17 ecommerce terms you need to know before starting your business

17 ecommerce terms you need to know before starting your business

Wednesday 5th August, 2020

Every industry has its own unique language and understanding your industry’s lingo becomes especially important if you’re an ecommerce startup. Because of the digitally native aspect of the ecommerce world, there are a number of elements that can help you succeed in growing your business, if you understand what they are and how they work.

The following list is not exhaustive but should give you some insight into the various aspects to pay attention to when starting your ecommerce business.

A/B Testing

Noone can ever say for certain whether something is going to work or not so trying out different versions of ad copy or a few versions of a webpage and then seeing which attract and convert more sales works will help you make better business decisions.

Affiliate Marketing

This is a 3rd party marketing process where a publisher and advertiser join forces to market a product or service. In this case, you’re the advertiser. Essentially, by using someone else’s existing audience you can start to generate more leads for your business, you simply agree on a fee for every link clicked with the publisher.

Attribution Model

In Google Analytics, you’re able to see which channels contribute most to your traffic and sales. Channels can be direct, organic search, referral, email, paid search, social, or display. Attribution is usually awarded to the last channel the user was on before visiting your site.

Bounce Rate

This is the percentage of visitors who leave your site after only visiting one page. You want to work to keep your bounce rate as low as possible as, generally speaking, the more time a user spends on your site, the higher the rate of conversion.

Cart Abandonment Rate

An online shopping metric used to show the rate of potential customers who leave a site before completing a purchase when they have already added items to their cart. If you experience a high rate of abandonment, you should consider reasons why people are leaving before purchasing. Small tweaks could help lower this rate.

Click-To-Open-Rate (COTR)

Email marketing is a powerful tool to help your new business grow and to foster relationships with new and established customers. A COTR measures your email marketing campaign’s effectiveness to make users perform a specific task, like clicking through to find out more about a new product.

Cross Selling

Technology exists that will show your visitors items that are similar to those they are currently looking at. Ever seen the “you might also like…” part at the bottom of an ecommerce website? That’s cross-selling.

Call-To-Action (CTA)

A CTA is a phrase that attempts to persuade a visitor to take a specific action. These vary from getting a user to contact you, to buy a product, to request more information. They are an important part of any ecommerce business and the clearer they are to understand, the higher your potential rate of conversion will be.


A critical component of the online world where the ultimate goal for any ecommerce business is to drive sales. Conversion means converting a generic user to either a customer (a sale) or a potential customer (a request for a quote / a phone call). All conversions are important and should be treated as such.

Conversion Funnel

If you consider the shape of a funnel, a conversion funnel shows the journey a user would make to ultimately get to a specific point. The large part of the funnel shows that there are numerous entry points but they all end up at one point of your choosing. Your communication along the conversion funnel is critical to get the user to take each step forward.

Drop Shipping

A process where an online store works with wholesale suppliers of various products. When an order is made, the online store sends the shipping detail to the wholesaler who arranges for delivery.

Event Triggered Email

You can set up automated emails to go to specific users with a highly targeted message. These could be birthday coupons or follow ups when they haven’t visited your store for a while. It’s a powerful way to build one-on-one relationships, just be careful not to spam your users too often.


Also known as the payment gateway, this is the platform that processes the transfer of data between the user’s bank account and your website and enables the sale transaction to occur. It would be a good idea to allow a number of payment gateways on your site that suit a wide range of user preferences.

Pay-Per-Click Marketing (PPC)

This is the process of buying site visitors to increase traffic and is commonly done through search engines. Think Google AdWords, you pay when someone clicks on your ad after they have searched for something that you offer and / or do.

Path Length

Also known as Time Lag. In Google Analytics, this shows how long, in interactions, it takes visitors on your website to become customers. The data is powerful if you use it correctly. See A/B Testing above. 

Payment Card Industry (PCI) Compliance

A set of requirements to ensure you protect the credit card details of your customers when storing, processing and transmitting them.

Stock Keeping Unit (SKU)

A unique alphanumeric identity code given to each product or service that you offer in your business inventory. Makes stock take and procurement a little easier, especially if some items have similar sounding names.

These terms can seem overwhelming, however, the beauty of growing an ecommerce business from scratch is that you will get to understand each of these terms in precise detail, plus more. Your only requirement is to start your online business and learn as you go. If you ever do get stuck, there are myriad online resources for startups just like yourself all over the internet. 

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