There are so many eCommerce terms and acronyms. In this guide, we break them all down so you can find ultimate success with your store.
Do you work in eCommerce? Chances are you’ve heard a lot of acronyms and strange words flying around that you find yourself Googling.
That’s why we’ve put together this complete guide to eCommerce terms.
A/B testing, also referred to as bucket or split testing is a method used to compare two versions of a web page to analyze the performance of each. By randomly assigning version A to half of the web traffic and version B to the other half, you can track user experience and conversion rates, thus creating a better web page and online shopping experience. A/B testing can also be used for email marketing and advertising.
An address verification service is a process of comparing the billing address used in a transaction to the billing address the credit card company has on file. AVS is used in order reviewing to help online merchants match billing information to a customer’s credit card address.
By using AVS online merchants are able to better represent themselves in cases of fraud by providing the matched billing addresses that have been checked by an AVS.
Affiliate marketing is a marketing strategy where one merchant promotes the products or services of another. Affiliates encourage their audience to visit and shop on other websites through a referral link where the affiliate is paid a commission for each conversion.
Affiliate marketing is a relatively simple marketing strategy aimed at increasing website traffic and SEO through strategic partnerships that will allow you to reach new audiences and potential customers.
Assists refer to interactions that happen before a conversion. In Google Analytics, assisted conversions show the sales numbers that are attributed to each action taken to achieve a conversion. These actions can include clicks to banner ads, mobile ads and search ads. Assisted conversions exclude the final action taken to initiate the conversion and help assign value to the marketing efforts taken to finalize a conversion.
Assisted conversions are not a fully accurate representation of a transaction, as the value can be attributed to many channels for the same transaction. Assisted conversions are meant to help determine the significance of each contribution leading up to the final conversion.
Marketing attribution evaluates the marketing events or touchpoints a consumer will experience leading up to the final conversion or purchase. Attribution assigns value to each touchpoint based on its significance in securing a conversion. Marketing managers can use marketing attribution to determine the effectiveness of the current marketing strategy and make adjustments based on each touchpoint's significance.
The attribution model is the rules set up that determine how sales and conversions are assigned to these touchpoints. Generally, the attribution model can be broken into channels including organic, referral, paid search, social, and other advertising.
Google Analytics breaks the attribution model into these default categories:
The average order value (AOV) is the sum of all sales divided by the total number of sale. It is important to track the average order value in order to balance the cost of customer acquisition and marketing spending to generate a higher ROI. Tracking AOV also helps determine consumer behavior and spending habits which can be broken down by demographics and improve marketing strategies based on that information.
The average time on site is the standard amount of time consumers are spending on your website. The average time on site helps determine the amount of engagement a webpage is bringing. A higher average time on site is an indicator of more engaged consumers and valuable content. As time is valuable to consumers offering more or better content to increase time on site is equally valuable.
A bounce rate is a metric used to express the rate at which consumers are leaving a website after a single page view. The bounce rate indicates the ability of the content displayed to encourage users to spend more time on the site and navigate through different pages which may lead to a conversion.
The bounce rate can also be called a single-page session as it indicates that a consumer had a single page request for the entire session.
A brick-and-click store is a term used to describe a business running an online eCommerce store as well as a traditional brick-and-mortar store. Many businesses initially start in a brick and mortar store then turn to online business in order to broaden its audience and bring in new customers.
Bundling is a marketing strategy that groups similar products and services together in a way that is generally offered at a reduced cost for the consumer. This strategy often encourages conversions and brand loyalty as consumers like to feel that they are receiving a deal on all purchases and will often return to your site.
In order for bundling to be a successful strategy, the product bundle must offer consumers they would not be getting if they purchased the products separately or from a competitor. Bundles can include products or services that complement the original item, dissimilar products that may appeal to the consumers or offer a more convenient shopping experience for consumers.
The buy-to-detail rate is a metric that expresses the number of products purchased compared to the number of times the product detail page was viewed. The buy-to-detail rate shows the effectiveness of a product page at generating a conversion. The buy-to-detail rate informs marketing managers on the effectiveness of certain product pages at generating sales.
