The eCommerce Glossary: The Online Shopping Terms You Need to Know
5 Min Read
The eCommerce Glossary: The Online Shopping Terms You Need to Know
The evolving nature of ecommerce marketing means there’s a continuous set of new trends and technology (and terminology) to get to grips with.And then there are the basics that every ecommerce and digital marketing professional should understand.This glossary aims to break down the expanse of ecommerce terminology out there and is an excellent read for those new to the discipline.A/B testingA/B testing – or split testing – is testing two variables on a web page to see which one performs better.For example, a website might show 50% of visitors one call-to-action, and the other 50% would see a different call-to-action. The version of the page that generates the highest conversion rate is then considered the most effective.Affiliate marketingis the performance-based activity of promoting a product and earning a commission for every sale. A typical scenario is when a retailer provides an online influencer with a trackable link to include in their social content. If someone uses that link to buy a product, the retailer will pay the influencer a percentage of the final sale. Anyone generating interest online, from successful bloggers to big news websites, can use affiliate marketing to generate money from consumers in the market to buy everything from clothing to holidays.Average order value (AOV)Average order value is a metric that measures the average amount that customers spend on a transaction with a retailer. It is calculated by dividing the total revenue made during a specific period by the number of orders during the same time.AOV can provide retailers with a good indication of how effective their pricing and marketing strategies are.Bounce rateBounce rate is a metric that measures the percentage of visitors who enter a site and leave without taking further action (such as clicking to view another page). It is calculated by dividing the total number of one-page visits by the total number of overall visits to the webpage or website during a specific time frame.BundlingBundling is a sales technique that involves selling multiple products as a package deal, usually at a lower price than if the items were to be sold individually. Bundling can be an effective way to increase average order value.Buyer personaBuyer personas are fictional profiles of typical customers. They allow ecommerce companies to focus on the customer’s goals, personal motivations, buying habits, and pain points.Personas are based on the analysis and research of real customers; this helps to build a much more detailed picture of the (hypothetical) customer, including dynamic information such as what they value in a brand, what kind of communication they prefer, and how they might respond to a particular marketing message.Call-to-actionA call-to-action is a marketing message or line of copy that aims to persuade the user to immediately take a specific action. In the context of an ecommerce product page, for example, a CTA might be: “buy now” or “add to cart”. The most effective CTAs often create a sense of urgency in the consumer.Cart abandonment rateCart or basket abandonment rate refers to the ratio of shoppers who add items to their cart but abandon the web page before they check out. It is calculated by dividing the number of completed transactions by the number of shopping carts created.Checkout processThe checkout process refers to the various steps a customer takes when completing a purchase online, from when the customer clicks ‘checkout’ or buy now to the order confirmation page. The checkout process usually includes reviewing orders, inputting billing and delivery information, and entering payment details.The most effective checkout processes (generating the lowest abandonment rate) tend to include the fewest steps and require the least effort on the customer's behalf. Amazon’s reputation for smooth customer experience is due in part to the ease of its 1-Click ordering.Click-through-rate (CTR)Click-through-rate is a metric which measures the ratio of customers who click on a link, organic search result, or email versus the number of times it is viewed (i.e. impressions).It is calculated by dividing the total impressions by the number of clicks and multiplying the result by 100. Click-through rates can help retailers to gauge the effectiveness of a marketing or advertising campaign.Comparison shopping enginesComparison shopping engines – also known as price comparison websites – are websites where consumers can browse the exact product sold by multiple retailers.Google Shopping is one prominent example; part marketplace, part advertising platform, allows ecommerce businesses to store product catalogues and create campaigns to present ads to customers searching on Google. By integrating with Google, ecommerce sites can update products, prices, and stock levels to the Google Shopping platform.Content management system (CMS)A content management system is a software that allows ecommerce companies to edit, manage, and publish the content of their online store. This is typically the store’s product catalogue but can also involve other digital content or imagery.Magento, Shopify, and WooCommerce are among the most widely-used ecommerce content management systems.Conversion funnelThe conversion funnel is the conceptual name for a customer’s journey through an ecommerce site, from awareness (in the acquisition phase) to action. Conversion funnel optimisation is the process of making this journey as smooth and as seamless as possible.Conversion rateConversion rate refers to the percentage of visitors to a site who end up completing the desired action out of the total number of visitors. In ecommerce, a conversion usually refers to the completion of a purchase, but it can also mean email sign-ups or content downloads.Conversion rate optimisation (CRO)Conversion rate optimisation is optimising an ecommerce site to increase the likelihood of visitors completing a purchase. CRO strategies can be quantitive and qualitative, including A/B testing, online customer surveys, or copy optimisation.Cloud-based platform“cloud-based ecommerce platforms provide a package including all the functionality required for ecommerce to allow