Ecommerce Terms You Need To Know To Manage Your Digital Business

Caitie Gonzalez
By Caitie Gonzalez

Estimated read time: 15 minutes, 1 second

Marketers sure are good at jargon, aren’t they? We love talking about our KPIs, ROI, and margins. But when it comes to digital businesses where all transactions and fulfillment take place online, there’s a whole new set of terms you need to know in order to keep up.

Not only do you have to know general business and accounting concepts, but you need to understand online marketing, coding, and conversion terms to monitor and grow your business. If you’re thinking, “That’s a lot of words,” you’re exactly right. But don’t worry, we’ve created an ecommerce glossary that includes all the terms and concepts you need to know to have a successful digital business.

A

Affiliate links
A specific URL that includes an affiliate’s ID or username. Affiliate links can be used to record traffic that is sent to a merchant’s site.

Affiliate marketing
A type of performance-based marketing in which a business rewards partners (also known as affiliates) for each visitor or customer brought by the affiliate’s marketing efforts.

Amazon Marketplace
The largest 3rd party ecommerce platform. Selling on the Amazon Marketplace can significantly boost volume through your store. Amazon charges fees on every sale through the Marketplace. They also offer Fulfillment by Amazon, where they handle the fulfillment process for your business at extra cost.

Application programming interface (API)
A set of subroutine definitions, protocols, and tools for building application software. An API may be used for a web-based system, operating system, computer hardware, or software library.

Authorization
A security mechanism that determines if a payment account has sufficient funds to complete a given transaction.

Authorized reseller 
A brand-approved or -designated reseller who can sell digital products directly to consumers on behalf of the brand.

Average order value (AOV)
The average value a customer spends in a typical visit to a business. The AOV can be calculated by dividing the total number of orders received by the total sales revenue.

B

Back office
The operations of a business including sales tax, VAT filings, billing, order processing, and online payments. FastSpring’s end-to-end platform manages all back-office operations for customers.

Blog
A blog is an online log of content relevant to your market. The term blog is a combination of “web” and “log.” A blog should be included on your ecommerce site. Most ecommerce platforms have a built-in blogging function, so you can attract both traffic and links to your store.

Bounce rate
The percentage of website visitors that navigate away from the site after viewing only one page.

Bundling
A marketing concept where a business offers several related products or services and sells them as one package solution, often at a reduced price.

Business to business (B2B)
Business to business refers to the business that is conducted between companies, rather than between a company and individual consumers.

Business to consumer (B2C)
It is business or transactions conducted directly between a company and consumers who are the end-users of the products or services.

C

Call to action (CTA)
A marketing concept where an instruction is given to the target audience to persuade them to take immediate action. Examples include, “visit now,” “learn more,” “sign up,” and “subscribe.”

Capture
The process of collecting payments from a payment process after it has been authorized.

Chargeback
A demand by a credit-card provider for a retailer to make good the loss on a fraudulent or disputed transaction.

Content management system (CMS)
A computer application that supports the creation and modification of digital content. It typically supports multiple users in a collaborative environment.

Conversion
A phrase often used to describe a specific action a customer can take. For example, a website visitor can fill out a form to download an eBook, and by clicking the “Download” button, they converted to a lead. A conversion can also be used to describe someone who becomes a paying customer.

Conversion rate
The percentage of visitors to a given page that convert into customers.

Cookie
A very small file saved on a user’s computer or mobile device for the purpose of storing information related to the user’s interaction with a particular site.

Credit card
A payment card issued to users (cardholders) to enable the cardholder to pay a merchant for goods and services based on the cardholder’s promise to the card issuer to pay them for the amounts so paid plus the other agreed charges.

Cross-sell
The action or practice of selling an additional product or service to an existing customer. It is important that the additional product or service being sold enhances the value the customer gets from the business.

Currency
A currency is a system of money (monetary units) in common use, especially in a nation. Currencies include US dollars, British pounds, Australian dollars, and European Euros.

Customer acquisition cost (CAC)
A metric that has been growing in use, along with the emergence of Internet companies and web-based advertising campaigns that can be tracked. It is the cost of convincing a potential customer to buy a product or service.

Customer relationship management (CRM)
A CRM system allows businesses to manage relationships with potential and current customers. This system stores key data and information associated with each individual including contact information, accounts, leads, and sales opportunities in one centralized location.

D

Dashboard
A user interface. They often provide at-a-glance views of KPIs relevant to a particular objective or business process. The dashboard is often displayed on a web page which is linked to a database that allows the report to be dynamically updated.

Digital commerce
A type of ecommerce used by an organization that delivers and sells products online. It deals exclusively with the exchange of electronic goods.

Digital media
A blend of technology and content. It refers to any media that are encoded in machine-readable formats. Digital media can be created, viewed, distributed, modified, or preserved on digital electronics devices.

Directories
An online list or catalog of websites, including online stores.

Discount
A reduction to the basic price of goods or services. Businesses reduce the price of a product or service by a specific dollar amount or percentage.

