E Commerce Glossary

A Comprehensive E-Commerce Glossary: 172 Words, Phrases and Expressions that You Should Know

Have you ever felt left out during meetings and discussions with your colleagues because you can’t understand certain e-commerce terminologies and fundamentals? Do you need to frequently look up the meaning of certain expressions when reading articles about e-commerce? Are you concerned with your poor e-commerce vocabulary?

Don’t worry – we’ve got you covered. Contentor, the leading e-commerce translation, localisation and copywriting agency in the Nordics, have compiled below an exhaustive list of 172 of the most commonly used phrases and e-commerce related words in the industry today. Are you ready to speak and listen like an e-com expert? Simply bookmark this page, and you’re good to go!

 

 

0-9

3D Secure
The latest security protocol in online payment authentication by Visa and MasterCard debit and credit cards. 3D Secure, or Three Domain Secure, requires three layers of verification originating from the merchant domain, issuer domain and interoperability domain. The new version of 3D Secure, 3DS 2.0 (or EMV 3DS), is fully compliant with EU’s Strong Consumer Authentication component (SCA). Read more.

3D Secure Visa
A variation of 3D Secure protocol developed by Visa to prevent unauthorised online transactions.

 

A

A/B Testing
A comparative test that compares two variants (A and B) to analyse which one performs better. Also known as split testing.

Account Balance
Revenue generated during the current pay-out period (from  the last pay-out date)

Account Updater Service
A service provided by credit card issuers to update changes in card numbers and expirations due to replacements, reissuers, account closures, upgrades, etc.

Accounts Receivable
Payment due to merchant from issuing banks after customers complete a purchase. The term varies between banks, though it usually ranges from one day to several weeks.

Account Takeover
A form of identity fraud. Malicious actors take control of genuine accounts.

ACH Payment
Electronic payment made via the Automated Clearing House (ACH) network between two bank accounts.

Acquiring Bank
The financial entity which processes transactions on behalf of merchants. Sometimes referred to as acquirer.

Address Verification System
The system used to verify the billing address of cardholders.

Affiliate
Agents who promote and sell the products of other merchants in return for compensation.

Affiliate Bonus
Incentives to agents who achieve sales or CTR target.

Affiliate Marketing
A form of marketing where businesses reward agents who drive sales or leads on their behalf.

Affiliate Marketing
Affiliate marketing provides companies with the option of expanding their marketing reach with no upfront cost. Image courtesy of Picpedia

Affiliate Network
Platforms that act as intermediaries between merchants and agents.

Agile Methodology
Software development practises based on flexible and independent cross-functional teams.

Analytics
The methodology of collating and analysing data to find information to support decision-making processes.

Annual Contract Value (ACV)
A SaaS metric which indicates the average annual revenue of individual customer contract.

Annual Recurring Revenue (ARR)
This metric is derived by multiplying recurring monthly revenue by 12 months. Typically used by subscription-based e-commerce entities.

Application Programming Interface (API)
A code that establishes a set of rules and commands which allow two software applications to communicate with each other.

Application Security
Protocols designed to prevent the hijacking of code and data from an application.

Arbitration
A non-binding mechanism designed to resolve disputes between end-users and merchants.

Artificial Intelligence (AI)
A field of computer science which attempts to replicate human intelligence in machines and computers.

Augmented Reality (AR)
A field of computer science which aims to improve user experience by enhancing real-world experience using digital sensory stimuli.

Authorisation Rate
Ratio of successful transactions.

Auto-renewal
A billing model where charges are periodically made on customers’ accounts via existing payment data,

Automated Clearing House (ACH)
A highly secure payment transfer platform which connects banks and financial institutions.

Automated workflows
A process that identifies and automates repetitive and time-consuming manual tasks using technological solutions.

Automation
Automation is essentially the process of mechanising routine processes using technology. This enhances process efficiency since computer programs or machines can perform repetitive tasks faster and with higher accuracy. Automation helps to increase productivity, reduce operating costs and improve product and service quality.

Average Cost of Service
The aggregate real cost of products or services. It includes manufacturing, labour, delivery, storage, handling, etc. costs.

Average Order Value (AOV)
Average amount of individual purchase per individual customer.

Average Revenue Per User (ARPU)
Average revenue per customer over a specified period of time. Typically, merchants tend to track monthly ARPUs.

 

B

B2B
Business to business, i.e., companies that sell to other companies.

B2C
Business to consumer, i.e., companies that sell to end-users.

Back-End System
Software which support back-office applications like sales, inventory, ordering and payroll.

Bank Identification Number (BIN)
The first four to six digits of a credit or debit card. This can be used to identify a card’s issuing bank.

Behavioural Biometrics
A revolutionary cybersecurity technology that identifies people using browsing habits, signature analysis, mouse use, gait analysis, etc .

Big Mac Index
An index used to measure the purchasing power parity (PPP) between national currencies. The price of a McDonald’s Big Mac is used as a base.

Billing
Invoicing.

Billing Currency
The currency which a transaction uses and payment is made in. This spans across the customer, merchant and issuing bank.

Biometrics
Physical aspects, such as fingerprints, facial recognition or voice authorisation, which are used to digitally identify a human.