customers to access the software and for the organisations to store their ecommerce data.”Essentially, cloud-based ecommerce platforms remove the requirement for on-site hosting expertise. The benefits are that they are far easier to manage and allow businesses to focus more on the nuts and bolts of ecommerce, such as product selection or marketing. The two biggest cloud-based ecommerce platforms are Shopify and BigCommerce. They offer similar functionalities, such as low cost of ownership, low transaction fees, and a standard payment system.Cross-sellingCross-selling is a sales tactic that involves recommending related or additional items to the customer (based on the initial item they are buying). The aim is to increase the overall value of the order placed.One of the best-known examples of cross-selling is Amazon’s ‘frequently bought together section on its product pages. This often highlights complementary and additional items to make a completed set. For example, Amazon might suggest a carry case and a charger if you buy a wireless speaker.Customer acquisitionSimply put, customer acquisition is attracting new customers to your business. For ecommerce companies, this is typically seen in terms of traffic to a website.On a more complex level, however, customer acquisition is about driving the right traffic. To do this, ecommerce teams must ensure they are targeting the right people.Ecommerce sites usually run acquisition campaigns throughout the year (alongside frequent marketing campaigns). Throughout, it’s important to measure success using KPIs related to where the user is in their customer journey. For example, measuring awareness by impressions and loyalty by repeat purchases.Customer journeyThe customer journey is the path and sequence of interactions customers go through when visiting a website. The way to purchase or customer conversion is no longer linear; customers enter and move through the customer journey on their terms, using multiple devices and channels. Creating a consistent customer experience right through the journey is critical.Customer journey mappingCustomer journey mapping visually represents every customer interaction with a business.Customer journey maps don’t only include positive interactions or steps but also moments of friction, as well as the customer’s motivations throughout. By understanding how customers interact throughout their entire journey, marketers are better positioned to improve it.Customer lifetime value (CLV)Customer lifetime value is the estimated total worth of a customer to a business over their relationship. In other words, it is the expected net profit a company can hope to gain from an individual customer. The most significant benefit of CLV is that it can help companies nurture and retain the customers who will ultimately generate the most value for a company in the long term.Customer profileUnlike a buyer persona – a composite representation of a significant customer segment – a customer profile helps to identify who the target ecommerce customer is. Quantitative data is used to build customer profiles and usually includes demographic information such as age, gender, purchase history etc.Customer retentionCustomer retention is retaining your existing customers (i.e. encouraging those who have converted to return).Customer retention has been proven to be more cost-effective than acquisition. Studies suggest that it can cost five times more to attract a new customer than to retain an existing one while increasing customer retention rates by 5% can increase profits by 25% to 95%.Customer reviewsCustomer reviews are proven sales drivers, with most people reportedly trusting online reviews more than personal recommendations from friends or family. As such, most customers will always check online reviews before making a purchase.One way to attract reviews is to use a third-party reviews provider, such as Trustpilot. Alternatively, sending an email after a customer has purchased an item to ask for a review can also be effective, as can incentivising reviews.DAM systemA DAM system – also known as a digital asset management system – is effectively a single source of truth for ecommerce digital assets”.Essentially, a DAM system is a platform that allows anyone within the same organisation to upload, tag, or categorise digital assets. In the context of ecommerce, these digital assets could be product images, instruction manuals, or ‘how-to’ videos.DAM functionality can be found in basic content management systems (CMSs), ecommerce systems, PIM systems, standalone vendor systems, and third-party online DAM platforms. Crucially, the complexity of an ecommerce site’s digital asset management requirements should determine which solution is chosen to provide DAM features.Delivery integrationDelivery integration is when an ecommerce platform seamlessly integrates with a delivery partner (such as FedEx or DPS). It allows customers to receive real-time updates on a package’s delivery progress, ultimately helping ecommerce businesses to provide the fast and seamless shipping options that customers have come to expect.Direct-to-consumerDirect-to-consumer ecommerce brands sell their products directly to consumers, cutting out the need for third-party retailers, wholesalers, and other middlemen.As well as the ability to collect and analyse data, the benefit of a DTC business model is that it affords a more seamless customer journey and greater control over customer relationships. Examples of the most successful direct-to-consumer ecommerce brands include Glossier and Warby Parker.Discount codeA discount code is a sales tactic to incentivise purchases or other specific actions (such as additional purchases or customer reviews). They are often used to attract new customers or encourage repeat shoppers.DropshippingDropshipping is a retail fulfilment method whereby the ecommerce store does not own the stock or inventory it sells. Instead, the store partners with a third-party manufacturer, who will ship items once a customer has purchased them.One of the most significant benefits of dropshipping is that it involves lower overheads, as the business model removes the burden of stocking merchandise or covering shipping costs. As such, it can be an excellent way to test the demand for new products before