And then there’s the basics that every marketer, ecommerce and digital professional should understand.
This glossary aims to break down the expanse of ecommerce terminology out there and is a great read for those new to the discipline. You’ll find some of what’s included here (and lots more) in Econsultancy’s Ecommerce Best Practice Guide.
A/B testing – otherwise known as split testing – is the method of testing two different variables on a web page in order 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 marketing is the performance-based activity of promoting a product and earning a commission for every sale made. A typical scenario is when a retailer provides an online influencer with a trackable link to include in their social content. If someone then 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 total revenue made during a certain time-period by the number of orders during the same time-period.
AOV can provide retailers with a good indication of how effective their pricing and marketing strategies are.
Bounce 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 amount of one-page visits with the total amount of overall visits to the webpage or website during a certain time-frame.
Bundling is a sales technique that involves the sale of 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 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 emotive 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.
A 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 are often those that create a sense of urgency in the consumer.
Cart abandonment rate
Cart 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 overall number of shopping carts created.
The checkout process refers to the various steps a customer takes when completing a purchase online, starting from when the customer clicks ‘checkout’ or ‘buy now’ all the way through to the order confirmation page. The checkout process usually include reviewing an order, inputting billing and delivery information, as well as entering payment details.
The most effective checkout processes (in terms of generating the lowest abandonment rate) tend to be those that include the fewest steps, and require the least amount of effort on behalf of the customer. Amazon’s reputation for slick 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 number of total impressions by the number of total clicks and then multiplying the result by 100. Click through rate can help retailers to gauge the effectiveness of a marketing or advertising campaign.
Comparison shopping engines
Comparison shopping engines – also known as price comparison websites – are websites that consumers can use to browse the same product sold by multiple retailers.
Google Shopping is one prominent example; part marketplace, part advertising platform, it 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 contents of their online store. This is typically the store’s product catalogue, but can also involve other forms of digital content or imagery, too.
Magento, Shopify, and WooCommerce are among the most widely-used ecommerce content management systems.
The conversion funnel is the conceptual name for a customer’s journey through an ecommerce site, from awareness (in the acquisition phase) all the way through to action. Conversion funnel optimisation is the process of making this journey as smooth and as seamless as possible.
Conversion rate refers to the percentage of visitors to a site who end up completing a desired action out of the total number of visitors. In the context of 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 the process of optimising an ecommerce site in order to increase the likelihood of visitors completing a purchase. CRO strategies can be both quantitive and qualitative, and can include things like A/B testing, online customer surveys, or copy optimisation.
As stated in Econsultancy’s Ecommerce Best Practice Guide: “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 they 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 payments system.
Cross-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, if you are buying a wireless speaker, Amazon might also suggest a carry case and a charger.
Simply put, customer acquisition is the process of 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. In order to do this, it is vital that ecommerce teams ensure they are targeting the right people.
Ecommerce sites usually run acquisition campaigns through the year (alongside frequent marketing campaigns). Throughout, it’s important to measure success using KPIs that are related to where the user is in their customer journey. For example, measuring awareness by impressions, and loyalty by repeat purchases.
The customer journey is the path and sequence of interactions customers go through when visiting a website. The path to purchase or customer conversion is no longer linear; customers enter and move through the customer journey on their own terms, using multiple devices and channels. This means that creating a consistent customer experience right through the journey is key.
Customer journey mapping
Customer journey mapping is a visual representation of every interaction a customer has 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. Essentially, by understanding how a customer interacts throughout their entire journey, marketers are then in a better position to be able to improve it.
Customer lifetime value (CLV)
Customer lifetime value is the estimated total worth of a customer to a business over the entirety of their relationship. In other words, it is the expected net profit a company can hope to gain from an individual customer. The biggest benefit of CLV is that can help companies nurture and retain the customers who will ultimately generate the most value for a company in the long-term.
Unlike a buyer persona – which is a composite representation of an important 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, and purchase history etc.
Customer retention is the process of retaining your existing customers (i.e. encouraging those who have previously converted to return again).
