Ecommerce glossary

ACH payments (automated clearing house)

In America, the Automated Clearing House is responsible for securely processing financial transactions electronically. For e-Commerce firms and their customers this is vital, due to both parties relying on its services when consumers enter their bank account information into merchants’ websites.

Ad spend

Without physical shops to catch the eyes of consumers, ecommerce stores rely heavily on digital advertising. Inevitably, this incurs a cost. No matter whether it is via paid ads on Facebook, Google Search ads, or sponsored listings on Google Shopping, collectively this expenditure is summarised as ad spend.

Affiliate marketing

Ecommerce firms aren’t solely reliant on digital advertising to get their business known. In addition, they can partner with affiliates. This type of marketing sees content creators such as influencers promote their gods and refer people to their site. In return, affiliates receive a commission of sales which they enable.

Amazon Pay

Developed by Amazon.com and launched in 2007, Amazon Pay is an online payment processing service.

Apple Pay

Launched in 2014, Apple Pay is now available on iPhones, iPads, and Apple Watches as a mobile payment and digital wallet service. Along with allowing users to store credit and debit card information, they can also use it to make contactless payments.

Business to Administration (B2A)

When private companies provide goods or serves to government agencies or public institutions, they engage in a type of commerce known as B2A.

Business to Business (B2B)

Instead of selling their goods or services to individuals, those which sell to other businesses are involved in a type of commerce known as B2B.

Business to Consumer (B2C)

Businesses that sell directly to individual consumers operate in the space of B2C commerce.  

Cart abandonment

If a consumer adds an item to their online basket with the intent to make a purchase but fails to do so, this is known as cart abandonment.

Chargeback

If a customer has an issue over a payment, product, or service, they can command their bank to issue a chargeback on their behalf. This results in the transaction being reversed. If a seller wishes to dispute the action, they can.

Consumer to Consumer (C2C)

Via online platforms such as marketplaces, individuals can now buy and sell products or services to one another. This type of commerce is known as C2C.

Cost-per-click (CPC)

To understand their ad spend, ecommerce businesses must look to their CPC which is the total they pay the likes of Google and Facebook every time that someone clicks on their advert.

Customer lifetime value (CLV)

The total which an individual spends with a business over the entire relationship with said business is totalled up to measure their customer lifetime value.

Data loss prevention (DLP)

Operating in a digital space which is used by millions every day, ecommerce firms store a lot of personal data. They therefore must employ policy enforcement tools and/or encryption technology to prevent access to such data.

Digital wallets

Sometimes referred to as an e-wallet, digital wallets electronically and securely store payment details and passwords so that consumers can make purchases quickly online or via their smartphones with NFC technology. Examples such as Google Wallet work by linking to a consumer’s bank account or having funds deposited into them.

Direct to Consumer (D2C)

When a business controls the entire operations from manufacturing all the way through to distribution whilst also being responsible for managing relationships with consumers, their business model is known as D2C due to them bypassing traditional retail channels.

Dropshipping

To avoid having to retain stock which might never sell, some e-Commerce retailers employ a method known as dropshipping. This means that they have no warehouse facilities. Instead, whenever an order is placed via their lone store, they then purchase the necessary product from a third-party supplier and have it shipped direct to their customer.

Encryption

By encoding digital information with cryptography, only authorised parties can access it. This process is known as encryption.

Fraud protection systems

Whilst reconciliation can help spot fraud, it can’t detect it. That’s why it is always best for ecommerce firms to deploy fraud protection systems.

Google Wallet

Launched three years before Apple Pay, Google Wallet achieves the same as Apple Pay for Android devices.  

Identity access management (IAM)

Ecommerce firms have access to a variety of data, some of which should be more secure than others. As a result, an IAM allows organisations to easily define permissions which people within a business have in terms to accessing and using different applications and systems.

Incoterm

Any company – including e-commerce businesses – which has overseas customers or suppliers are regulated by the International Chamber of Commerce (ICC). As such, they must abide by their published rules, the International Commerical Terms. Individual terms from this rulebook are often referred to as an incoterm.

Inventory

Stock of goods which a company has at their disposal ready for sale or distribution is known collectively as their inventory.

