Ecommerce Glossary

Want to sell more products from your store and increase the average order value? Our Shopify experts have the best product bundling strategy for you.
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Bundling
SEO and SEM
eCommerce
Discounts
Customer Engagement
Checkout
Analytics
Advertising and Marketing
Logistics and Fulfilment

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Bundling
SEO and SEM
eCommerce
Discounts
Customer Engagement
Checkout
Analytics
Advertising and Marketing
Logistics and Fulfilment

Term of the Day

Abandoned Carts

A/B testing, also known as split testing, is a method for comparing two versions of marketing content to determine which performs better. In an A/B test, versions A and version B are created, with one key difference, such as a different headline, button color, or layout. One version is shown to the first half of your audience and the other version to the rest. Then, you see which version gets better results, like more clicks or purchases. This data further helps you to improve your website, increase sales, and create a better user experience.

A

Ad Sets

An ad set is a group of ads within a larger advertising campaign. They let you group ads with a similar target audience, budget, placement, and timing. This lets you easily manage your campaign and test different approaches to see what works best. Ad sets are commonly used in online advertising platforms like Instagram Ads, Google Ads, and others. By using ad sets effectively, you can increase the reach and impact of your advertising campaigns.

A

Abandoned Cart

An abandoned cart, also known as shopping cart abandonment, happens in online shopping when a customer adds items to their shopping cart but leaves the website before completing the purchase. Studies show that the average cart abandonment rate is around 70%, meaning for every 10 people who add something to their cart, 7 will leave without buying. Cart abandonment can happen for various reasons, like unexpected shipping costs or a complicated checkout process. Online stores use strategies like simplifying checkout, offering clear pricing, and sending reminder emails to recover abandoned carts.

A

Address Validation

Address validation, also known as address verification, is the process of checking the accuracy and deliverability of customer-entered addresses during checkout. It is done by verifying customer information (address, Pincode, etc) against databases to ensure they exist and are deliverable. By implementing address validation, eCommerce businesses can create a smoother and more efficient checkout process for their customers. This reduces errors, failed deliveries, RTO, fake orders, chargebacks, refunds, and returns, saving businesses time and money on reshipments.

A

Ad Spend

Ad spend, short for advertising spend, refers to the total amount of money a business invests in promoting its products or services through advertising. This investment can be spread across various channels, including social media, search engine ads, and traditional avenues like television commercials or print media. By analyzing ad spend data, businesses can determine which channels, creatives, and targeting strategies deliver the best return on investment (ROI).

A

Affiliate Marketing

Affiliate marketing is a performance-based advertising strategy where businesses reward affiliates (publishers or promoters) for traffic or sales generated through their marketing efforts. Think of it as a commission-based partnership where affiliates earn commissions for every customer they bring in. Affiliates typically promote products or services they like to a targeted audience, using methods like blog posts, social media posts, or video reviews. When a customer clicks on a unique affiliate link and makes a purchase, the affiliate earns a commission. Businesses gain access to a wider audience and sales, while affiliates earn money by promoting products they believe in.

A

AOV: Average Order Value

AOV, which stands for Average Order Value, is a key metric in eCommerce that tells you the average amount a customer spends per order. In simpler terms, it tells you how much money customers bring in on average with each purchase. AOV is calculated by dividing your total revenue by the number of orders within a timeframe. The AOV formula is: AOV (Average Order Value) = Total Revenue / Number of Orders Placed A low AOV suggests customers buy small items often, while a high AOV might mean they buy in bulk or splurge on bigger purchases.

A

ASP

In eCommerce, ASP (Average Selling Price) refers to the average amount a customer pays for your products. It's a key metric for understanding your revenue generation and pricing strategy. ASP is calculated by dividing your total revenue from product sales by the number of units sold during that period. For instance, if you sold ₹10,000 worth of products and 20 units in a month, your ASP would be ₹500 (₹10,000 / 20). By understanding ASP, you can make informed decisions about pricing, promotions, and product offerings to optimize your eCommerce business.

