eCommerce terminology - the most important 30+ terms
As in any professional field, a lot of terminology and abbreviations are used which can be mystifying or confusing to people entering the field. Here are the top 30 terms, the most important for you to know, please get in touch with any suggestions for other terms you would like to see described.
eCommerce website components terms
This section describes the elements of an ecommerce store with which the customer interacts in their shopping journey. Each is relevant to a website and a mobile App as a minimum, also to some other ecommerce channels.
Home page
The home page is the page displayed when navigating to the domain name of the ecommerce store. It is considered the front door of the website and showcases the brand to new visitors, displays major marketing campaigns and hero products or themes of importance to the site as a whole. When displaying the home page to a returning visitor about whom you know some details, best practice is to show a personalized version of the home page. For example a fashion site might choose to display images of men's clothing to a visitor that has previously shown an interest in this category.
Product listing page (PLP)
The product listing page is a type of page that shows a list of products, for example the page shown after a visitor performs a search on the website, or the page shown when a visitor clicks on a product category. It can also be called "search results page", but this risks confusing it with the results seen on an external search engine such as Google which are called the Search Engine Results Page (SERP).
Product details page (PDP)
The product details page is a type of page that shows the full product title, description, price and details of a single product. In the example shown here there are also multiple images, color options, available sizes, fit options (regular / tall / petite), link to size guide, fit notes, fabric & garment care details, recommendations for other products, indication that shipping and store collection are both possible, promotion of the "Afterpay" alternative payment method, a quantity field and an "Add To Bag" button.
The PDP can be one of the most complex parts of the website to design, with many variations possible on how to present a product and many retailers experimenting frequently with different page layouts to determine which results in the highest conversion rate.
Best practice for a PDP is to show full details, including inventory and delivery options, a link to the size chart for clothing, ratings and reviews, technical details, returns information, payment options. The theory is that the more (accurate) information you can provide, the more confidence you give the potential buyer and the less likely they are to return the item after receipt.
Super menu
The so-called super menu, or mega menu, is a large menu of navigation links that is shown on a desktop version of a website when the visitor hovers their mouse over a link in the main navigation (which is typically a ribbon of links at the top of the page). In the example below from B&H Video Photo hovering over the TVs & Entertainment link on the green top nav bar results in a large super menu appearing that shows images and links to product categories and other links and information.
Checkout
The checkout is the series of steps a visitor must take to place their order, that is to buy the products they have selected on the site. Some ecommerce stores prefer a single page checkout process in which all information is gathered in a single page however most use a series of steps starting with confirming the contents and quantities in the cart are correct, then choosing the delivery method and address, confirming the total price and collecting payment information.
Guest checkout
A guest checkout process is a checkout in which the shopper can complete their transaction without having to first register for a new account. Some shoppers feel this is more private and will avoid subsequent marketing or email spam, even though similar information is gathered from them in either approach. In a guest checkout no password is requested from the shopper in order to be able to create an account on the website. In the guest checkout processes of some websites, after the order is confirmed as having been placed, the visitor is asked if they would like to enter a password to create an account.
eCommerce order terms
The following terms relate to an ecommerce order placed by a customer.
Average order value (AOV)
The average order value of an ecommerce store is the arithmetic mean of the total selling price of the items in that order. AOV can be calculated before or after tax and shipping charges, therefore it is important to know the definition if comparing the AOV of two stores, or two regions/countries (where tax and shipping rates are different), or two time periods.
Article: How to calculate Average Order Value (AOV)
Average selling price (ASP)
The average selling price of an ecommerce store is the total of the sales prices of all products sold divided by the number of items sold. ASP does not normally include sales tax and shipping charges. ASP is one way of comparing the performance of products across categories, or between brands or among a group of competitors or over time. Product categories with low ASP are harder to sell profitably, as the cost of labor for pick, pack and dispatch becomes a higher percentage of the selling price. For example, in a fashion store, all other things being equal, accessories such as costume jewelry with an ASP below $10 would be much harder to sell profitably compared to watches with an ASP above $80, as the cost of labor picking, packing and dispatching that order and answering questions from customers, would be similar in both cases.
