Glossary

An explanation of every ecommerce term you need

A

A system where you reward partners (affiliates) for each visitor or customer brought about by the affiliate's marketing efforts. Affiliates act as an ambassador for your product and usually take a portion of the sales resulting from the traffic as compensation.

An Attribution Model in e-commerce assigns credit for sales and conversions to different touchpoints in a customer's purchase journey, providing insights into channel effectiveness and aiding marketing optimization. E-commerce businesses need to understand the differences between attribution models, from simple ones like the Last-Click model to complex ones like the Time-Decay model or Data-Driven models, to allocate their marketing budget efficiently and increase conversion rates.

The average amount spent each time a customer places an order.

B

The Break-Even Point, is when all revenue minus all costs, yield no profit or loss. It's crucial for businesses to track as it indicates the minimum sales required to cover costs and start earning profit.

A broken size curve in e-commerce happens when one or more of a product's variant(s) is out of stock, often reducing the conversion rate.

C

The percentage of online shoppers who add items to their cart but leave without completing the purchase due to a change in mind, usually because of high hidden costs like shipping fee.

The percentage of customers who stop using your online store during a certain timeframe.

CTR, or Click-Through Rate, measures the proportion of users who progress from one stage to another in a process, such as from seeing an ad to clicking on it, or opening a newsletter to visiting a linked e-commerce site.

The Contribution Margin, a crucial profitability metric, is the leftover from Gross Sales after deducting all the direct costs of fulfilling the orders. Some argue that it is the same as Net Gross Profit 3, taking marketing spending into account. In contrast, others say marketing spending should not be part of calculating the contribution margin.

The journey a customer takes through a sequence of steps designed to lead to a desired action, typically a purchase.

The percentage of visitors who take a desired action, generally making a purchase.

The cost of goods sold signifies the total expense of purchasing the products sold, meaning the cost appears first when you sell the product.

In e-commerce, the Cost of Lost Sales (COLS) is the revenue lost when a product is out of stock. It affects a company's profits and customer satisfaction, as customers may switch to competitors, so businesses need to manage their inventory well and use technologies like machine learning to anticipate market trends and reduce COLS.

A metric often used in e-commerce to define the efficiency of the marketing, shortened COS. You get the Cost of Sales by dividing your Marketing Cost with your Gross Sales 

CPC (Cost-Per-Click) is the price you pay for each click on your ad. It's different from Cost Per Visit, which calculates the cost based on how many people actually visited your site after clicking the ad. So, even if someone clicks your ad but doesn't reach your site, you still pay in the CPC model.

CPM, or Cost-Per-Mille, refers to the cost an advertiser pays for one thousand views or impressions of an advertisement. This term is commonly used in digital advertising to measure the cost-effectiveness of a specific campaign or among multiple campaigns when it comes to awareness and brand-building. To determine if your CPM is good, compare and see if it is below industry averages.

Customer Acquisition Cost (CAC) in e-commerce refers to the total cost of acquiring a new customer.

A customer lifecycle is a journey that a customer goes through with a business or brand, it has many different stages. The general stages a customer goes through are from awareness to purchase to loyalty. By understanding your customer lifecycle, you are better able to relate to your customers and guide them to moving forward in the process.

D

A Data-Driven Attribution Model uses machine learning to assess each touchpoint's role in a customer's purchase journey, providing a comprehensive understanding of marketing effectiveness and guiding intelligent optimization of marketing spend in e-commerce.

A fulfilment method where an e-commerce business doesn’t keep the products it sells in stock. Instead, the e-commerce purchases the product after the customer has purchased the item from the e-commerce. The third party that the e-commerce buys the item from also ships it directly to the customer. This allows for low overhead costs and attention on fulfillment, while more emphasis is put on paid marketing.

E

An Engaged Session, in the context of website analytics, refers to a visitor's active interaction with a website for a given duration. This may include clicking on links, scrolling, or filling out forms. An engaged sessions usually implies that the visitor is actively interested in what your website has to offer and therefore exploring around.

epROAS is another word for Profit ROAS, pROAS, POAS. All describing the Profit Return on Ad Spend. It differs what people refer to as Profit when mentioning these words.

