With ecommerce as a whole seeing a growth of 16% between 2015 and 2016, it’s unsurprising that an increasing number of retailers are taking the plunge and extending their reach online. This has resulted in a staggering amount of information on best practices, ecommerce theory and ever sophisticated software, and as the information grows so too does the ecommerce jargon.
Whether you’ve been in the world of ecommerce for some time or are have just decided to take the leap and start building your ecommerce business, you’ve probably been stumped more than once by unexplained acronyms and complex metrics.
Fortunately, you don’t have to learn another language just to talk to your ecommerce team or agency. There is quite a bit of ecommerce jargon out there, but we’ve come up with some easy explanations for the most common and confusing. While it’s not an exhaustive list, it should be plenty to see you through development meetings and digital marketing proposals.
Analytics are the meaningful insights that can be gleaned from your raw ecommerce data. Most of the time when we talk about analytics, we are referring to a specific platform such as Google Analytics. Typical insights from these platforms include the amount and type of traffic coming in and basic traffic behaviour such as the time spent on each page.
AOV – Average Order Value
The average order value is simply the average amount spent each time a customer places an order. It is calculated by dividing your total revenue by your total number of orders. You can you work out and compare your AOV by day, week, month and year, and even compare the AOV of different customer segments (see Customer segments).
API – Application Program Interface
API’s are tools or protocols that manage software applications and specify how software components should interact. They are essential for communication between programs.
You are most likely to come across this term when discussing or looking at your analytics data (see Analytics). Attribution refers to the ability to attribute credit to certain channels such as social media, email or telephone, each time a customer interaction occurs. Interactions can occur at any point in the customer journey (see Customer journey).
Business to business refers to any company whose main customer base is made up other companies. Some companies may have both B2B and B2C customers (see B2C).
B2C is simply the offer of products or services from a business to end customers.
This is a buzzword that simply refers to the increase in data now available to businesses thanks to online traffic growth and more sophisticated analytics packages.
CAC – Customer Acquisition Cost
This is the average cost of acquiring a customer for your business (see Cost Per Acquisition).
CLV – Customer Lifetime Value
This is the predicted net profit expected from the entire relationship with a customer, or how valuable a customer will be over a specific period of time. A good CLV is indicative of good customer retention (see Retention) and can help to guide marketing costs and set goals.
CMS – Content Management System
A content management system as is application designed to create, modify and publish digital content, for example, a web page or a blog post. WordPress is perhaps the most well-known example of a content management system and is used to create blogs and websites, although CMS features and uses can vary widely.
Conversion/ Conversion rate
A conversion occurs anytime a visitor on your ecommerce site completes a certain action in the customer journey in line with your business goals. This can include signing up to your newsletter, using an enquiry form, requesting a quote or making a purchase. The conversion rate is the percentage of your site visitors that complete one of these actions and converts.
CPA – Cost Per Acquisition
This is the average cost for converting a visitor into a customer. It is worked out simply by dividing your marketing costs by the number of customers acquired over a time period. You can work out your CPA for certain channels, certain campaigns or overall for a given day, week, month or year.
CRM – Customer Relationship Management
CRM refers to practices, systems and technologies that are used to manage and track a business’s interactions with potential and current customers. CRM aims to nurture customer relationships to convert more customers, improve customer retention and drive overall sales growth. Many modern CRM applications help to automate this process across marketing, sales, customer service and support.
CRO – Conversion Rate Optimisation
This is the process of adjusting your ecommerce site with the aim of increasing your conversion rate (see Conversion/ conversion rate). These decisions are based on insights from your ecommerce data and are then tested in a controlled way, such as with A/B testing, to determine which results in the best conversion rates.
CSS – Cascading Style Sheets
You may come across this term when talking with developers or during the build of your ecommerce site. Cascading Style Sheets describe how HTML elements will be displayed on each page and can control the layout of multiple web pages at once, making them an essential time-saving tool.
The customer journey is also referred to as the funnel and refers to the complete sum of experiences a customer goes through with your business. It includes all the steps from the first visit to your ecommerce site, to a loyal customer advocating your products or services. The length and detail of the customer journey vary depending on the business and depth of analytics.
Customer segments is a marketing term referring to the grouping of potential and current customers by certain traits, characteristics or behaviour. These segments are created based on your ecommerce data and can help personalise your ecommerce content and marketing materials to better appeal to your customers. For example, a segment of customers who have the highest AOV (see AOV - Average Order Value) and highest purchase frequency might be your loyal customer segment. You would target them with rewards and personalised content.