Domain name
The root address for a web page, for example, www.myshop.com.

Dunning management
Refers to the ability of a recurring billing solution to manage the process and communication surrounding expired payments, failed payments, and renewals. FastSpring’s platform features Dunning Management tools that help sellers send automatic notifications to buyers regarding recurring payment issues.

E

Ecommerce
The activity of buying or selling products and services online. Ecommerce includes mobile commerce, electronic funds transfers, online transaction processing, electronic data interchanges, inventory management systems, and automated data collection systems.

F

FastSpring
FastSpring enables global subscriptions and payments for thousands of software businesses around the world. Our end-to-end ecommerce platform is designed for companies selling software, content, or apps online.

Fulfillment
The meeting of a requirement, condition, or need. For example, the FastSpring platform manages the fulfillment of digital content, software, etc. to the buyer on behalf of the seller.

G

General Data Protection Regulation (GDPR)
A new EU regulation that will replace the 1995 EU Data Protection Directive (DPD) to enhance the protection of personal data of EU citizens. It requires organizations and businesses to follow specific regulations regarding the collection and processing of personal data.

Google Analytics
The industry standard for analytics, Google Analytics is a free tool you can link up with your website, enabling you to track traffic through your site and their interactions with you funnels and goals. Google Analytics provides invaluable insights about your website, which can be used as a basis for identifying growth hacks.

Google Keyword Tool
A free keyword suggestion tool that uses data from the searches conducted on Google search to suggest keywords for a given URL and category.

Google Trends
A tool that shows how often a specific term or keyword is searched on Google. This allows marketers to easily compare keywords or phrases. It also shows where searches came from and search volume over time.

Google Webmaster Tools
The main channel of communicating with Google as a website owner, Google Webmaster Tools gives feedback about your website and your Google rankings, from Google, so you can tweak and optimize your website performance for better results.

Gross Transaction Value (GTV)
Refers to the total sales volume transacting through the platform. It is the aggregate spend by the company’s users during a defined time period.

H

Hyper Text Markup Language (HTML)
The standard markup language for creating web pages and web applications.

I

Integration
Typically refers to the process by which two separate systems, applications, software, etc. are joined together so the data contained in each becomes part of a larger comprehensive system.

Internet of things (IoT)
The network of physical devices, vehicles, home appliances, and other items embedded with electronics, software, sensors, actuators, and connectivity which enables these objects to connect and exchange data.

J

JavaScript
An object-oriented computer programming language commonly used to create interactive effects within web browsers.

JavaScript Object Notation (JSON)
A lightweight data-interchange format. It is based on a subset of the JavaScript programming language.

K

Key Performance Indicators (KPI)
A measurable value that demonstrates how effectively a company is achieving key business objectives.

L

Landing Pages
A single web page displayed in response to a link in a pay-per-click ad, an email, or a specific URL shown in offline advertising. Landing pages include content directly related to the link a visitor clicked.

Lifetime customer value (LCV/CAC)
The prediction of the net profit attributed to the entire future relationship with a customer.

Limited Liability Company (LLC)
A corporate structure whereby the members of a company cannot be held personally liable for the company’s debts or liabilities.

Long Tail
Chris Anderson’s idea that markets and marketplaces, especially online, are moving toward niche products and away from mainstream, broad-appeal products.

M

Margin
The difference between a product or service’s selling price and its cost of production or to the ratio between a company’s revenues and expenses.

Marketing Automation Platform (MAP)
Software and technologies designed for marketing departments and organizations to more effectively market on multiple channels online and automate repetitive tasks.

Merchant
An individual or company that sells products or services. An ecommerce merchant refers to a party that sells goods or services exclusively through the Internet.

Merchant Account
A type of bank account that allows businesses to accept payments by debit or credit cards.

Micro-payment
An ecommerce transaction involving a very small sum of money in exchange for something available online, such as an application download, a service, or web-based content.

Microservices
A software development technique—a variant of the service-oriented architecture (SOA) architectural style that structures an application as a collection of loosely coupled services.

Multi-Channel Ecommerce
The process of selling goods and services across multiple different channels and devices, including online and on mobile.

N

Net profit
The actual profit after working expenses, not included in the calculation of gross profit, have been paid.

Niche
A small, distinct market segment.

O

Organic
Search engine listings that are shown based on their relevance to a query, as opposed to paid-search results that are shown because a site owner paid for an ad or paid to be featured.

Outsource
Hiring third-party providers to handle elements or functions of your business on your behalf. Outsourcing can be used for anything from web design to logistics and fulfillment.

Overhead
The ongoing expenses associated with operating a business.

P

PageRank
Google’s page ranking system that emphasizes inbound links to determine a page’s importance.

Payment
The action or process of paying someone or something, or of being paid. An amount paid or payable.

Payment Card Industry compliance (PCI)
A set of security standards designed to ensure that all companies that accept, process, store or transmit credit card information maintain a secure environment.

Payment gateway
A merchant service provided by an ecommerce application service provider that authorizes credit card or direct payments processing for digital businesses, online retailers, bricks and clicks, or traditional brick and mortar.