Gross merchandise value (GMV)
The gross merchandise value of the orders from an ecommerce store is the sum of the selling prices of the items ordered from that store before tax and shipping. GMV is used as a metric by some ecommerce software vendors, such as Salesforce who charge a percentage of GMV for building and operating a store based on their software. Note that GMV is not reduced by returns. That is, the effect of returns rate does not impact the GMV. I wrote a full article about GMV here.
Returns rate
The returns rate of an ecommerce store is the percentage of orders that, having been fulfilled, are subsequently returned by a customer for a refund. Orders returned for an exchange (e.g. to swap the size of an item of clothing) are included or not, depending on your business's definition. Returns rate varies tremendously by sector. In grocery, ecommerce returns rate is less than 2%, in fashion retail it can be as high as 50%, partially because customers may purchase multiple sizes and return those that do not fit. Returns rate varies by category (clothing has the highest returns rate), customer (some return more than others, in particular younger customers return more (source: Accenture)), by country (Germany has a particularly high returns culture) and by payment method (e.g. paying after delivery increases returns rate).
In the 2019 report from Klarna, it was noted customers were more likely to shop with a store that offered free returns (37%), simple, painless returns process (39%) or instant refund (29%), each measure having increased significantly since 2017. In the 2020 report from IMRG for carrier hub MetaPack, its customers reported returns rates from 1% in the gifts sector to 44% in clothing.
Returns rate is a complex area to investigate. Low returns rate is not the same as the optimal returns rate. Enabling returns and providing free, easy & generous terms encourages returns, but also sales. Each ecommerce merchant must evaluate its own situation and derive a returns range that is acceptable to them.
eCommerce trading and operation terms
The following terms relate to the trading and operation of an ecommerce business.
Personalization
Personalization is the process of providing a different experience to a visitor based on the knowledge the site has about that visitor. The aim of personalization is to make it easier for the visitor to find and buy the best products for them, or to make website content more relevant and engaging to a specific visitor. Given no two website visitors have exactly the same needs, history with your brand / product, or mission on their current visit, there is considerable scope to improve a customer's experience on each visit.
Personalization should be based on information about the visitor gained from their current visit and by combining data from the current and all previous visits to the same site. In complex scenarios, this assembly of customer data is done by a dedicated software called customer data platform (CDP).
Personalization features for ecommerce websites include:
- tailoring the home page or landing page to feature product categories or products in which they have shown an interest
- offering recommended products based on their purchase history, searches and browsing
- filtering products based on known size and other preferences
- showing loyalty point balances or other details following login
- adjusting images and product details based on type of visitor
- highlighting or reducing the prominence of sale or clearance messaging
- showing currency / shipping country options based on visitor location or preference
- varying the selling price of products by customer (normally a B2B feature, but can be done with care in the B2C world)
Trading
Trading an ecommerce website refers to the processes involved in maximizing the revenue and profit from running that ecommerce store. It is a catch-all, or umbrella, term for many processes including deciding the range of products to list on the site, setting product prices and delivery terms and prices, adding promotions or markdowns and marketing to customers. Merchandising is part of trading a website, which includes deciding on the products to promote, perhaps pushing them to the top of search results or featuring them in spots on a product details page, or presenting them in a "most popular" or "featured" list of products.
A/B testing and multivariate testing
A/B Testing refers to a process whereby a small proportion of a website's traffic is shown a new version of a page in order to gauge what impact the change has on visitors' behavior. It is sometimes called split testing. A very simple example might be to change the position, text or color of the "Add to cart" button on a PDP. If the change is proven to have a positive impact on the goal the website owner has, e.g. in this example if more people add that product to the cart or end up buying it, then the change can be rolled out to all future traffic in order to improve the performance of the site.
Multivariate testing (and, yes, it is multivariate(*), not "multivariant" as you sometimes see written) is a more complex and advanced version of A/B testing, in which variations in many elements are simultaneously tested. There might be tens of elements on the page which are being varied, with tens of variations of each, hence the number of permutations quickly becomes astronomical. Specialist software is required to run multivariate testing, in order to adjust which combination of variations are shown to each visitor and to derive statistically relevant insights into which variations should be rolled out and which can be abandoned.