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 reviews are proven sales drivers, with the majority of people reportedly trusting online reviews more than they do personal recommendations from friends or family. As such, the majority of customers will always check online reviews before making a purchase online.
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.
A 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 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-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.
A discount code is a sales tactic used 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.
Dropshipping is a retail fulfillment 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 then ship items once they have been purchased by a customer.
One of the biggest benefits of dropshipping is that it involves lower overheads, as the business model takes away the burden of stocking merchandise or covering shipping costs. As such, it can be a good way to test the demand for new products before investing on a more long-term basis.
Faceted navigation is a filtering tool that allows users to select various combinations of attributes in order to narrow down their search for a product. On FeelUnique.com, for example, users can filter by brands but also product specialties, key ingredients, and offers, too.
Theoretically, the user will end up browsing a final selection that contains their desired or ideal product.
Fulfilment is the process of 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 delivering the overarching ‘promise’ of ease and convenience. Fulfilment can be undertaken in-house or through a third-party company.
The 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 frontend.
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 frontend much faster and easier.
Inventory – also known as ‘stock’ – is the physical goods that an ecommerce retailer sells (or part of the goods that it plans to sell in future).
Interactive product visualisation
Interactive product visualisations are tools that 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 in order to gain a better understanding of the product or its different features.
One example of a brand using visualisation technologies is Converse, which gives customers the opportunity to customise their shoes online. As shoppers build their customised shoe, they can turn, flip and zoom in on it – gaining a 3D understanding of what the finished product will eventually look like.
A 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 other marketing campaign.
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.
According to Shopify, logistics is defined as “the process of 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’ 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.
In her article breaking down the seven retailers at the forefront of New Retail, Rebecca Sentance explains: “With innovations like facial recognition, digital payments, rapid-fire delivery, big data, and shopping tailored to the individual, the New Retail experience is designed to be seamless, fast, and convenient. It combines the physicality and accountability of offline shopping with the speed and ease of online shopping and has breathed new life into bricks-and-mortar retail.”
A 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.
A 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 too, such as images, or subcategories relating to themes.
One example of a mega menu comes from Boohoo, which aims to quickly convert customers with its eye-catching ‘offers’ section.
Online value proposition (OVP)
An online value proposition is what helps to 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 how to use an item, or it can be something related to the customer experience, such as free shipping or returns.
On-site navigation refers to all the steps a customer must take in order to find what they’re looking for on an ecommerce website.
Econsultancy’s ecommerce best practice guide explains: “Site users can be divided into browsers and searchers. A browser is someone who uses menus or links to navigate, while a searcher goes directly to the search functionality and progresses from there. Regardless of whether the user is a browser or a searcher, they are both goal-directed: they have a specific task that they wish to accomplish and the role of the site is to help the user reach this goal.”
There are multiple tools which can help users navigate a site, such as the search box, product filters, drown-drop menus, and on-site landing pages.
A payment gateway – such as PayPal or Stripe – is the technology that processes credit card payments on ecommerce sites. Crucially, it offers the secure encryption of payment, as well as screenings for security purposes. It also gets approval from the credit card or bank and calculates tax costs like VAT.
There are a number of payment gateways protocols including ‘redirect’, which is when the ecommerce site takes a customer to a payment page to handle the complete transaction. There is also ‘checkout on-site, payment off-site’, which is when the checkout occurs on the ecommerce site, but the payment processing happens through a gateway such as Stripe. Finally, there is ‘on-site payment’, which is when checkout and payment processing on behalf of the ecommerce customer is done by the ecommerce business itself.
PCI compliance is a set of industry regulations set up to protect ecommerce companies against data breaches. Essentially, it ensures that ecommerce companies are able to safely and securely accept, store, and process cardholder data during a transaction. Any merchant that accepts credit card payment needs to be PCI compliant.
The opportunities afforded by personalisation within ecommerce are vast. But in short, the term encompasses the aim of giving customers an individualised online experience based on their unique characteristics, demographics, and data (including previous purchases, persona, interests, search, and buying behaviour).