A call to action (CTA) is a phrase or subheading on a website targeting consumers and inviting them to perform a desired action or conversion. Calls-to-action can include subscribing to an email newsletter, purchasing a product or filling out a user experience survey.
Successful marketing includes many CTAs which use keywords that elicit immediate responses from consumers. If successful the call-to-action will lead potential consumers through the conversion funnel and will be measured as part of the click-through rate.
Cart abandonment is an eCommerce metric used to show the percent of potential consumers who have added products to their shopping carts and left the website before completing the purchases. Cart abandonment is a common issue in eCommerce and can be difficult to mitigate. To mitigate shopping cart abandonment make it easy for customers to check out including using sites like Paypal.
Simply put, a chargeback is a reversal on a credit card payment, typically stemming from a dispute on the consumer's end. While a chargeback may seem similar to a refund, the main difference is chargeback comes directly from the credit card company. The request of a chargeback is often followed by an investigation into the seller if the credit company feels the consumer's request for a chargeback is valid. Chargebacks are meant to make the consumer feel protected from companies who may be selling unsatisfactory products or services, or from potential fraudulent charges. Often, sellers will not know a chargeback has been requested until after the funds have been moved in order to protect the consumer.
The churn rate or attrition rate is the percentage of consumers who cancel their subscriptions during a given time period. The churn rate often applies to subscription-based companies. A high churn rate can be avoided by implementing barriers that deter consumers from switching to competitors or canceling subscriptions, mostly through a value-added model.
A cohort analysis is an analysis of consumer behavior broken down by consumer segments based on shared traits during a specific time frame. Often the cohort analysis is done in the same time frame that the churn rate was taken. A cohort analysis often helps marketing managers make informed decisions to help reduce the churn rate.
A conversion funnel is an eCommerce phrase that is used to describe the steps a consumer takes from the start of conversion. The conversion funnel is a metaphor that describes how consumers are guided through the process to the end goal, where there become fewer and fewer options for navigation as they get closer to the point of conversion. As consumers are guided through the funnel, as expected there are fewer consumers completing the conversion as when started.
A conversion path is a step-by-step approach to measuring conversion. Starting when an user visits a landing page or homepage. The conversion path shows the change of the anonymous visitor into a known lead. The user often responds to calls-to-action and continues to the final conversion or abandons the sessions. Often marketing managers are tracking conversion paths to show the effectiveness of the current marketing strategy at creating conversion and optimizing outcomes.
The conversion rate is the rate at which website visitors are turned into customers. Expressed as a number, the conversion rate is the number of conversions divided by the total number of visitors.
An important note in conversion is that a conversion is not always defined by a sale. Conversions are defined as specific actions companies want visitors to make during their visit to the website. A conversion can also include a subscription to a newsletter or a signature on a petition.
In eCommerce, conversions measure the performance of web pages at persuading visitors to perform actions that drive business goals.
Conversion rate optimization is the process of changing website layouts, text, and designs in order to increase total conversion. This is seen in A/B testing as designs are changed and tested to see which option is best at generating conversions. The optimization process requires an in-depth knowledge of the business operations, web-design, human psychology and statistics in order to create the best webpage for delivering results.
A content management system is a back-end application and database used to make editing content user friendly. The content is displayed on a template that is easily changeable without needing to know HTML or CSS. CMS is also used to manage workflow and allow for multiple editors or contributors in an easy to use manner. There are a multitude of content management systems, some popular examples of CMSs include; Shopify, Squarespace, and WordPress.
Cross-selling is the practice of encouraging consumers to make additional purchases that compliment the original product of interest. Cross-selling differs from up-selling as sellers are offering complimentary products or services, rather than offering a better version of the product. Cross-selling can be seen in bundling as products are grouped together in a way that often compliments each other.
The customer lifetime value is the predicted value a consumer will bring to an eCommerce site for the entirety of the relationship based on all interactions with the site. The customer lifetime value is used in relation to the cost of customer acquisition, where the lifetime value shows how long it will take for a company to recoup the cost of acquisition. An important part of customer relationship management is the customer lifetime value, which helps businesses examine the most profitable segments of their markets and make decisions to extend customer relationships and value.