* The reason it is called multivariate testing is because it is named after multivariate analysis, the branch of pure mathematics from which this practice stems.
Search Engine Optimization (SEO)
Search engine optimization (SEO) is the practice of trying to ensure that a website ranks well in a search engine, for example by ensuring it contains high quality, in-depth content, the content is structured well in the HTML of the site's pages, and encouraging owners of other, authoritative, websites to link to it. Traffic to a website gained from a search engine is free, compared to traffic gained by marketing, making it highly desirable in order to improve profitability of the business.
Organic Traffic
Traffic arriving at a website without paying for it, or otherwise soliciting for it, is called organic traffic. Organic traffic includes traffic coming from non-paid (sometimes called "earned") search engine results, traffic clicking through from links in another website or social network, and direct traffic which is visitors that just type the website address in their browser or use a browser bookmark or favorite.
Traffic that has come from email marketing, or other forms of digital marketing including SEM, is inorganic traffic. As in many fields in life, the traffic categories that a business tracks and uses, and the definitions of them, vary from business to business.
Search Engine Marketing (SEM)
Search engine marketing (SEM) is the advertising of your ecommerce website within the search results of a search engine, for example through the use of Google Adwords. Sometimes called pay-per-click (PPC) as you pay the search engine each time a visitor clients on the advertised link in the search engine results page (SERP).
Conversion rate
The conversion rate of an ecommerce site is the percentage of visits that result in an order being placed. A conversion rate of 2% implies that for every 100 visits to the site, two orders are captured. There is no one number that is expected for conversion rate, but given its direct impact on the sales generated by the website, it is tracked and discussed keenly. In the run up to Valentine's Day it is common for florist ecommerce sites to achieve over 10% conversion rate. Event ticketing sites can have high conversion rates, too, as visitors generally have strong motivation to buy (rather than browse) when they visit. Many ecommerce sites have much lower conversion rates, even down to less than 1%. The Episerver report (Episerver is a member of our ecommerce platform shortlist) on holiday shopping, published in October 2020, gave averages of conversion rate for its customers of 2.6% in November 2019 and 3.0% in June 2020.
Conversion rate will vary between different sources of traffic. For example organic traffic from a search engine may have a different (lower) conversion rate to traffic that has arrived at the site from paid digital advertising.
The process of attempting to maximize conversion rate is called Conversion Rate Optimization (CRO).
Funnel
A funnel is the series of steps through which customers pass on their way to placing an order. It is called a funnel because the early steps have very large numbers of customers, the later stages have progressively fewer customers until finally you are left with those who have placed an order. An example funnel might have the following stages:
- people who see a post on your Facebook page
- just those who then click on the post and arrive at a landing page on your website
- those who then add the product shown on the landing page to the cart
- those who then go on to start payment process
- those who complete their order
An ecommerce business will typically define and track many funnels according to their sales and marketing activity, tracking key performance indicators (KPIs) in order to identify which work best, which steps in the funnel are causing the biggest drop-offs in customer numbers, and which generate a profit after taking into account the money spent on attracting customers into the funnel, such as pay-per-click (PPC) advertising.
Web analytics
Web analytics refers to the technology that captures details of the visits made to the website, including details of where the visitors are located, which page they arrive on, how many and which pages they view, the type of browser they are using, when and how often they add items to the basket, start checkout and place an order, the time they spend on the site and many other factors besides. One widely used web analytics package is Google Analytics. Web analytics tools are often used to calculate conversion rate.
Performance testing
Performance testing, in the context of ecommerce site development, is the activity taken prior to a major change being made to the website or its supporting software, to ensure that visitors will be able to experience a responsive site with good page load times and timely response to their actions on the site, even when there are many visitors on the site such as might occur during a heavily promoted sales event. Performance testing, including the closely allied stress testing. load testing and volume testing, is a specialist skill and needs to be carefully planned, designed and executed in order to derive meaningful results and provide insight into the actions that must be taken to correct any defects identified.
