Ecommerce glossary: Making sense of selling online

Whether you’ve been working in ecommerce for years, or you decided to set up an online shop in the past few days, the chances are that you’ll have come across your fair share of ecommerce jargon.  To make things simpler, we’ve pulled together a handy list of ecommerce definitions to help you get to grips with buying and selling online.  

Affiliate marketing 

The use of a network of websites to advertise and promote your products. They get paid a fee based on the performance of the campaign, whether it’s clicks, sales or sign ups 

API  

Application Programming Interface – a piece of code that allows sites and software to talk to each other 

App  

Application – a piece of software that performs a specific function 

Average Order Value 

AOV = Total sales revenue/number of sales – which will give you an idea of how much people spend per order. You may decide you want to improve this figure by up-selling and cross-selling other products 

B2B  

Business-to-business – organisations that sell directly to other businesses 

B2C 

Business-to-consumer – organisations that sell to individuals  

Call to action 

If you want to get someone to do something on your website, you need to encourage them to do so with a call to action. For instance, ‘shop now’ is a call to action 

Cart abandonment 

When a customer places items in their basket/cart, but then fails to complete a sale before leaving the site 

Read more: The future of fashion

Commoditised products 

These tend to be products that are bought repeatedly, for instance groceries, clothing. 

See also: Niche products 

Conversion rate 

The rate at which website visitors complete pre-defined activities. For instance, it may refer to the rate at which visitors become paying customers   

CMS 

Content Management System – typically a software that allows you to edit the content of a website, like Wordpress, Blogger or Shopify.   

CRM 

Customer Relationship Management system – a software system that allows you to track customer journeys and build relationships to encourage sales and repeat business   

Cross-selling 

The process by which you encourage the sale of a product related to their purchase. For instance, if a customer buys a laptop, you may cross-sell a laptop bag to go with it 

See also Upselling 

CSS  

Cascading Style Sheets – code used to define how a language is styled on a webpage 

Crowdfunding 

A process by which a company may raise funding and investment to develop new products and services 

Drop shipping 

Selling other business’s products, which they then ship to end users. As such, no stock or inventory is held by the ecommerce business   

Ecommerce 

The electronic selling of products and services, typically via the internet. It is most commonly used to refer to online shopping 

Read more: T he best 27 Shopify apps

Encryption 

The process by which sensitive information, such as payment details, are encoded to protect them while being transferred via the internet  

Fulfillment 

The process of completing an order, from packing to shipping and delivery. 

HTML 

Hypertext Mark-up Language – used to program websites   

Inventory 

The value of the stock and services available 

Limited company 

Ltd – Private limited companies with shareholders but not listed on a stock exchange. It has limited liability in the eyes of the law, which means individual investors are not liable for the debts of the business 

See PLC 

Live chat 

Functionality on a website which lets users contact a customer service representative via the website, without email or making a phone call 

Margins 

Also called ‘profit margins’, this term refers to the amount of profit made once the original cost of the product is deducted   

Mobile responsive 

A website that adapts to use on mobile devices 

Multi-channel retailer 

A business that uses multiple platforms to sell their products. For instance, Shopify, Ebay, Etsy, Instagram and Facebook  

Niche products 

Products that tend to be bought on a one-off basis – often a high-value product, such as a laptop   

See also Commoditised products   

Payment gateway 

A third-party provider that authorises the payment between a website and a card provider   

Read more: The Money Makers Report

Payment processor 

Analyses a transaction data and transmits it, for instance credit card machines   

Personas 

Also referred to as customer personas or customer profiles, these define what your ideal customers look like. Ideally this is based on market research and data, so you know who you are selling your products to, to guide promotional activity, as well as your brand   

PLC 

Public Limited Company – a business structure referring to a company listed on a stock exchange, open to investment by those outside of the business. It has limited liability in the eyes of the law, which means investors are not responsible for the business’s debts 

See also Limited Company     

Responsive design 

Website design that resizes according to the size of the browser it is being viewed in 

RRP 

Recommended Retail Price – The suggested price for a product as defined by the company that produced it. Reducing the RRP is often used as a promotional tool   

SaaS 

Software as a Service – Software that provides a service for the end user, usually on a subscription basis. Shopify is an example of this, providing the software to set up an ecommerce store for a monthly fee   

Social selling 

Using social media to sell products, either by generating interest or by selling directly through a social media platform  

SKU 

Stock Keeping Unit – a unique code used for managing inventory and stock levels. It doesn’t need to be applied to a physical item. It can be used to sell services, providing each service has its own SKU. An alphanumeric code, it tends to include codes that refer to the item’s colour and size and is used for internal usage. 

See also UPC 

Stock 

The products that you have available to sell 

Upselling 

The process by which you encourage the sale of a more expensive item or additional item 

See also Cross-selling   

User experience (UX) 

The experience of interacting with a company. Can refer both to the functionality of the website, but also customer service overall 

User interface (UI) 

How a user and computer interact. For instance, a company website, its look and feel and functionality 

UPC 

Universal product Code – A 12-digit code that relates to a unique item, which is often accompanied by a barcode. This relates to a product and will be the same regardless of who is selling it.  

See also SKU  

Wishlist 

Website functionality that allows users to save a product to a list for future purchase.