The customer acquisition cost is an eCommerce metric referring to the cost associated with acquiring a potential customer. By understanding the CAC businesses can determine how to best allocate marketing and advertising funds to generate the largest pool of potential customers.
The biggest challenge to CAC is balancing the relationship between the acquisition cost and lifetime value. If the lifetime value is lower than the cost of acquisition business is jeopardizing profitability at the expense of potential consumers.
The click-through rate is a common metric that measures the number of clicks a webpage receives in relation to the total number of visits that page receives. A high click-through rate shows that advertising and marketing efforts are relevant and valuable to the consumer and can in turn help increase conversions.
Dropshipping is an eCommerce method of shipping products and fulfilling customer orders without keeping inventory on hand. Dropshipping is a business-to-consumer method, that allows the seller to give customer orders to a third party–generally the manufacturer–who will directly ship to the customer. This can be beneficial for small businesses or for new product launches as businesses are not having to invest in large quantities of inventory. Dropshipping makes eCommerce easier. Since dropshipping eliminates the need for inventory on hand, online stores can focus on what they are best at–marketing and selling–and leave shipping to a company that specializes in it.
The engagement rate is a metric used to show how many visitors interact with the content or ads on a website or social media account. Engagement rate is calculated from the total time's something was engaged with–liked, shared, clicked on–divided by the total number of visitors or followers. The engagement rate is just one tool that lets managers know how well content is doing.
By measuring engagement rates managers can evaluate the quality of content where a higher engagement rate shows that content is resonating with visitors and keeping them on the website longer. And the longer a visitor spends on a site, the better the chances of converting them into a paying customer.
Fulfillment is an eCommerce term, sometimes called order fulfillment that refers to the steps a business will take to process an order. The fulfillment process starts when an order is received and finishes when the product is delivered to the customer in a satisfactory manner.
Fulfillment is an intensive process and for eCommerce business, it can often be easier to outsource fulfillment to a third party who specializes in it. By using a third-party fulfillment service, small and medium-sized enterprises (SMEs) do not have to store or manage inventory and all orders will be sent out directly from the fulfillment service. This helps make eCommerce more agile and gives businesses the ability to focus on bringing in new customers rather than on inventory.
Key performance indicators or KPIs are metrics that matter. There are tons of metrics that managers should be keeping track of when monitoring how their eCommerce business is operating, but KPIs are the metrics that show how well the business is doing at meeting its goals. There are two types of KPIs. High-level KPIs focus on overall performance, like annual growth or relative market share, while low-level KPIs look at individual departments which can include sales or marketing. The term key performance indicator is versatile as a business can select the types of metrics it wants to track based on the industry or on the part of the business it wants to focus on or improve.
Long-tailed keywords are a type of phrase that consists of three to sometimes five words used to target niche audiences in search engine optimization. Long-tailed keywords are more specific and are often searched for less than generic search words. However, long-tailed keywords will usually have a much higher conversion rate as the longer the keyword phrase the less competitive the market becomes. In optimizing eCommerce sites, long-tailed keywords help businesses become discoverable by niche markets who are more motivated to become customers.
mCommerce also called mobile commerce refers to the use of mobile devices for selling goods and services, paying bills or mobile banking. mCommerce is a derivative of eCommerce that puts the eCommerce website in the customer's hand by means of smartphones or tablets or through a mobile web browser or app.
A microsite is a webpage or small group of webpages that function to promote individual products or campaigns. Microsites are generally not used to conduct eCommerce so much as they are meant to provide information and engage as many audience members as possible. Microsites are truly meant to promote the product or engage users as they generally do not contain information about the parent company or any feature other than information on the product or service.
Monthly recurring revenue (MRR) or predictable revenue is a term to describe a consistent liability to receive a monthly income. Stemming from subscription-based services, MRR implies that the billing is occurring on a consistent monthly basis. To calculate monthly recurring revenue, businesses multiply the number of paying users by the average revenue per user. Knowing the monthly recurring revenue, allows a business to control expenses and plan for sustained growth over time.
