Ecommerce Jargon Explained
The digital world is full of jargon and even more confusing acronyms. To put you at ease and help you get started, we defined a few of the most essential terms in ecommerce.
ANONYMOUS CHECKOUT – The process by which a customer completes a sales transaction without creating an account on the seller’s website. The seller captures the email, shipping, and billing addresses to complete the transaction. Anonymous, or guest, checkout streamlines the process for the customer and often improves the conversion rate for the seller.
AVERAGE ORDER VALUE (AOV) – AOV tracks the average pound amount spent each time a customer places an order. To calculate your company’s average order value, simply divide total revenue by the number of orders.
CATEGORY – Ecommerce sites group products or services into a hierarchy of categories and subcategories for ease of navigation and to improve SEO.
E.g., “Our bespoke ecommerce shoe store is organised using the categories men, women and juniors, with subcategories including flats, heels, outdoors and sports.”
CHECKOUT –The process by which a customer provides information to complete an ecommerce purchase, typically including payment, billing and shipping information and order verification and confirmation.
CONVERSION – Conversion is when a website visitor completes a successful, completed action, including a purchase, completing a registration, or joining an email list.
CONVERSION RATE –A conversion rate records the percentage of users who have completed a desired action. Conversion rates are calculated by taking the total number of users who ‘convert’ (for example, by clicking on an advertisement), dividing it by the overall size of the audience and converting that figure into a percentage. For example, if your site received 200 clicks and 5 conversions, the conversion rate is 2.5%.
COUPON/DISCOUNT CODE –A designated code a customer may enter during checkout to apply a discount.
DROP-SHIP –Dropshipping is an order fulfilment method where a business doesn’t keep the products it sells in stock, but instead purchases inventory as needed from a third party (usually a wholesaler or manufacturer) to fulfil orders.
One of the biggest differences between dropshipping and the standard retail model is that the seller acts as a middleman, as they don’t own stock or inventory.
ECOMMERCE – Ecommerce, short for electronic commerce or internet commerce, is the buying and selling of goods or services on the internet, and the transfer of money and data to execute these transactions.
ECOMMERCE PLATFORM – A software program or application that allows businesses to sell online. Features of ecommerce platforms vary but they generally include product information, customer account management, shopping cart and checkout processes, product search capabilities and order management.
FULFILMENT – The process of receiving goods, then processing and delivering orders to customers. The process starts with a customer placing an order and ends once they receive it. Order fulfilment also manages return transactions.
INVENTORY – The list of the seller’s current stock.
MERCHANDISING – Like in a brick-and-mortar store, online merchandising refers to the placement and display of products to entice a customer to make a purchase. Examples include featured items, product promotions, top sellers and related products.
MERCHANT ACCOUNT – A merchant account is a type of business bank account that allows a business to accept and process electronic payment card transactions. The account requires a business sign a contractual agreement with a payment gateway provider or bank who facilitates all communications in an electronic payment transaction, such as credit card or other payments.
ORDER CONFIRMATION – This is the final step of the checkout process, where a customer is informed that their order has been placed successfully. This message is usually delivered on screen and by email.
PAYMENT GATEWAY – The payment processing portal used in online stores, a payment gateway is technology used by merchants to accept debit or credit card purchases from customers. Popular gateways in the UK are Worldpay, Paypal and Stripe.
PRIVACY POLICY – A statement that explains what customer information an online retailer will collect and how the retailer will use that information. All UK-based online companies are required to be open with users about how their personal data will be used. ‘Personal data’ is defined as any data that ‘relates to a living individual who can be identified from that data’.
PRODUCT FEED – A product feed is a file that consists of a list of products or services, as well as attributes and product information. Product feeds are also called data feeds or product data feeds and they can be made in different formats.
PRODUCT RECOMMENDATION ENGINE – Product recommendation engines are software that analyse data about shoppers to learn exactly what types of products and offerings interest them. Based on search behaviour and product preferences, they serve up relevant offers and product options that appeal to individual shoppers and can help drive sales. For instance, an online pet store could suggest dog treats or dog toys to a customer who orders dog food.
REGISTRATION – The process of creating a customer account with an online retailer. The account typically holds personal information such as name, billing and shipping address, and payment details.