Payment processor
A company—often a third party—appointed by a merchant to handle transactions from various channels such as credit cards and debit cards for merchant acquiring banks.

PayPal
A leading, worldwide payment processing company. It is the preferred payment method for most consumers.

Pay Per Click (PPC)
A type of online advertising where you bid per click on highly targeted traffic, paying online for each click through to your website, rather than paying for impressions or some other metric.

Plugin
In computing, a software component that adds a specific feature to an existing computer program. When a program supports plugins, it enables customization.

Point-of-sale (POS)
The transaction that takes place between a merchant and a customer when a product or service is purchased, commonly using a point of sale system to complete the transaction.

Q

Quantitative Metrics
Data that can be represented as numbers, like click-through rates, visitor counts, and time-on-site.

Qualitative Metrics
Data that measures the quality of a customer interaction, which may be subjective. These metrics are often based on customer reviews, interviews, and surveys. This data is then given a qualitative score that is used to decide the success of a campaign.

R

Recurring billing
When a merchant automatically charges a cardholder for specified goods or services on a prearranged schedule.

Return on investment (ROI)
The ratio between the net profit and cost of investment resulting from an investment of some resource.

Revenue
The amount of money that a company actually receives during a specific period from normal business activities, like the sale of goods and services to customers.

Roadmap
A strategic plan that defines a goal or desired outcome, and includes the major steps or milestones needed to reach it. It also serves as a communication tool and high-level document that articulates strategic thinking—the why—behind both the goal and plan.

S

Search Engine Marketing (SEM)
Online marketing that increases a website’s visibility on a search engine results page (SERP). This is done by optimizing the website with indexing techniques and purchasing paid-search ads.

Search Engine Optimization (SEO)
The process of creating your website and building links in a Google-friendly way to ensure your website is given the best possible ranking within relevant SERPs.

Search Engine Results Page (SERP)
The page that is generated by searching for a given phrase on Google. SEO is all about moving a webpage up the SERPs, so your website is clickable from position number 1 of page 1, or as close to that as possible.

Social Media
A collection of platforms where businesses can tap into targeted audiences through advertising or through a comprehensive social media strategy. Facebook, Twitter, Google Plus, Instagram, Pinterest, and others are all examples of social media platforms.

Social Media Marketing
A type of Internet marketing that promotes products or services via social media. It is also considered web-based word-of-mouth marketing.

Software Development Kit (SDK)
A set of software development tools that allows the creation of applications for a certain software package, software framework, or hardware platform.

Shopping cart
Allows visitors to a website to select items for eventual purchase.

Software
The programs and other operating information used by a computer.

Software as a service (SaaS)
A software licensing and delivery model in which software is licensed on a subscription basis and is centrally hosted. It is typically accessed by users using a client via a web browser. Also referred to as web-based software, on-demand software, or hosted software.

Split Testing (A/B Testing)
A testing model that has marketers simultaneously test two variables (often labeled A and B) in order to discover which variation in web page, ad content or design produces the best possible result.

Subscription
Involves access to a product or service over a specified period of time.

T

Traffic
The number of visitors coming to your site from outside sources. Traffic is the ‘input’ side of the ecommerce equation. More traffic generally results in more business and is equivalent to foot traffic in brick-and-mortar stores.

Transaction
An instance of buying or selling a product or service.

U

Usability
The ease and efficiency with which your customers can use and interact with your website. Usability is central to the quality of the customer experience and your conversion rate. It now extends to the customer experience on mobile and tablet devices.

User interface (UI)
The means by which the user and a computer system interact, in particular, the use of input devices and software.

Upselling
A sales technique used to encourage a customer to spend more by buying an upgrade or related products or service.

User experience
The overall experience of a person using a product, such as a website or a computer application.

V

Value-added tax (VAT)
A value-added tax, known in some countries as a goods and services tax, is a type of general consumption tax that is collected incrementally, based on the increase in the value of a product or service at each stage of production or distribution.

Vendor
A party in the supply chain that makes goods and services available to companies or consumers. The term “vendor” is typically used to describe the entity that is paid for goods that are provided, rather than the manufacturer of the goods itself.

Vertical
An industry segment that is comprised of similar businesses and customers.

W

WordPress
A free and open-source content management system based on PHP and MySQL. To function, WordPress has to be installed on a web server, which would either be part of an Internet hosting service or a network host in its own right.

WP Engine
A leading web host in the managed WordPress host category.

 

Chances are you’re going to need to refer to this glossary again … and again … and again. We suggest you make this a bookmark in your preferred browser so you can quickly access all the essential ecommerce terms. Your accountant and affiliates will thank you, I promise.

Caitie Gonzalez

Caitie’s background in social media and content marketing combined with her creative nature led her to a career in content creation. Caitie has experience in creating content for social media, blogs, websites, and video. When Caitie isn’t busy creating educational and entertaining content, you can find her walking her dog, watching movies, and playing video games.
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