Inventory management

To ensure that no customer is disappointed with an unfulfilled order due to payment being taken for an item when stock levels are at zero with no prospect of it being revived, e-commerce firms and other businesses engage in inventory management. It involves everything to ensure that inventory is accounted for correctly and managed effectively such as tracking product availability, stock levels, storage capacity, and forecasting future demand.

Inventory turnover rate

Once a company sells and replaces its entire inventory, their stock turn is complete. The length of time this takes is their inventory turnover rate. The lower that it is, the higher the more frequently they make sales and the greater their cash flow.

Lead time

From the moment that an order is placed to the point that it is delivered to the customer, a business’ lead time is ticking. Companies tend to measure their average lead time across all products they sell; however, if the logistics of their stock varies greatly, they might to choose to measure lead time based on individual items.

Logistics

In order for products to transport from one location to another, logistics take place. This involves planning shipments, the actual movement of goods, and ensuring that goods aren’t damaged, so that they are received by customers on time and in an expected state.

Marketplace

Providing an online space for trading like traditional brick-and-mortar shops would, marketplaces are the modern-day equivalent of the high street thanks to them rarely facilitating the buying and selling of one type of product but usually many to reflect the greater mixture of people catered for online.

Mobile commerce (M-commerce)

Mobile devices such as smartphones can do many amazing things and one of them is facilitating the buying and selling of goods. With mobile capabilities being so vast, mobile commerce covers a range of activities such as purchases completed on mobile-optimised apps as well as those via mobile payment systems such as Google Pay.

Omnichannel

Providing customers with a seamless shopping experience across various touchpoints and channels, an omnichannel commerce strategy is something which many businesses aim for thanks to the engagement it drives. It works best when businesses have a presence across social media platforms, apps, and physical locations.

Online to Offline (O2O)

As the name suggests, online to offline commerce sees buyers utilise online methods to search for, order, and pay for goods and services which are fulfilled in real life.

Order tracking

Ecommerce might be common nowadays; however, people still wish to make sure that their orders will be delivered after placing them online. That’s why many ecommerce sites and delivery firms offer shipment statuses and real-time tracking of their goods as part of order tracking services.

Payment gateway

Encrypting payment information at the point of card details being inputted online or a purchase being initiated via an in-store POS, payment gateways transmit payment data to payment processors.

Payment processor

Acting as a middleman between customers and merchants, payment processors facilitate the secure transfer of funds from a customer’s bank or credit card to a merchant’s account. It achieves this through verifying customer funds, ensuring secure data transfer between issuers and acquirers, and settlement.

PayPal

One of the most prominent payment innovations which would shape the industry, PayPal was launched in 1998 and allows the sending and receiving of payments electronically.

PCI/DSS compliance

When placing orders online, customers are trusting that their payment data is securely kept safe. To ensure this is the case, all merchants and service providers that process, transmit or store cardholder data must comply with the Payment Card Industry Data Security Standard (PCI/DSS).

Point of Sale (POS)

Where a transaction takes place is known as the Point of Sale. However, this isn’t simply defined as online or offline, it also incorporates the software used to process the payment which is at the crux of the transaction.

Samsung Pay

Like Apple Pay and Google Wallet, Samsung Pay is a mobile payment and digital wallet service. However, it is used on Samsung Galaxy smartphones.

Secure Sockets Layer (SSL)

All websites which receive data must comply with the encryption protocol known as Secure Sockets Layer (SSL) due to it ensuring that an encrypted link is in place between a web server and a browser. As a result, data will remain private and secure when passed between the two.

Shipping costs

Whilst shipping costs are absorbed by consumers, it is vital that ecommerce businesses calculate what they expend on courier services, packaging materials, and more, to ensure that their shipping costs support rather than undermine their business.

Square

Similar to Stripe, Square is also a payment processing company headquartered in San Francisco and provides businesses with software solutions to accept and manage payments.

Stripe

Founded in 2010, Stripe provides businesses with a selection of APIs and payment processing tools to facilitate and manage online payments.

Subscription-based

When consumers pay a recurring fee in return for products or services they are doing business with a subscription-based model. Typically, this is employed by SaaS platforms, content providers, and e-commerce businesses.