Your digital guide for e-commerce terms and their definitions.
School is in session again and we are taking it back to the basics: vocabulary. No other industry is as fast-paced, ever-changing and innovation-driven as e-commerce. To successfully navigate the intricacies of the online retail market and stay in the know, it’s necessary to first understand the e-commerce terminology used.
Whether you’re a newcomer, a long-time professional, or just curious, we wanted to provide a digital resource that clearly defines the most common and useful terms (plus jargon) in the world of e-commerce, all in one place.
A/B Testing — Research technique that compares two versions of content simultaneously to determine which performs better. Also known as split testing, this method randomly divides the target group into equally sized groups A and B. While group A receives one version, group B receives the other. Once the test phase is over, an evaluation is made as to which variant triggers the desired effect or works better for the target group.
Abandonment — The act of withdrawing before completing a desired action. In e-commerce, it is often used for virtual shopping carts and refers to visitors who add items to the cart but exit the online shop before completing the purchase. Abandonment rate is a key performance indicator and can be measured pre-product, at the cart page and during checkout.
Affiliate — A type of inter-company relationship where one party promotes the other company’s products on their own website by means of different visual tools and in return earns a commission for every sale made. If you have a product and would like to sell more, you can provide sellers with a financial incentive. Likewise, you can be the one to promote a product and earn a piece of the profit for each purchase made.
Application Programming Interface (API) — A set of clearly defined methods of communication that allows multiple components of a system to interact with each other. APIs provide the building blocks to enable you to access e-commerce application functions without requiring a hard coded integration.
Auto-Suggest — Also known as suggestive search or autocomplete, is a feature that analyzes the user’s typing and completes the partial search query. It works by searching through the product catalog while the search term is still being entered and then displaying suggestions that match the character string. This feature in search engines makes it both easier and faster for users to complete their search.
Average Order Value (AOV) — The average amount of money customers spend when purchasing from a website. AOV is considered one of the most important e-commerce metrics as it helps online retailers understand customer purchasing behavior and make strategic business decisions. 💡 Product recommendations are a great way to increase AOV.
Average Selling Price (ASP) — Refers to the price a product is typically being sold for across distribution channels or markets during a specific time period.
Back End — The part of a software program or website that is not visible to users. The back end is typically known as the data access layer and contains all programming of the application and the administration area. It refers to the ‘behind the scenes’ operations that happen before a page is displayed.
Bounce Rate — A metric that measures the percentage of sessions in which users view a single page, have no interaction with the page (e.g. clicking on the navigation menu, clicking on a link, filling out a form) and then leave the site. A high bounce rate can indicate issues with content, user experience or page layout.
Business to consumer (B2C) — A type of commerce transaction in which businesses sell products or services directly to the end-user consumers. It exists both online and offline but the acronym is primarily used to describe online. It is among the most popular and widely known of sales models.
Buy Online Pick Up In Store — Also known as BOPUS, BOPIS or Click & Collect, is a cross-channel method which allows customers to order items via the online shop and collect them via the physical store. Customers are motivated to use BOPUS due to the convenience of picking up their purchase rather than waiting for delivery, saving them both time and money. Other reasons are the ability to search for more deals online, see the product before taking it home and return the product instantly.
Buyer Persona — A detailed description of someone who represents your target audience. This representation of your best potential customer is based on market research and real data of your existing customers. While creating a buyer persona, its critical to consider their journey, behavioral pattern, demographics, goals, and more.
Chatbot — A software application that uses artificial intelligence and natural language processing to simulate a conversation with a human. Chatbots interact via text or text-to-speech and serve as a virtual assistant for online visitors.
Content Management System (CMS) — Software used to manage, create, edit and publish web content. Content management systems are designed to be user-friendly and do not require programming knowledge since working with the content is independent of the source code. A CMS enables collaboration between users and facilitates the creation of digital content.
Conversion — A conversion occurs when a visitor completes a specific, pre-determined action on a website. Conversion depends on the goals of the provider, for example, a conversion can either be a store visitor purchasing an item or a newsletter recipient clicking on a specific link. The conversion rate is therefore the ratio of potential conversions (all recipients of the newsletter) to actual conversions (recipients who actually clicked on the link).
Cross-Sell — To sell related, supplementary products or services to a customer. This sales technique promotes items based on the customers’ interest in or purchase of a product in order to generate additional revenue. Cross-selling is a great method for increasing customer trust and loyalty.
Customer Acquisition Cost (CAC) — A metric that measure the cost of convincing a potential customer to buy a product or service. The CAC can be calculated by taking the entire cost of sales and marketing over a given period, including salaries and other headcount related expenses, and divide it by the number of customers acquired in that period.
Customer Journey — Describes a consumer’s complete course of action with a brand, from the beginning stages of recognizing a need to the post-purchase experience. The customer journey can spread over multiple touchpoints and time periods. Also called the buyer journey or user journey.
Direct Traffic — Website visitors that arrived to your site with no referring website, such as a search engine, social media, blog, or other websites with referring links.
Dropshipping — An order fulfillment method where an online store sells the product but relies on a third-party supplier or manufacturer for the delivery of the product.