B

BFCM

BFCM stands for Black Friday and Cyber Monday. It's a major shopping event that marks the unofficial kick-off to the holiday shopping season. Black Friday, the day after Thanksgiving in the United States, traditionally focuses on online deals, while Cyber Monday, the following Monday, is known for mega online sales. BFCM has become synonymous with huge discounts, promotions, and deals offered by retailers both online and in brick-and-mortar stores. BFCM has grown into one of the biggest shopping events globally, making it a prime time for both shoppers and businesses.

B

Bounce Rate

Bounce rate refers to the percentage of visitors who land on your website and leave without taking any action, like browsing other pages, adding items to their cart, or making a purchase. They essentially "bounce" away after viewing just a single page. A high bounce rate may indicate potential issues for your eCommerce website/store such as confusing website layout, slow loading times, or missing information that visitors are looking for. The average bounce rate for e-commerce websites falls between 26% and 40%.

B

Bundles

Bundles are groups of multiple products sold together at a discounted price. These products are usually complementary, meaning they go well together (like a phone case and screen protector). They can include product bundles, mix-and-match options, product and service combinations, or time-limited offers. For example, an online store might also bundle similar items (multiple t-shirts) at a discount to clear inventory. Bundles benefit eCommerce businesses by increasing average order value and moving inventory while providing customers with added value and convenience.

B

Buy Button

A "buy button" is a clickable button on eCommerce websites and platforms that allows buyers to quickly and easily purchase products with a single click. Buy buttons can also be placed on social media posts and emails, allowing customers to buy on the spot without ever leaving the page they’re on. A buy button typically appears next to a product listing or description, inviting buyers to make a purchase. For businesses, buy buttons are a great way to streamline the buying process and potentially boost sales by reducing the chance of someone abandoning their cart before checkout.

B

BOGO or Buy X Get Y

BOGO stands for "Buy One, Get One". It's a popular sales promotion strategy where you purchase one item at the regular price and get another item, often identical, for free or at a significantly reduced price. The goal is to entice customers to buy more by offering a seemingly unbeatable deal. BOGO is an effective way for eCommerce stores to encourage customers to buy more, try a new product, increase sales, or clear out excess inventory.

B

Buy X Get X

Buy X get Y is a marketing promotion strategy where eCommerce stores offer a discount or free item (Y) to customers when they purchase a certain quantity (X) of another product or spend a specific amount. This quantity can be a specific number (like "Buy 2 shirts") or a minimum spending amount. The reward (Y) can be a free item, a discount on more items, or even free shipping. Buy X get Y discounts help stores boost sales by encouraging customers to buy more, clear inventory by bundling slow-selling items, and introduce new products by offering them at a discount with familiar ones.

B

Buyer Persona

A buyer persona, also called a customer persona or marketing persona, is a detailed profile of your ideal customer. It's a fictional character based on market research and real data about your existing customers. Buyer persona captures their demographics, behavior patterns, motivations, goals, and challenges to provide a complete understanding of who they're selling to. By understanding your buyer persona's motivations and pain points, you can tailor your entire eCommerce experience to resonate with them. This can involve everything from the products you offer to the marketing messages you craft.

C

Campaign Tracking

Campaign tracking is the process of monitoring and measuring the performance of your marketing efforts to assess their effectiveness and ROI (Return on Investment). It involves tracking various metrics like traffic sources, user engagement, and conversions to understand how effectively campaigns reach target audiences and achieve desired outcomes. This data helps eCommerce businesses to make informed decisions, optimize campaigns, allocate resources strategically, and maximize the impact of their marketing efforts to achieve their overall business objectives.

C

Campaign

A campaign is a coordinated series of activities and efforts aimed at achieving specific objectives within a set timeframe. In eCommerce, a campaign refers to a strategic marketing initiative designed to achieve specific goals within a defined timeframe. These goals could include increasing sales, promoting a new product or service, driving website traffic, or generating leads. eCommerce campaigns often involve various marketing channels and tactics, such as email marketing, social media advertising, search engine optimization (SEO), pay-per-click (PPC) advertising, content marketing, influencer partnerships, and more.

C

CAC

Customer Acquisition Cost (CAC) refers to the amount of money a business spends on acquiring a new customer. This includes all the expenses involved in marketing, sales, and any other efforts that lead to a customer making a purchase. To calculate CAC, simply divide the total costs associated with acquiring customers (such as marketing expenses, sales team salaries, advertising costs, etc.) by the number of customers acquired within a specific period. The CAC formula is: CAC = (Cost of sales + cost of marketing) / New customers acquired For example, if a company spent $10,000 on marketing & sales efforts in a month and acquired 100 new customers during that same period, the CAC would be $100.