Availability testing
Availability testing is the practice of frequently loading a page in the website, or simulating a specific user journey through the website (such as searching for a product, adding it to the cart and checking out) by an automated script that will detect problems such as pages not loading or error messages being shown or the whole site not being available. In the event of problems the availability testing script will alert the support team to ensure corrective actions can be taken. Sometimes competitor sites will also be tested in order to gain a comparative view of these other sites. It is most effective to use an external service provider for availability testing as they can test access from several points around the country or world and simulate access by different devices and browsers, making this type of testing more effective than something that might be setup by the retailer themselves. Example providers include Microsoft Azure Monitor, Pingdom, Uptrends, Dynatrace.
Omni-channel retail terms
This section describes terminology relating to how ecommerce stores participate alongside physical, brick-and-mortar stores to deliver a holistic customer experience. The way in which online, digital channels and offline channels work well together is known as omni-channel retail.
Research Online and Purchase Offline (ROPO)
Research Online and Purchase Offline (ROPO) is the tendency for consumers to research their purchases online, but then to actual make the purchase in an offline, e.g. store, channel.
Buy online pickup in-store (BOPIS)
Buy online pickup in-store describes the fulfillment method offered on some ecommerce stores for customer to collect their purchases from a convenient physical store. This is also sometimes called click & collect.
When setting up BOPIS, merchants need to consider the following crucial concepts:
- Product can be picked from store stock and set aside for the customer, or can be picked from a warehouse and shipped to the store. For the former, collection times of 60 minutes or less can be offered, for the latter it might take 1-3 days. When shipping from the warehouse, you need to decide if this will be via carrier or through the store replenishment logistics network.
- Selling price online is often set on a national basis, whereas the price of the product can vary by region and by store format (e.g. selling price might be higher in smaller, convenience store locations). Merchants need to recognize this and decide how to handle instances when the selling price online is different to the collection store. When the online price is higher, customer might be disappointed when they see a lower price advertised in the store on collection. When the online price is lower, customers may start to use BOPIS over buying from the store stock, which reduces revenue as well as incurring the additional labor cost of picking in-store, or shipping to the store.
- Customers collecting from store may buy additional items from store stock while they are there, increasing the value of each BOPIS order.
- Customers using BOPIS have a higher engagement with the physical store and the retailer's brand, which can be valuable over and above a pure online interaction with home delivery.
Reserve online pickup in-store (ROPIS)
Reserve online pickup in-store refers to the fulfillment method where an ecommerce order is placed online without payment details and the payment is completed in the store at time of collection. The key challenges with ROPIS are that labor costs are incurred when picking the inventory from the store to set it aside, and the inventory becomes unavailable to sell in the store with no guarantee that the customer will arrive, collect and pay for that order. The retailer should specify a reasonably tight deadline for collection of the order to avoid dead stock sitting for too long.
Buy online return in-store (BORIS)
The ability to buy a product online and subsequently return it to a physical store for an exchange or refund is called buy online, return in-store or BORIS.
Last mile
Last mile refers to the fulfillment of an ecommerce order to the customer, specifically the final steps in delivering or handing over a product to that customer. In the world of general merchandise (GM) this is typically handled through a parcel carrier or pickup from a collection point. For grocery, last mile is often through the retailer's own fleet, especially in Europe where grocery home shopping is particularly strong.
Drop ship (supplier direct)
Drop shipping is a fulfillment method where the retailer captures an order for a product and then sends that order to a supplier to fulfill directly to the customer. For this reason dropshipping is also called "supplier direct". The retailer does not own or stock any inventory for that product and does not handle the physical fulfillment of the product. When a customer places an order, that order is sent to the drop ship supplier who sends the goods to the customer and invoices the retailer the agreed price. The retailer will make a margin from the difference in price paid by the customer and the price paid to the supplier. This margin is typically lower than the margin made on products that the retailer has bought in bulk and stocked in their own warehouse. For this reason it is most commonly used for products outside the core range, for example a supermarket selling a trampoline might use a drop ship arrangement to avoid having to stock such a bulky item with non-standard logistics requirements and a seasonal sales pattern.