investing more long-term.Faceted navigationFaceted navigation is a filtering tool that allows users to select various attribute combinations to narrow their search for a product. On FeelUnique.com, for example, users can filter by brands but also product specialities, key ingredients, and offers, too.Theoretically, the user will browse a final selection containing their desired or ideal product.FulfilmentFulfilment is getting an online order delivered to a customer’s door. It involves managing the inventory, picking and packing products, and shipping online orders to customers – as well as providing the overarching ‘promise’ of ease and convenience. Fulfilment can be undertaken in-house or through a third-party company.Headless commerceThe majority of available ecommerce platforms have a standard or ‘template’ based interface that the user sees – this is what’s called the ‘frontend’. An ecommerce backend ‘delivers’ the content and functionality to the front.Headless commerce is the separation of the frontend interface from the backend ecommerce platform, which enables ecommerce capability to be delivered across new channels and environments.Essentially, headless commerce enables ecommerce brands to deliver all the functionality required, as well as a customised design, content, and capability for that brand. It also allows ecommerce brands to appear in new channels, such as wearables or Alexa skills, and deploy updates to the front much faster and easier.InventoryInventory – also known as ‘stock’ – is the physical goods that an ecommerce retailer sells (or part of the goods it plans to sell in the future).Interactive product visualisationInteractive product visualisations enable customers to visualise products in more detail or in the context of real life. These tools often involve 3D or AR technology, allowing users to interact with the digital interface to better understand the product or its different features.Landing pagesA landing page on an ecommerce site is a standalone webpage that potential customers can ‘land’ on when they click through from an email, search engine, or another marketing campaign usually implemented for PPC or SEO Consultancy purposes.Landing pages are typically designed to encourage visitors to take a particular action when they arrive. This might simply be clicking through to another page – such as a product page or special offer – or it could be designed to persuade a user to sign up or download a piece of content.LogisticsAccording to Shopify, logistics is coordinating and moving resources – people, materials, inventory, and equipment – from one location to storage at the desired destination. In the context of ecommerce, logistics relates to the process of shipping orders to customers or transporting inventory to merchants.New retail‘New retail’ is a term coined by Alibaba co-founder, Jack Ma, referring to the convergence of offline and online commerce to create a seamless shopping experience.MarketplacesA marketplace is an online platform through which third-party retailers can sell their products. All transactions are processed by the marketplace operator but delivered and fulfilled by the participating retailers.Marketplaces often have other capabilities, such as auctioning and advertising, such as eBay, Amazon, or Etsy, and these are often referred to as ‘horizontal’ ecommerce businesses.Mega menusA mega menu is a horizontal drop-down menu that displays a wide range of product categories at once (taking away the need for the user to scroll). Due to the space afforded within mega menus, they often contain rich content, such as images or subcategories relating to themes.Online value proposition (OVP)An online value proposition helps persuade customers to buy from a particular ecommerce site instead of a competitor. An OVP can consist of several elements, such as product-related factors like tips or tutorials on using an item or something related to the customer experience, such as free shipping or returns.On-site navigationOn-site navigation refers to all the steps a customer must take to find what they’re looking for on an ecommerce website.Payment gatewayA payment gateway – such as PayPal or Stripe – is the technology that processes credit card payments on ecommerce sites. Crucially, it offers secure encryption of charges and screenings for security purposes. It also gets approval from the credit card or bank and calculates tax costs like VAT.PCI compliancePCI compliance is a set of industry regulations to protect ecommerce companies against data breaches. Essentially, it ensures that ecommerce companies can safely and securely accept, store, and process cardholder data during a transaction. Any merchant that accepts credit card payments needs to be PCI compliant.PersonalisationThe opportunities afforded by personalisation within ecommerce are vast. But in short, the term aims to give customers an individualised online experience based on their unique characteristics, demographics, and data (including previous purchases, persona, interests, search, and buying behaviour).PIM systemA PIM system – or product information management tool – is a central repository for product details for an ecommerce store. Storing product details in one place ensures that consistent product information or a ‘single source of truth is available to customers, ecommerce teams, and suppliers. It’s important to note that not all ecommerce platforms will require dedicated PIM (sometimes called an MDM – Master Data Management) functionality.Point-of-sale system (POS)A POS is a type of software that enables transactions to take place. Many POS systems also help ecommerce companies to manage inventory and seamlessly sync online and offline sales data.Product AttributesProduct attributes are a set of characteristics that help to define and differentiate a product, which can, in turn, impact the customer’s purchase decision. Attributes can be classified as ‘universal’, i.e. product title, description, and reviews. They can also be ‘category-specific’ and apply to individual product categories and are commonly used to differentiate and compare two products in the same category.Product DescriptionA product description is a copy that explains more about a product and its features. It aims to inform and persuade the customer to