C

Cart-Conversion Rate

Cart conversion rate, also known as shopping cart conversion rate, is a key metric in eCommerce. It essentially tells you what percentage of shoppers who add items to their online shopping cart actually follow through and complete the purchase. In other words, it measures how effective your online store is at converting browsers into paying customers. For example, if 100 people add items to their carts but only 10 people end up buying them, your cart conversion rate for that period would be 10%. The average cart abandonment rate globally sits around 69.82% A high cart conversion rate indicates a smooth checkout process and a trustworthy online store that convinces visitors to turn into buyers.

C

Cashback

Cashback refers to a way for customers to earn a portion of the money they spend back on their purchases. Instead of complete money back, customers earn a percentage of the purchase as cashback. There are two ways to earn it: through cashback websites or retailer loyalty programs. Cashback websites partner with stores and offer rewards for clicking through their links before shopping. Retailer programs offer cashback directly for purchases on their site. Overall, cashback is an incentive for shoppers to choose one store or online platform over another.

C

Chargeback

A chargeback is a process where a customer disputes a charge made by an online store and seeks to get their money back. It's essentially a reversal of a transaction due to fraud, undelivered items, defects, or duplicate charges, acting as a form of consumer protection. Chargebacks can be a hassle for both the customer and the business. The customer has to go through the process of disputing the charge, and the business loses the sale and incurs a fee. However, chargebacks can be minimized by good customer service, fast shipping, clear return policies, and prompt refunds.

C

Checkout

Checkout is the final stage where a customer confirms their online shopping basket and completes the purchase. It's similar to the cashier lane in a physical store, but online. Customers typically review their cart items, provide shipping and billing information, choose a payment method, and receive confirmation upon successful payment. A smooth and user-friendly checkout experience is important to avoid cart abandonment and boost sales.

C

Click to Open Rate

Click-to-Open Rate (CTOR) is an email marketing metric that measures how engaging your emails are. It specifically looks at the percentage of people who open an email and then click on a link within that email. To calculate CTOR, divide the number of unique clicks by the number of unique opens and multiply by 100. For example, if your email gets 200 clicks and 250 opens, your CTOR will be: CTOR = (200/250) x 100 = 80% By tracking the CTOR, you can know how well your email content resonates with your audience and identify areas for improvement. This helps you refine future email marketing campaigns for better results.

C

Churn

Churn, also referred to as customer churn or subscriber churn, is a business metric that measures the rate at which customers stop doing business with a company within a certain time frame. It's a key metric that reflects how well a business retains its customer base. A high churn rate indicates that a business is losing customers faster than it can acquire new ones. This can be a serious problem, as it can lead to stagnant or declining revenue. Online businesses aim to keep their churn rate low by providing value and a positive customer experience.

C

Checkout Extensions

Checkout extensions are tools specifically designed for Shopify Plus stores to customize and enhance the checkout experience for their customers. These can be anything from gift wrapping to loyalty programs, all aimed at making the checkout smoother and more customized for better sales. Checkout extensions are built into apps, ensuring a safe way to modify the checkout. This means they run separately from the core checkout page and other extensions, minimizing security risks and compatibility issues with future updates.

C

Content Management System (CMS)

A Content Management System (CMS) is a software tool that helps users create, manage, and edit website content without having to write code or understand web development languages. It’s a user-friendly platform for managing your website's content including text, images, videos, and other multimedia elements. Popular CMS platforms include Webflow, WordPress, Joomla, Drupal, and Wix, among others.

C

Content Marketing

Content marketing is a strategic marketing approach focused on creating and distributing valuable, relevant, and consistent content to attract and retain a clearly defined audience. It includes creating various types of content like blog posts, videos, and social media posts, distributing it across different channels, and measuring its impact on business goals. To put it simply, content marketing is like having a long-term conversation with your target audience. You're offering them helpful information, solving their problems, and ultimately, positioning yourself as the go-to choice when they're ready to buy. Overall, content marketing is a long-term strategy for building trust and brand awareness, ultimately leading to more sales.