Good examples of personalisation include marketing emails targeting a specific user behaviour (such as abandoning a basket), or recommendations based on real-time data (such as location or time).
A 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 to seamlessly sync online and offline sales data.
Product 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, reviews. They can also be ‘category-specific’ and can apply to individual product categories, and are commonly used to differentiate and compare two products in the same category.
A product description is the copy that explains more about a product and its features. Its aim is to inform and persuade the customer to buy, which is why the most effective examples bring to the life the benefits of the product rather than plainly stating what it is.
Product details page
A 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 (including title or brand, price, features), product photos, similar product suggestions, social proof, and a clear call-to-action.
Product 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 filters are an interactive element of ecommerce user experience that help to reduce a large product range to a smaller selection, and allow the user to focus on the products they are interested in.
Product listings page
A product listings page – also known as a category page – lists multiple products within the same category. On fashion ecommerce sites, for example, this could be ‘women’s tops’ or ‘jeans’. These pages typically include filters to allow the user to narrow down the category into specific product features, such as ‘size 10’ or ‘black’.
A 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 engine technology shows generates 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.
Scarcity is a sales technique based on the threat of loss, which is often more powerful than the prospect of gaining something of equal value. Product and category pages typically imply scarcity based on number of items in stock or an offer that is running out.
Some ecommerce companies have been criticised for effectively misleading the customer with scarcity (e.g. failing to end promotions after the countdown clock has hit zero).
Segmentation is the practice of dividing potential customers into different groups based on different characteristics and traits. Different segments can include demographics (e.g. based on age or gender), behaviours (e.g. past purchases or abandonment) or psychographics (personal beliefs or values).
Just like a product OVP (online value proposition), a service OVP is designed to differentiate an ecommerce company’s service, in order to convince the customer to choose the brand over a competitor.
AO.com’s service OVP is “free 100-day returns”. The use of 100 instead of 365 might seem less appealing, but it is unique, and still a sufficiently large enough number to be reassuring.
An ecommerce shopping cart is a piece of software that facilitates the customer’s order. However, it is also used as a memory aid that allows the customer to remember and access items of interest.
A sitemap collates all the pages on an ecommerce site into categorised links. From a user perspective, it can help to aid product discovery, taking away the need to enter keywords into the search bear or browse via category pages. A sitemap is also used by search engines like Google to index a site and understand its architecture.
Social commerce refers to the ability to make a purchase 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.
In China, social commerce is arguably more mature thanks to an ecosystem of super apps and high mobile penetration. Pinduoduo is a notable social commerce app which offers discounts for users who buy as a group.
Social proof is based on the theory that people will look to others and be influenced by their behaviour in order to copy them. The more people that are doing or saying the same thing, the greater the likelihood is that an individual will follow suit.
Ratings and reviews can act as social proof, as can user generated content (which signifies an appreciation of a brand or its products). One of the best examples of social proof can also be found on Booking.com, which lets you know that “X other people looked for your dates in the last 10 minutes”.
SSL stands for ‘secure sockets layer’ – an online protocol that provides greater online security. A SSL certificate (which is represented by a padlock) signifies that a secure connection has been made and that all transmitted data on the site is encrypted.
Vertical (or curated) marketplaces enable tailored online shopping experiences, by providing access to a base of customers online, along with consumer and product data insights in terms of customer tastes and preferences.
One example of a vertical marketplace is Lyst.com, which serves fashion retailers and customers. Each fashion brand selects the collection of fashion items it makes available through Lyst to give retail customers the feeling of browsing a curated fashion collection.
Urgency 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).
Black Friday is a broad example of urgency in action, as it instils the notion that the customer must buy now or miss out on a good deal.
User experience (UX)
Jakob Nielsen, a prominent UX consultant, defines UX as something that “encompasses 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 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 would normally write in a search, as well as 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%.
If visual search allows customers to search by photo, voice search allows the customer to do so by using 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’.
You can find more on voice search in Econsultancy’s ‘Getting to Grips with Voice Search’ report.
Wish 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, family, or on social media.