Endless aisle
Endless aisle is the concept that a physical store can offer more virtual shelf space than is possible in the store itself, that is to sell products that are either currently out of stock or else not stocked in that store. This additional stock and additional products lines are provided to customers in the store by store associates who have access to tools that show them the inventory available to online customers and in many cases inventory available at the retailer's other stores, and even stock at suppliers, or stock in transit to the store, and enables them to place an order on the customer's behalf. This is also sometimes called save the sale.
eCommerce website traffic terms
This section describes terminology relating to visitors to a website. These metrics are captured by the web analytics tools you choose to deploy on your website.
Visitor
A visitor is a person using a browser to look at the website, often also called a unique visitor. The number of visitors a website receives in a month is the unique number of different people that have visited that website in that month.
Visitors are measured in terms of a number per time interval, for example 250,000 visitors per week.
Visit
A visit is an instance of a person looking at one or more pages in a website without a significant gap in time. For example a visit might be someone who goes to an ecommerce site and spends 5 minutes searching for a product, reading some product information and customer reviews before then going off to another website. Note that one visitor can make two visits in a given period. For example, the 50,000 visits a website receives in a day might be from only 42,000 visitors (unique individuals). There is no one method to differentiate between two visits from the same visitor with a small time gap between them and one long visit. This is a matter of definition. Some site owners might specify that a gap of 15 minutes in activity from a visitor means that the next activity seen from them will be counted as a new visit, others might specify 60 minutes or even longer.
Visits are normally measured in terms of a number per time interval, for example 100,000 visits per day.
Session
Session is a very similar term to visit, but session is a technical term. The website servers that assemble and show pages to visitors maintain an internal record of all of the visitors currently on the website. Since this information could grow infinitely large over time, the server essentially forgets about a visitor after a specific period of inactivity. Once a visitor has been inactive for a period of time their session is considered ended. While a record of all their important actions, such as changing their email address, is retained, the data about the session is removed from server memory. The website administrator can specify the period of inactivity that will cause the session to be considered ended.
Page view
A page view is a single instance of a website visitor fetching a page from the website, for example the home page, a product details page or the contact us page. Page views are normally expressed as a number within a specific time interval, for example page views per month when expressing the popularity and usage of the website, or page views per second when discussing the peak performance that a website might need to handle. Commonly measured is also page views per visit, the average number of pages that a visitor visits on the site during a single visit. Page views per visit gives an indication of how engaging the content on a site is.
Bounce
A bounce is a one page visit to a website, i.e. a visitor who visits a page on the website and goes no further - they leave the site. Bounce rate is then the percentage of visits that result in a bounce. Bounce rate is another measure of how engaged your visitors are with your site. A high bounce rate at a specific page on the site might indicate a problem with that page - the content might not be useful or attractive, or the traffic coming to that page (for example through advertising) is not interested in the content presented on the page. When spending money on advertising, you need to pay careful attention to the bounce rate of your traffic from advertising sources - a high bounce rate is a sign of a problem, either in how appropriate the page is or whether the advertising is attracting the right audience.
Exit page
Regardless of how many pages there are in an ecommerce visit, one page will be the last page viewed by the visitor - the exit page. Identifying the most frequent exit pages on an ecommerce site helps identify potential poor content or customer experience. Exit page frequency should be measured for visits that do not result in a purchase to help highlight pages that are contributing to missing sales. If one of your main exit pages is your "thank you for ordering" page, you might think you are in a good place. While this is good, still think about what action you want the customer to take next - to sign up for an email newsletter, to share the news with a social network or friend, or to sign up for parcel tracking.
Hit
A hit is a request from the visitor's browser to the servers hosting the website to fetch a component of the page, for example a specific image, or a piece of code that will be run in the browser once it is fetched. Hit used to be a commonly used term in the days when every call to the website was potentially difficult for the server to respond to and the overall number of hits was one measure used to size the capacity required of the server. These days, many components of a website are served from different locations, not the main website servers and the term has fallen into all but disuse.