C

Conversion Funnel

A conversion funnel, also known as a sales or marketing funnel, is a visualization of the customer journey toward a business's desired action, like a purchase. It includes stages like awareness, interest, consideration, intent, and conversion. The conversion funnel narrows as prospects move through each stage, with the ultimate goal of converting them into customers. Understanding the conversion funnel helps businesses improve their marketing strategies to increase conversion rates and drive revenue growth.

C

Contribution Margin

Contribution margin is a key metric that tells a business how much money each sale contributes to covering its fixed costs and profit. It’s calculated by subtracting variable costs (expenses that change with sales volume) from sales revenue. This leftover amount essentially contributes to paying for fixed costs (expenses that stay the same regardless of sales) like rent and salaries. Businesses use contribution margins to measure profitability, make pricing decisions, and perform break-even analysis.

C

Conversion Rate

Conversion rate refers to the percentage of website visitors who take a desired action. This action could be anything from making a purchase (the most common goal) to signing up for an email list, downloading a brochure, or creating an account. For example, if 100 people visit your online store and 10 of them end up buying something, your conversion rate would be 10%. Higher conversion rates mean you're convincing more visitors to do what you want them to do. The average e-commerce conversion rate typically falls between 2.5% - 3%.

C

Cookies

Cookies are small data files that websites store on your device, like your computer or phone. These files contain data such as user preferences, login information, browsing history, and other relevant information. Cookies can be session or persistent, and first-party or third-party. They are a common way for websites to remember information about your visits and make your browsing experience more convenient. Overall, cookies help with features like staying logged in, personalized recommendations, and remembering settings but also raise privacy concerns. Hence, many websites provide cookie consent notices and allow users to manage their cookie preferences.

C

Cost-Per-Click (CPC)

Cost-per-click (CPC) is an advertising model used online where you pay for advertising based on the number of people who actually click on your ad. It's used in platforms like Google Ads and Facebook Ads. Advertisers set a maximum bid for clicks, and they're charged only when a user clicks on their ad. Here's the formula for calculating CPC: CPC = Total ad cost / Total number of clicks So, let's say you spend $100 on your ad campaign and get 200 clicks. Your CPC would be $100 divided by 200, which equals 50 cents per click A lower CPC generally indicates a more successful ad campaign, as you're getting more clicks for your money. CPC is a popular option for online advertisers because you only pay for results. It's a good way to target potential customers who are already interested in what you offer.

C

Coupon Discounts

Coupon discounts are a marketing strategy that offers customers a reduction in the price of a product or service. They come in various forms like percentages off, fixed-amount reductions, or even free shipping. For example, a 10% coupon discount would reduce the price of a $100 item by $10, to $90. Coupon discounts are used to attract new customers, encourage larger purchases, or clear out slow-moving inventory.

C

CRM

CRM stands for Customer Relationship Management. It's a tool, often software, that helps businesses manage all their interactions with customers and potential customers. CRM is like the central hub for all your customer information and interactions. A CRM system helps businesses track sales leads, manage customer service interactions, and analyze customer data. This can help businesses improve their relationships with customers, streamline sales processes, and ultimately boost their bottom line.

C

CRO

CRO, or Conversion Rate Optimization, is the process of improving the percentage of website visitors who take a desired action, like making a purchase, signing up for a newsletter, or downloading a file. It involves analyzing data, conducting tests, and optimizing elements such as user experience, content, and conversion funnels to increase conversion rates and drive better results. CRO helps businesses get more value out of their existing website traffic. By increasing conversions, they can boost sales, generate more leads, and ultimately grow their business.

C

Cross Selling

Cross-selling is a sales strategy that focuses on selling related or complementary products to an existing customer. It targets existing customers who already trust the brand. For example, recommending a phone case or screen protector with a mobile phone purchase. The goal of cross-selling is to increase the customer's overall purchase value and provide them with a more complete solution. It can also be a way to boost customer satisfaction by ensuring they have everything they need.