buy, which is why the most compelling examples bring the product's benefits to life rather than plainly stating what it is.Product details pageA product details page – more commonly known as a product page – is a page that lists all the crucial information that a user must know before making a purchase. This typically includes a product overview (title or brand, price, features), product photos, similar product suggestions, social proof, and a clear call to action.Product discoveryProduct discovery is the process of a user arriving on an ecommerce site and discovering a product they want to buy. By enabling product discovery, ecommerce sites can make it easier for customers to find what they are looking for and make a purchase in less time – both in situations when a customer already knows what they want and when they don’t.Product filtersProduct filters are an interactive element of the ecommerce user experience that helps to reduce an extensive product range to a smaller selection and allow the user to focus on the products they are interested in.Product listings pageA product listings page – also known as a category page – lists multiple products within the same category. Product OVPA product OVP (which stands for online value proposition) is a set of unique benefits that helps to differentiate a product from similar products sold by competitors.Recommendation engineRecommendation engine technology generate recommended products according to the customer’s real-time intent, past behaviour, purchases, and the preferences of similar visitors. Essentially, it affords multiple ways to personalise the on-site UX.ScarcityScarcity is a sales technique based on the threat of loss, often more powerful than the prospect of gaining something of equal value. Product and category pages typically imply scarcity based on the number of items in stock or an offer running out.SegmentationSegmentation is the practice of dividing potential customers into different groups based on other characteristics and traits. Additional segments can include demographics (e.g. based on age or gender), behaviours (e.g. past purchases or abandonment) or psychographics (personal beliefs or values).Service OVPJust like a product OVP (online value proposition), a service OVP is designed to differentiate an ecommerce company’s service to convince the customer to choose the brand over a competitor.Shopping cart/bagAn ecommerce shopping cart is a piece of software that facilitates the customer’s order. However, it is also a memory aid that allows customers to remember and access items of interest.SitemapA sitemap collates all the pages on an ecommerce site into categorised links. From a user perspective, it can help to aid product discovery, removing the need to enter keywords into the search bar or browse via category pages. Search engines also use a sitemap like Google to index a site and understand its architecture.Social commerceSocial commerce refers to purchasing through a third-party social media platform such as Facebook or Instagram. The industry has seen many ‘buy’ buttons and hybrid platforms flounder over the past few years in the west; however, social commerce finally arrived in 2019 in the form of Instagram Checkout, which allows users to checkout without navigating away from the app. In the main, the term refers to social media advertising and its role in acquisition for ecommerce companies, such as through shoppable ads on Instagram.Social proofSocial proof is based on the theory that people will look to others and be influenced by their behaviour to copy them. The more people doing or saying the same thing, the greater the likelihood that an individual will follow suit.SSLSSL stands for ‘secure sockets layer’ – an online protocol that provides greater online security. An SSL certificate (represented by a padlock) signifies that a secure connection has been made and that all transmitted data on the site is encrypted.Vertical marketplacesVertical (or curated) marketplaces enable tailored online shopping experiences by providing online access to a base of customers, along with consumer and product data insights in terms of customer tastes and preferences.UrgencyUrgency is a sales technique based on the notion that the customer must act soon or risk losing out (indicating that a product is highly popular or in demand).User experience (UX)Jakob Nielsen, a prominent UX consultant, defines UX as " encompassing all aspects of the end user’s interaction with the company, its services, and its products.” Within the context of ecommerce, this means making the end goal (i.e. the discovery and purchase of products) as easy to achieve as possible.Visual searchVisual search is when a customer uses a photo instead of keywords as a search term on an ecommerce site. The process is made possible by recognition technology and mobile phone processing.The main benefit of visual search is that it can enable the user to find what they want (as well as similar items) much faster. This is because photos can contain more immediate information than a user typically writes in a search and convey hard-to-describe elements, such as patterns, shapes and style.Asos is one good example of visual search within ecommerce, with research suggesting that the tool has helped to grow sales by over 30%.Voice searchIf visual search allows customers to search by photo, voice search allows the customer to use their voice. Again, the benefits are rooted in speed and ease, as the customer doesn’t have to spend time entering keywords. Another positive is that product discovery can be initiated on impulse as voice assistants are always on.Wish listsWish lists have several meanings and functions. Ian McAllister, formerly in charge of the ‘Wish List’ feature for Amazon, describes them as an alternative to basket holding. This means that a customer will use a wish list to temporarily hold items.Another benefit of wish lists is that they do not disappear if a customer ends a particular session; this increases the likelihood that they will buy the item when they return, even if they returned to the site for another reason.Customers can also use wish lists for gifting and sharing purposes; they often include the option to be made public so that customers can share them with friends, and family, or social media.