25 E-commerce terms everyone should know

If you are new to e-commerce, using all the terms and abbreviations might cause you a headache. We have been in e-commerce for years but still encounter terms we haven’t heard before. But to help you get started in the world of e-commerce, we compiled a glossary of terms everyone should know. We also added examples that will help to explain some of the terms. So feel free to use them to look smarter when you get into a conversation about e-commerce.

Average Order Value (AOV): the average amount customers spend at your store, calculated by dividing your total revenue by the number of orders. This metric provides valuable insight into the success of your business and helps you make informed decisions about pricing and marketing strategies.

B2B (business-to-business): a business model where one business sells products or services to another business. B2B online stores refer to online stores that serve other businesses as primary customers. B2B stores usually have different pricing setups (e.g., bulk pricing) and payment solutions (e.g., invoicing) than B2C stores. If you are considering starting your own online store, consider a B2B store as an option, as it’s usually less crowded than B2C.

B2C (business-to-customer): a business model where a business sells products or services directly to the end user. It is estimated that there are over 24 million online stores worldwide, most of them B2C stores. 

Bounce rate: a measurement of the percentage of website visitors who leave the site after viewing only a single page. It reflects the proportion of people who visit the site and then leave without interacting with any other pages or content on the site. 

Cart Abandonment Rate: a metric that measures the percentage of shoppers who add items to their cart but do not complete the purchase. 

Checkout: the series of steps a customer follows when purchasing a product. This typically includes confirming orders, adding billing and shipping information, and providing payment details.

Conversion rate: a measure of the number of visitors to a website who make a desired action, such as purchasing or signing up for a newsletter. It is calculated by dividing the number of completed purchases by the total number of visitors during the same period.

Cross-selling: a strategy for increasing sales by recommending additional, related, or complementary products that customers may have yet to think of themselves. For example, if you’re shopping for boots, you might be interested in a leather moisturizer and brush. It also improves your shopping experience.

Customer acquisition: the process of acquiring new customers for a business. In e-commerce, this is usually measured by website traffic volume.

Customer Lifetime Value (CLV): a measure of the overall value customers are expected to bring to a business over the entire course of their relationship with the company.

Customer retention: the process of retaining customers for repeat business instead of losing them to another company. It’s also sometimes called customer loyalty or customer retention rate.

Dropshipping: an order fulfillment method where a store does not keep the products it sells in stock. Instead, sellers purchase inventory from third-party vendors (usually wholesalers or manufacturers) as needed to fulfill orders. In short, after purchase, the order goes directly to the end customer. Drop shipping has many benefits, including less upfront capital and making it easier to test new products in your online store. Most of the products we offer at Hertwill are available for drop shipping.

E-commerce: a business model that includes selling and buying goods and services over the internet. It allows businesses to reach a wider audience and sell products and services to customers anywhere in the world.

Fulfillment: the process of getting an online order delivered to the customer. This typically involves managing inventory, selecting and packing products, and arranging their shipment to the customer.

Inventory: refers to the physical goods a business has available for sale on its online platform. It includes all the products the business has in stock and is ready to sell to customers.

Marketplace: An online platform that allows third parties to sell their products. Marketplace operators facilitate transactions, while participating merchants are responsible for delivering and fulfilling orders.

Omnichannel: refers to a seamless customer experience that allows customers to shop across multiple channels, such as in-store, online, and through mobile devices, without experiencing any disruption.

Payment Gateway: the software that an e-commerce website uses to process payments. The link between the website and the financial institutions actually processes the transactions.

PPC (pay-per-click advertising): a form of online advertising where you only pay when someone clicks on your ad.

SEO (search engine optimization): improving a website’s visibility in search engine results in pages and driving organic, non-paid traffic to the site. The more your page appears in search results, the more visitors you get.

Social commerce: a term used to describe the act of shopping through social media platforms. This can include discovering and researching products, making purchases, and leaving reviews, all through platforms like Facebook, Instagram, and TikTok.

Shopping cart: a virtual “basket” of products that you add to your cart while shopping online.

Traffic: the number of visitors to your website, which is often determined by how many people visit your website and how long they stay.

User Experience (UX): the term used to describe how customers interact with your company, product, or service. It’s all about ensuring that the things you do to improve your site’s function, look and feel or add new features don’t impact how easy it is for users to find what they’re looking for and complete their tasks.

Upselling: a sales tactic in which a seller encourages customers to spend more money than they initially intended by suggesting a higher-priced product or an add-on.