-SaleThe time and place at which a customer completes a retail transaction for goods and services. These days, POS could be anything from a cash register at a movie theater to a payment ready connected to a mobile device at a flea market. Modern POS solutions are Interner-enabled platforms that can feed valuable sales data to backend systems like ERPs and MAPs and pull product inventory data to ensure that the customer is seeing catalog data in near-real time.
- Product AttributesSimilar to customer attributes, ecommerce platforms will generally provide a set of default properties that can be associated with products in the catalog (e.g. "sku", "product description", "weight"). Additionally, most platforms will provide a way to define custom product attributes that can be used to provide more detailed information to customers and to help facilitate order fulfillment. Large merchants will often use a Product Information Management (PIM) system to maintain their product attributes and then integrate that PIM with their ecommerce platform. As part of that integration, custom product attributes may be needed in order to represent data in the PIM on the commerce site.
- Progressive Web ApplicationPWAs are a relatively new way to distribute web-based applications without the need for publishing those applications through an app store model. PWAs use many of the same standards and technologies as modern websites but have a few advantages that websites don't - they can be "installed" on a user's device as if they're an app, they can utilize device features such as the camera and they can run without an Internet connection. Since a PWA is executing on the device instead of in the user's browser, optimizations can be made such that PWAs perform faster than more traditional web-based applications. In order to execute PWAs, web browsers must support the specifications defined for PWAs. Browsers like Chrome, Safari and Edge now support PWAs.
- Purchase OrderA payment method that uses a documented purchasing agreement between a buyer and a seller. In large organizations, a procurement department will approve a purchase request and issue a purchase order (P.O.) which can then be referenced when completing transactions that fall under that P.O. Actual payments against a P.O. tend to happen offline from any transactions that would happen on an ecommerce site. When completing an online order via P.O., the buyer will reference the P.O. number instead of providing something like a credit card number. When the order is fulfilled, the merchant's accounting team will look up the P.O. from the number entered at checkout. If those numbers align, the order is fufilled and the buyer will be invoiced according to the terms agreed upon when the P.O. was first created.
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- Return Merchandise AuthorizationRMA is the process by which customers can return products to a merchant within the guidelines of the merchant's established warranty terms. RMA can be a highly automated process that's initiated by the customer on a merchant's site but it can also be something as simple as a form or email. In more modern ecommerce platforms, RMA features include full self-service on the returns process, ability to print return shipping labels, customizable workflows for the merchant so returns requests are routed to the right customer service reps and payment refunds.
- Return on Ad Spend
Used to measure effectiveness of marketing efforts by comparing the amount of revenue generated from a campaign relative to the cost of operating the campaign.
For example, if it takes a merchant credits $2,000 in revenue from an ad campaign that cost $500 to run, the ROAS would be 4:1 (or, just 4).
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- Search Engine OptimizationThe process of tuning a site's content in order to rank higher on search engines like Google. SEO is a key component for an effective overall marketing strategy and should be considered carefully when thinking about site structure, content such as a home page and landing pages, product content like descriptions and product attributes, etc.
- Software-as-a-ServiceSaaS is a method of providing Cloud-based software for end users that doesn't have the costs and headaches associated with ancillary services that are required for traditional software implementations (e.g. hosting, technology stack maintenance, security patching, upgrades). In the early days of SaaS, the software being used was relatively limited in terms of extensibility since the same software needed to work across organizations in different industries. Over the years, however, SaaS providers have found innovative ways for businesses to customize these solutions to better meet their needs while continuing to offer the benefits that a pure SaaS-based solution has over self-hosted technology.
- SubscriptionAn order for a product or service that has an automatic recurrence component. A customer placing a new subscription order will typically get to choose from a set of frequencies (e.g. "every week", "every month", etc.) at which a new order will be created and shipped. In order to facilitate subscription orders, merchants will often need to "vault" payment information securely so the payment information can be used for future, automatic orders. Merchants that offer subscriptions will generally provide discounts to customers as this helps the merchant to better predict their revenue.
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- Tiered Pricing
A pricing model that's based on the quantity of the items being ordered. Typically, merchants will offer a higher discount the more a customer buys of a particular item.
For example, a merchant may not offer a discount if a customer buys up to 9 items but once they buy 10, a fixed percentage discount will be automatically applied to the order.
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- UpsellA sales strategy used by merchants in an attempt to get customers to buy an alternative (but similar), higher priced item than the one(s) being considered during the customer's check out journey. Common methods of displaying upsells include "Have you considered?" areas with product images/text at key points in checkouts and modal windows prompting users to upgrade their items.
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- Web Content ManagementAt its core, WCM has many of the same characteristics as content management (see CMS above) - version history, workflow routing,collaboration capabilities, etc. Where WCM really stands out is in the ability to publish that content out to websites (and, in some cases, 3rd party services like marketing platforms) and easily control when and how that content is presented to consumers on those sites. Additionally, WCM solutions allow organizations to manage reusable components of content that can be used in pages and other components.
