eCommerce Dictionary: Terms you Must Know
The eCommerce space is full of confusing terms and acronyms. This eCommerce dictionary compiles the most common terms you need to know when selling online.
Whether you are just starting out or are a long-established seller in the eCommerce industry, this dictionary will help you navigate all the jargon, abbreviations, and technical terminology you are likely to face during your eCommerce career.
A/B Testing
A/B testing is a way of testing two variations of a website, landing page, or paid ad to determine which drives the best results. Also called split testing, it shows site visitors one of two variations at random and tracks which version results in the most clicks, conversions, or sales.?
Average Order Value
Average order value, also referred to as AOV, is a commonly-reported eCommerce metric that measures how much each order is worth over a period of time.?
The formula for average order value divides the total value of all orders over a period of time by the total number of orders over the same period.?
Behavioral Segmentation
Behavioral segmentation is the practice of separating or grouping customers based on behaviors they have in common. This improves the effectiveness of marketing campaigns, such as email marketing, by allowing brands to send more targeted messages.?
Bounce Rate
Bounce rate is a website analytics metric that measures the percentage of site visitors who visit a page and do not complete any action on the site before leaving. In your analytics programs, the bounce rate only counts visitors who visit one page on the site.?
Brand Equity
Brand equity refers to the value that shoppers associate with a specific name brand. Brands that are easily recognizable and trustworthy have higher brand equity with consumers.?
Brand Perception
Brand perception refers to the sum of all feelings, thoughts, and perceptions customers have about a brand. It can include brand awareness, brand equity, loyalty, and emotional attachment towards the brand.?
Call to Action
Call-to-action, also called a CTA, is a prompt that encourages visitors to take the next step in a sales or conversion funnel. It generally refers to a a concise statement that prompts the visitor on their next action in the shopping journey.
Cart Abandonment
Also called shopping cart abandonment, measures the rate at which shoppers add an item to their digital shopping cart and fail to complete their purchase.?
*Did you know that nearly 75% of shoppers abandon carts on their mobile?
Find out more: Digital Shopping Cart Abandonment: A Data-Driven Guide
Conversion Funnel
The conversion funnel refers to the journey a customer takes from first becoming aware of your brand to conversion. In eCommerce, this process generally includes awareness, interest, desire, and action stages.?
Conversion funnels are often split into three portions — top, middle, and bottom. Each portion of the funnel requires different strategies, content, and techniques.?
Conversion Rate
Conversion rate is a metric that tracks what percentage of site visitors complete a desired outcome. It is calculated by dividing the number of conversions by the number of site visitors.?
Conversion Rate Optimization
Conversion rate optimization, often called CRO, is the practice of implementing site changes to increase the number of site visitors that complete a desired action.
Customer Journey
Customer journey is the individual path that visitors take during their online shopping experience, from first learning about a product or brand to conversion.
Customer Journey Hijacking
Customer journey hijacking, also called CJH, occurs when unauthorized ads are injected into visitors’ browsers, including popups, banners, and text ads. These ads distract shoppers from your site, pulling them out of the customer journey and redirecting them to your competitors.?
Customer Lifetime Value
Often shortened to CLV or LTV, this measures the amount of money a customer is likely to spend over the course of their relationship with a brand, not just the first purchase they make. This metric is calculated by multiplying the average order total by the average number of purchases in a year multiplied by the average length of retention.?
Customer Perceived Value
Customer perceived value is based on whether a customer thinks an eCommerce brand's products' benefits exceed its cost. Perceived value is closely related to value proposition, and includes traits such as performance, branding, and pricing.?
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Customer Segmentation
Customer segmentation, also known as marketing segmentation, is the process of dividing customers into subgroups that share similar characteristics and variables including demographics, interests, and behavior.?There are three main segmentation models used in eCommerce and B2C companies:
1. Psychographic Segmentation
Psychographic segmentation is a segmentation technique that sorts prospective customers into segments based on physiological traits that impact buying behavior, such as interests, social status, lifestyle, and personality.
Unlike demographic segmentation, which sorts prospects based on who they are, psychographic segmentation sorts potential customers based on their specific actions and psychological makeup.
2. Customer Segmentation
Customer segmentation, also called marketing segmentation, divides customers into smaller groups with similar demographics, interests, or behaviors.?
3. Demographic Segmentation
Demographic segmenting is a type of customer segmentation that buckets an audience based on demographic information, including age, race, gender, family status, income, education level, employment, and occupation. Each demographic segment can also be broken down into subgroups.?
Demographic segmentation breaks consumers into groups based on who they are, unlike behavioral segmentation, which separates visitors based on their actions.?
Discounting Rate
Discounting rate is an eCommerce metric that calculates the discount required to increase conversions. A higher discounting rate results in lower profit margins, so understanding the exact discount required to encourage conversion is crucial.??
eCommerce Metrics
eCommerce metrics are quantifiable, measurable data points that help eCommerce brands understand which marketing strategies are most effective. Common eCommerce metrics include conversion rate, average order value, customer retention rate, customer acquisition costs, click-through rates, and shopping cart abandonment rates.?
Friction Points
Friction points refer to variables in the customer journey or conversion funnel that slow down or stop progression through the sales funnel.
Injected Ads
Injected ads are ads added to websites via browser extensions. These ads are sold to third parties, generally without the site owner’s knowledge. They are especially problematic for eCommerce sites because they may display competitor products and can interrupt customers from their journey onsite.?
Intent Signals
Intent signals show a customer is interested in a specific type of product or is ready to make a purchase. Tracking these signals helps eCommerce stores create intent-based promotions, which target customers who are closer to conversion.??
Intent-Based Marketing
Intent-based marketing is a strategy that specifically targets consumers who have displayed intent to purchase. Because it targets consumers further in the purchase funnel, it is often more effective.?
Micro Conversions
Micro conversions refer to small actions shoppers take on your site that lead them towards your main conversion. Tracking micro conversions provides insight into how consumers engage with your website and move through the sales funnel.?
Persistent Carts
To support cart recovery strategies and minimize cart abandonment, many eCommerce platforms offer persistent carts, which use cookies to save digital shopping cart additions.?This allows customers to return to their cart on the same device.
Personalized Marketing
Personalized marketing, also called individualized marketing, is a marketing strategy that uses behavioral and demographic data to deliver customized content, ads, and other materials to current or prospective customers.
Pivotal Moment
A pivotal moment refers to a tipping point in the conversion process. The pivotal moment can refer to several events, such as when a customer decides which product to buy or when a customer moves from the research stage to the purchase stage.?
Revenue Per Visitor
Revenue per visitor, RPV, measures the value of each visitor to your site. It's calculated by dividing the total revenue of a website or page by the number of visitors.
Sales Promotion Strategy
A sales promotion strategy is a defined plan to increase the effectiveness of a sales or discount program.
Sales Promotions
Sales promotions are an eCommerce strategy aimed at increasing sales and brand awareness by offering a discount or promotion.
Social Proof
Social proof refers to the impact of word-of-mouth marketing (both online and in-person) on buying behavior.
Trust Signals
Trust signals are a collection of signals that increase trust in a website or business. For eCommerce brands, trust signals include an SSL certificate and social proof, such as online reviews or logos of current customers.?
User Experience
User experience, also referred to as UX, refers to design decisions that impact how a visitor interacts with a website, platform, or service. It includes factors such as ease of use, efficiency, and functionality.