F

The process of receiving goods from suppliers, packaging the items and branding it, and then shipping orders to customers. Fulfillment also handles the returning part of the process from customer back to the warehouse.

G

Gross Profit 1 is the profit a company makes after deducting the Cost of Goods Sold, which represents the costs associated with purchasing its products. This figure does not include fulfillment costs, marketing costs, overhead costs such as rent, utilities, and salaries, or returned items.

Gross Profit 2 is the measure of profitability after accounting for both the costs associated with purchasing its products and the costs of fulfillment. Fulfillment costs include expenses related to storage, order processing, packaging, and shipping. Like Gross Profit 1, this figure does not consider the impacts of marketing costs or overhead costs such as rent, utilities, and salaries. Returned items are also not deducted in the calculation of Gross Profit 2.

Gross Profit 3 encompasses the profitability measure that includes both the product purchasing costs, fulfillment costs, and the marketing costs associated with promoting the products and general marketing expenses. It still does not consider overhead costs such as rent, utilities, and salaries. Like Gross Profit 1 and 2, returned items are not deducted in the calculation of Gross Profit

I

A view of something. Typically used for ads. And it answers the question, “How many times have my ad(s) been viewed?” the term used is not views but Impressions. Views are generally used when it's about video ads. An impression does not require any action by the viewer and one viewer can have many impressions of the same ad.

A marketing strategy where brands partner with individuals with strong social media following to promote their products or services. These individuals, known as influencers, typically have a niche audience that aligns with the brand's target market. This acts as a paid acquisition of warm leads and increasing of brand awareness among the community.

L

The Last Click Attribution Model in e-commerce gives full credit for a sale to the final touchpoint before a purchase. Because of its simplicity, it undervalue earlier customer interactions that could have significantly influenced the buying decision.

The Linear Attribution Model in e-commerce assigns equal credit for a sale or conversion to all customer interactions on their buying journey. While it recognizes each interaction's value, it may oversimplify as not all touchpoints equally influence the final purchase decision.

M

Ensuring your e-commerce platform provides a seamless experience on mobile devices.

N

Net Gross Profit 1 is An e-commerce KPI and the result after subtracting returns and the cost of goods sold from Gross Sales.

Net Gross Profit 2 is Gross Sales subtracted by returns, the cost of goods sold and the fulfilment costs.

Net Gross Profit 2 is operational profitability an e-commerce company yields. It is calculated by subtracting returns, the cost of goods sold, the fulfilment costs, and the marketing costs from the Gross Sales.

Measures customer loyalty and how likely they are to refer others to your store.

Net Sales is the Gross Sales minus any returns.

P

Using collected data to tailor the shopping experience to individual users or market segments to cater to their taste and preferences. This can include many ways of doing so such as product recommendations, personalized emails, and targeted advertisements.

R

Remarketing or retargeting is an online advertising strategy that target users who have previously visited your website or shown interest in your products. This is done to convert a warm lead into a purchasing customer and since it takes less convincing for an interested visitor, it is usually quite effective.

The percentage of customers you maintain over a given period.

Return on Ad Spend (ROAS) is a measure of how much revenue you make for each dollar spent on advertising. It's calculated by dividing your ad-generated sales by the cost of those ads. It helps businesses see if their ads are working effectively.

S

Enhancing your online content so search engines can easily find it.

A unique identifier for each product variation in your store. Commonly referred to as variant. By having an organized and orderly way to track products, you will be able to better track the sales of the products and manage your inventory well.

U

Enhancing your online content so search engines can easily find it.

A unique identifier for each product variation in your store. Commonly referred to as variant. By having an organized and orderly way to track products, you will be able to better track the sales of the products and manage your inventory well.

W

The marketing budget that was "wasted" on marketing, which did not yield the desired result.

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