Native advertising is a type of advertising created as a paid promotion of a brand or business. Rather than a traditional banner ad, the content is meant to resemble the publication's editorial content and feel native to the content produced in the publication. Because of the fit of native advertising, readers are less likely to recognize the content as an advertisement and more likely to see it as branded content. The two main goals of native advertising are to position the brand image through a trusted outlet or source and to drive consumers to take a particular action and drive business goals.
In recent years, native advertising has transformed into sponsored content. Typically, sponsored content involves an independent third party used to promote the product to their audience. Unlike traditional forms of advertising, native advertising thrives on the concept of preexisting and built up trust between consumers and the brand rather than creating a masked net impression. With these changes in ad format, sponsored content and native advertising have become trusted and cost-effective ways of promoting content across multiple platforms.
Net promoter score (NPS) is a metric that measures the willingness of consumers to recommend or promote the products or services of a brand to others. Specifically, the net promoter score looks at a company’s consumers as either promoters, passives or detractors. Calculating the net promoter score can give companies insights on customer satisfaction and loyalty. NPS is calculated as a percent, where a score of nine to ten are “promoters,” seven to eight are “passives,” and six or below are “detractors.”
Omnichannel marketing is the use of a variety of digital and traditional marketing channels.
Omnichannel marketing aims to create a seamless marketing strategy across all of the business’ entities including brick-and-mortar stores, online stores and mobile shopping apps. While omnichannel marketing may sound similar to multichannel marketing, omnichannel marketing refers specifically to the unified customer experience across each aspect of the business.
A payment gateway is a digital payment processor like Paypal, used to manage transactions on an eCommerce site. The payment gateway allows an eCommerce platform to accept credit cards while protecting customer information by means of encryption. On an eCommerce site, the payment gateway communicates directly with the issuing bank or creditor to either approve or decline a charge to a customer's card at the end of the transaction.
PPC Marketing or pay-per-click marketing is a search engine advertising and marketing model in which advertisers pay a fee for each click of the advertisement. Essentially, PPC marketing is a way of purchasing visits to a company site and increasing web traffic versus an organic method of generating traffic.
Search engine advertising is one of the most common forms of PPC marketing. In this method, advertisers bid on the perceived value of a click in relation to the search words that triggered the ad. In this method, marketers and advertisers are seeking opportunities to connect the company to any keyword or search term that is relevant to the company and appear at the top of the search engine.
SERP or search engine results pages are a list of web pages that are returned by a search engine. There are generally two types of results that appear on a SERP, organic searches (i.e. from the search engines algorithm) or sponsored searches (i.e. paid promotions). Results on the SERP are ranked and displayed by relevance to the search query previewing the title, the web link and a brief description which shows where keywords are matched in the content of the site.
The service level agreement is a contract outline of the agreed-upon service a customer expects from the service provider. The service level agreement defines performance standards, scope and availability of service, and the responsibilities provided by the company.
Upselling is the sales technique of offering customers the opportunity to purchase an upgraded and better version of the original product. Upselling generally maximizes value for the consumer by providing more and better features, and for the sellers by increasing sales revenue, making it a good strategy for improving customer service and brand loyalty.
Upselling is different from cross-selling in that cross-selling offers similar or complementary products where upselling offers a high-quality version of the original product.
An XML sitemap is a text file of the hierarchical model of a website's content. The model provides search engines with links that act as a road map for all important web pages of a company's site. XML sitemaps allow search engines to efficiently find essential and important pages regardless of the quality of internal links. The XML sitemaps list all web pages available under a domain in a way that a search engine algorithm can sort through them searching for pages that may be excluded from searches. By using an XML sitemap, companies can increase web traffic by appearing in more search engine results.
Shanif Dhanani is the co-founder & CEO of Apteo. Prior to Apteo, Shanif was a data scientist and software engineer at Twitter, and prior to that he was the lead engineer and head of analytics at TapCommerce, a NYC-based ad tech startup acquired by Twitter. He has a passion for all things data and analytics, loves adventure traveling, and generally loves living in New York City.