CX – Customer Experience
The customer experience refers to any design decisions, techniques and strategies used to improve the customer experience of your ecommerce site (see UX – User Experience).
EAI – Enterprise Application Integration
This is the use of technologies to enable the integration of the various software and applications an ecommerce business needs for day to day tasks (see ERP – Enterprise Resource & Planning, and API – Application Program Interface). This allows applications, such as an accounting software and an order processing software, to communicate and work together.
ERP – Enterprise Resource & Planning
This is a type of software that automates certain business processes in order to make your business more efficient and profitable.
ESP – Email Service Provider
This is simply a company that offers email services, for example, Mail Chimp.
IMS – Inventory Management Software
This is software to help you track inventory levels, sales and deliveries.
IP – Internet Protocol address
Usually just called an IP address, it is the numerical label used to identify a device connected to a computer network using Internet Protocol.
KPI – Key Performance Indicator
KPI’s are metrics that a company uses to benchmark and measure its performance over time and in line with business goals. They can be used to track the progress the business to see if it is in line with targets and to measure against other companies and industry standards.
LTV – Lifetime Value of Customer
The is the predicted lifetime profit or value expected from a customer (see CLV – Customer Lifetime Value).
This a customer experience strategy that aims to build a cross-channel business model that completely integrates both offline and online channels. This results in a completely consistent and constant experience for customers throughout physical locations, web pages, social media, mobile applications and telephone. The most obvious example of a seamless omnichannel experience is in retail, where customers can order online, collect in store and use their app in store to scan items and see more information.
OMS – Order Management System
Order management systems are computer software used to track order entry and processing. For example, in retail, the OMS will track orders from customers, stock levels, packaging and shipping across channels to assist with processes such as click and collect or ship from store.
A payment gateway is provided by an ecommerce application service provider, for example, Worldpay, and allows merchants to securely process payments. It authorizes card payments for ecommerce businesses, online retailers, omnichannel retailers or brick and mortar businesses.
The Payment Card Industry Data Security Standard (PCI DSS) applies to any business that accepts credit card payments. Choosing a PCI compliant hosting provider means you are allowed to store and process the cardholder data needed to accept card payments.
PIM – Product Information Management
Product Information Management is a system or software that facilitates the storage and sharing of product information across business channels. For example a central database of product information that can be used to feed product details to websites, catalogues and ERP systems (see ERP – Enterprise Resource & Planning).
Responsive design is a website design that responsively scales to fit the screen that a web page is being viewed on. It ensures that a website is mobile friendly by adjusting the key website features, such as the navigation menu and images, to better fit the smaller screen.
Retention refers to the retaining of current customers beyond the first purchase. Good customer retention stems from repeat purchases and customer loyalty, and leads to a more stable and reliable ecommerce business.
ROI – Return on Investment
ROI measures how much return or sales your business is generating relative to the investment or costs you have incurred. You can calculate it simply with the following equation: ROI = (Gain from Investment – Cost of Investment) / Cost of Investment.
RoR – Rate of Return
This is the gain or loss on the investment or the ROI (see ROI – Return on Investment), expressed as a percentage. Simply multiply your ROI by 100.
SEO – Search Engine Optimisation
Search Engine Optimisation is the process of improving aspects of your ecommerce site with the aim of improving the ranking of your web pages in the search results for relevant keywords. See also SEO jargon buster.
SKU – Stock Keeping Unit
This is the number assigned to each product to enable inventory tracking and for internal uses.
SSL stands for Secure Sockets Layer. An SSL certificate is needed to allow secure, encrypted https connections between a website and an internet browser.
TOS – Terms of Service
Terms of services are rules or definitions that are agreed to and must be met when using a service, such as a disclaimer for the use of a website.
User Experience (UX)
User experience refers to the type of experience people have with your brand. In ecommerce, a ‘good’ user experience refers to people completing a task, or ‘experience’ with your brand in an efficient and enjoyable way. This can be achieved through effective website design and functionality, such as an easy to use navigation menu or clear CTA’s. A good user experience can improve conversion rates (see Conversion/ conversion rate), customer retention (see Retention) and even brand reputation.
USP – Unique Selling Point or Proposition
This is simply the main feature of a product, service or business that differentiates it from the industry competition and is therefore used to attract customers. A USP can be completely unique to other industries, such as a patented product design, or it can simply be a wide range of shipping options or exceptional customer service not matched by the competition.
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