C

CTA

CTA stands for a call to action. In marketing, it refers to any prompt that directs the audience to take a specific step. CTAs are typically designed using strong verbs and clear language that entices the audience to act. They can be found in various marketing materials like websites, email campaigns, or social media posts. The ultimate goal of a CTA is to nudge the audience towards a conversion, which could be a sale, a sign-up, a download, or any other action that aligns with the marketing objective.

C

CTR: Click Through Rate

CTR stands for Click-Through Rate. It's a metric used in marketing and advertising to measure the effectiveness of an ad or campaign. It tells you what percentage of people who see your ad actually click on it. CTR is calculated by dividing the number of clicks by the number of impressions, and then multiplying by 100 to express it as a percentage. So, for example, if your ad gets shown 100 times (impressions) and 5 people click on it, your CTR would be 5%. The average CTR in e-commerce is around 2.69%. However, a "good" CTR can change depending on the specific marketing channels.

C

Customer Review

A customer review is an evaluation of a product or service written by someone who has actually purchased and used it. It's basically a customer's feedback on their experience with a business. They can be positive, negative, or neutral, and they often include a rating system along with written comments. People rely on customer reviews to learn more about products and services before they buy. A customer review can be a great source of honest feedback about the pros and cons of a particular product. Businesses also use them to understand how customers feel and improve their offerings.

C

Customer Retention

Customer retention refers to the ability of a business to retain its existing customers over a period of time. It is a measure of how successful a business is at preventing customers from switching to competitors and encouraging them to make repeat purchases or continue using their product or service. This involves strategies and efforts aimed at keeping customers satisfied, engaged, and loyal to the brand, leading to repeat purchases and long-term relationships. By prioritizing customer retention, businesses can ensure long-term loyalty, reduce churn, and maintain stable revenue streams.

C

Customer Journey Mapping

A customer journey map is a blueprint that visually shows a customer's experience with your brand. It tracks their interactions, thoughts, and emotions throughout their relationship with your product or service across various touchpoints. The goal of a customer journey map is to help businesses understand their customers better. By seeing the journey from the customer's perspective, businesses can identify areas for improvement and create a more positive and seamless experience. It allows them to tailor their marketing, sales, and support strategies to better meet customer needs at each stage.

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Customer Retention Rate

Customer retention rate is a metric used by businesses to measure the percentage of customers that they retain over a specific period of time. It's calculated by taking the number of customers at the end of a period (E), subtracting the number of new customers acquired during that period (N), and then dividing that result by the number of customers at the start of the period (S). CRR = ((E-N)/S) x 100 A high customer retention rate is generally considered good because it indicates that you're providing value to your customers and they're happy doing business with you. The average customer retention rate in e-commerce is around 38%.

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Customer Account

Customer accounts are like digital profiles that store your history with a company. These profiles typically store key details like name, contact information, and purchase history. It allows businesses to track past interactions, personalize future experiences, and streamline communication. For customers, this means faster checkouts and easier order tracking, making shopping more convenient and tailored to their interests.

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Customer Journey

The customer journey is the entire experience a person has with a brand, from initial awareness to after-sales service. It includes all the interactions, right from the moment they first become aware of your product, all the way through to post-purchase stages, across different touchpoints. These touchpoints can be anything from online ads to in-store experiences to customer service calls. The key to understanding the customer journey is to see it from the customer's perspective. What are their thoughts, feelings, and pain points at each stage? By mapping out these touchpoints, businesses can identify areas for improvement and ensure a smooth, positive customer journey that fosters loyalty and drives growth.

A

A/B Testing

A/B testing, also known as split testing, is a method for comparing two versions of marketing content to determine which performs better. In an A/B test, versions A and version B are created, with one key difference, such as a different headline, button color, or layout. One version is shown to the first half of your audience and the other version to the rest. Next, you compare which version leads to more desired user actions, such as clicks or purchases. This data further helps you to optimize for conversion, increase sales, and create a better user experience.

3PL: Third-Party Logistics

Third-party logistics, also known as 3PL, refers to outsourcing logistics and supply chain operations to a specialized company. A 3PL handles all or some of the storage, transportation, and fulfillment tasks involved in getting products from the manufacturer to the customer. This includes warehousing, inventory management, packaging, and shipping. By using 3PL providers, companies can streamline their supply chains, improve efficiency, reduce costs, and focus on their overall growth.
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