eCommerce Terms for Beginners

Young Asian women working on a small business website on her laptop

So you’ve made the decision to become an eCommerce entrepreneur! Many people find selling online to be a little intimidating, but with the right information and hard work, you can turn your business into a thriving brand. 

The first thing you’ll need is a product and business model. If you haven’t made that decision yet, check out our Intro to eCommerce article and we’ll help you understand the basics and get you started. 

In this article, you’ll learn the most commonly used ecommerce terms so you can get familiar with the industry. Don’t worry, you won’t be tested on these vocabulary terms but you will need to know them in order to become a successful eCommerce seller. 

eCommerce Business Terms

The business end of eCommerce, although not the most exciting, is arguably the most important. You’ll need to know these terms to determine what your eCommerce business will look like.

Business to Business (B2B)

Selling products or services to other companies. For example, companies like Microsoft that sell technology to businesses all over the world.

Business to Consumer (B2C)

A retailer or middleman purchases products and sells to consumers. This type of method applies to most retailers and department stores.

Direct to Consumer (DTC) 

An eCommerce seller who owns a store and provides goods to shoppers. A good example of this is a handmade merchant.

Multichannel eCommerce

The process of selling products on multiple platforms. These platforms can consist of marketplaces like Amazon as well as the seller’s personal website.

Omnichannel eCommerce

As an extension of multichannel ecommerce, omnichannel includes sales that happen offline.

 

Black woman entrepreneur standing outsider of her store

Brick and Mortar

The traditional take on Commerce-- selling items within a physical store. Similarly, “Brick and Click” refers to a store utilizing the omnichannel sales method, selling online and off.

mCommerce

Referring to online purchases made with a mobile device.

Social Commerce

The act of buying and selling through a social media platform.

Shopping Cart Platform

A shopping cart within a website is defined as the hub where pre-purchased items are stored before completing a sale. A Shopping Cart Platform allows sellers to host their brand, display products, and sell to customers online all in one place. You can create your very own Shopping cart with our website builder.

Marketplace

An eCommerce site that connects buyers and sellers where the transactions are managed by the parent website. Examples include Amazon, eBay, Walmart Marketplace, and Alibaba.

Read more: How to Start an Online Business

 

Products and Inventory

There are millions of products being sold online. Not only is it difficult to decide which one fits your business model, but where are those items being stored? Here are some product and inventory terms you should keep in mind:

Niche

A product niche allows you to focus on a specific category of products. It’s something you should be passionate about but also have demand.


An example of a niche product is organic pet food as opposed to selling all varieties of pet products.


Software as a Service (SaaS)

A digital product that’s sold on a subscription basis and hosted from the company’s site. An example of this is Microsoft office and all the features included in the service.

Built Products

Products that are created or assembled and require specific materials. For example, a bicycle has many parts and must be built before selling to a consumer.

Product Identifiers

Every online marketplace requires a product identifier. It helps customers and sellers to keep track of specific products wherever they’re sold. These identifiers are a series of numeric or alphanumeric digits. Below are the most commonly used:

  • (UPC) Universal Product Code

  • (SKU) Stock Keeping Unit

  • (ASIN) Amazon Standard Identification Number

  • (MPN) Manufacturer Part Number

  • (GTIN) Global Trade Item Number

Inventory Management

This practice requires merchants to keep detailed records of product stock either manually or automated. It allows eCommerce companies to avoid issues like overselling and running out of inventory, but also helps them prepare for busy seasons or predict future trends.

Product Syncing

An extension of inventory management, product syncing consists of keeping track of your products and making sure the stock level is consistent across multiple sales channels, warehouses, and your website.

Audit

An in-depth look at one's inventory, matching physical products with current inventory records. Can be done manually or through an outside agent.

Read more: How Fast Is Fast Enough for Online Shipping?

 

Product Sourcing

Choosing a product to sell is just one step in the ecommerce journey, your next move is to find where to buy those products. Product sourcing is the act of searching for materials or your specific product to sell online. Here are some popular methods to find your products:

Dropshipping

A popular eCommerce business model, dropshippers take customer orders but do not touch the physical product. Instead, they set up a relationship with a supplier who houses the product and fulfills the order.

Wholesale

When an online seller sources products from a wholesaler, he or she buys in bulk and stores it in a storage facility. It’s a cheaper way to accumulate stock, but there’s a potential risk that the excess inventory will not be sold.

Private Label

Private labeling is another popular model where an online seller purchases products from a manufacturer and can customize that product to match their brand. A private label contract states that only the one online merchant can sell the product as its own.

White Label

Similar to private labeling with small differences. In this model, a manufacturer can allow several merchants to rebrand their product packaging, but cannot customize the product itself. Online sellers can only rebrand it.

Retail Arbitrage

This eCommerce business model consists of retailers sourcing products from other retailers. For example, thrift shoppers and resellers adopt the arbitrage model. They purchase products when discounted and resell them for a higher price.

 

Woman packing a product order in a store

Fulfillment

Once a product is purchased online, the fulfillment process is set in motion. You have to get your products to customers somehow. We list some of the ways you can fulfill customer orders and other important terms to remember:

3PL (Third Party Logistics)

Online merchants outsource storage facilities and distribution centers that fulfill a customer’s order. A good example of a 3PL is DHL Supply Chain. The company owns warehouses throughout the US, which they use to house, pick, pull, and ship products.

FBA (Fulfillment By Amazon)

Reserved for Amazon sellers only, FBA is a third party logistics facility that stores and ships items sold on the Amazon marketplace and other webstores. Merchants who participate in Amazon Prime also receive a “Prime” badge that’s displayed on product listings. It’s another way sellers can become more visible online.


Bonus Term: (SFP) Seller Fulfilled Prime

An Amazon Prime program, and FBA alternative, wherein merchants store their own products and ship them to customers through a shipping carrier. It allows sellers to still get the prime eligibility for their products without paying to store products in Amazon's warehouses. However, this model isn’t for the light-hearted as it requires merchants to store and fulfill orders with the same time requirements as FBA.


Read more: The Beginners Guide to Selling on Amazon for Small Businesses

Order

Any item purchased online. Sellers take the order information and send the requested item to the corresponding customer.

Pick List

A document used to identify which product will be sent to a customer. If fulfillment is being outsourced, a pick list tells the warehouse which items to ship.

Packing Slips

A printed document that consists of all order information, including the SKU, number of units, weight, and dimensions. These slips are added to the packaging so the customer can review and confirm their order is complete.

 

eCommerce Website

Building your brand is not easy, but the best way to do it is by creating your own eCommerce website. It’s a great place to tell customers more about your company and the products you sell. Below are some of the terms you should know when developing your store.

Product Listing Page

Any online page that a customer will end up on after searching a keyword and clicking on a link. When you list a product (put an item up for sale online), the customer will be directed to your landing page when they click your specific product.

SERP (Search Engine Results Page)

After searching a keyword on any engine (Google, Bing, etc.) customers will be shown the top results, so it’s important to be at the top of that page.

Payment Gateway

A service provided to ecommerce stores to allow credit card or direct payments from their website.

Lead

Any potential customer that shows interest by taking action on your site.

Traffic

Visitors on your website.

Conversion

When a visitor on your site completes a desired action, such as buying a product.

Cart Abandonment

It’s the bane of every online merchant’s existence, cart abandonment occurs when a customer chooses an item from your store but does not complete the desired action. Instead, the customer decided not to purchase the selected item.

Read more: Money Matters: How to Make Sure Your eCommerce Works Best for Your Customers

 

Become a Better Online Seller

With the terms above, you’ll be on your way to becoming an expert online merchant. We walked you through the ecommerce journey, from selecting and sourcing products to fulfilling orders. Your next step is building a brand and opening up an online store.

Image Credits: Shutterstock