Brick and mortar
Traditional physical stores – as opposed to online stores.

Browser Pop-Up
A secondary browser window which opens independent of user request. Typically displays advertisements. Can contain malicious pop-ups.

Bulk Ordering
Ordering a large volume of product.

Bundling
A strategy of selling multiple products or services together.

Business Model
A strategy or framework that an organisation uses to operate. This encompasses its entire chain of operation, including hiring, products, services, target market, capital, revenue targets, etc. A business model will need to be changed and adapted on a continuous basis. Many SMEs do not have their business model written down, which expose them to short-term and erratic decision-making.

Buyer’s Journey
A customer’s pathway to purchase. This can be broken down into three stages, namely, awareness, consideration and decision.

 

C

Call-to-Action (CTA)
A marketing message that triggers conversion. It may include text, image, video and/or voice.

Captive Pricing
A pricing strategy that offers a low price for a core product. However, the prices for other products essential to the core product are then marked up. Example: printer and printer cartridges.

Capture (or Settlement)
A credit or debit card transaction between end-user and merchant that are recorded and sent to the issuing bank.

Card Not Present (CNP)
A transaction over the internet, mail or phone where credit or debit card information is exchanged without the presence of a physical card.

Card Scheme
A central payment network for payment cards between acquiring banks and issuing banks. The networks are managed by card brands like Visa, Mastercard and American Express, which charge a fee of between 0.02% and 0.04% per transaction.

Card Testing
When criminals use a variety of techniques to uncover whether information from a stolen card can be used for fraud.

Cardholder Name
The name of the owner of the debit or credit card. The name is typically printed on the front of the card.

Cardholder Verification Method (CVM)
A process used by the card issuer to authenticate the legitimacy of the cardholder. Performed during point-of-sale. Methods used include, but not limited to, signature, enciphered pin and OTP (one-time-password).

Cart Abandonment
When customers exit a merchant website after adding products to their cart. The usual reasons include, but are not limited to, expensive shipping, card type not supported or invalid discount vouchers.

Cart Abandonment Rate
A ratio or percentage of cart abandonment incidents against the number of completed orders.

Cart Optimisation
Conversion techniques to reduce cart abandonment rate. Examples of cart optimisation include constantly visible dynamic cart icons, guest checkouts and form auto-fills.

Catalogue Management
A schema created by suppliers which are shared with buyers. Retailers, vendors and resellers are then able to automatically generate product data in a format which is friendly to the backend (inventory, accounting, etc), frontend (webstores and e-commerce platforms), websites (SEO) and customers (description of product characteristics).

Category Texts
Texts that provide a brief summary on the nature of a category. Allows users – and search engines – to quickly identify various categories of products.

Channel Management
Optimisation and administration of multiple sales channels, such as print, social media and affiliates, to reach specific target demographics.

Channel Manager
An automated tool which facilitates sales of products or services across all sales channels. Critical for industries such as hospitality, tourism and services.

Chargeback
When an issuing bank revokes payment made to a merchant due to customer dispute.

Chargeback Fees
Administrative cost levied by issuing banks during chargebacks that are billed to merchants.

Chargeback Monitoring Program
Visa’s internal monitoring system to identify chargeback volume of merchants. Used to identify merchants with an excessive number of chargebacks.

Chargeback Rate
A ratio or percentage of chargeback against the total number of transactions. Merchants with a high chargeback rate are flagged.

Chargeback Threshold
The maximum number of chargebacks (rarely above 1%) allowed by issuing banks under a merchant account.

Chatbot
Predictive or AI-powered programs which respond to customers’ common queries on websites via chat widget (function).

Check-Out Flow
A process that every customer must go through when finalising sales of products in a shopping cart. Typically entails filling out shipping and payment information.

Checking Account
A short-term liquid account in a bank which allows frequent withdrawals and deposits.

Checkout
The second last stage of a typical e-commerce flow, where customers finalise their purchase right before submitting their payment and shipping details.

Churn Prevention
A strategy of retaining customers. Extremely important for subscription-based business models.

Churn Rate (Attrition)
The ratio or percentage of churn (voluntary or involuntary) against successful retention.

Co-termination
The consolidation of multiple services from a single vendor or merchant into a single account, typically to align the period of service contracts or subscription cycles.

Cohort
Also referred to as cohort analysis. This is an analysis of customers who share identical behavioural, purchase or conversion characteristics.

Configurable Retry Logic
Targeted at soft declines. Internal payment processing applications on websites and e-commerce platforms are configured to reattempt approvals periodically.

Contactless Payments
Delivery agents deliver products to the home or office without making any contact with buyers. The popularity of contactless payment skyrocketed during the COVID-19 pandemic.

Content Management System (CMS)
A collaborative software that allows users to create, optimise and publish content digitally. Typically allows to create, design and manage a website.

Conversion Rate
The ratio or percentage of actions taken (such as purchase, opt-ins and following a funnel link) against the total number of visitors to a web property.

Conversion Rate Optimisation (CRO)

The process of optimising and increasing responses to call to actions (CTAs) on webpages.

Credit Card
A credit card is a revolving credit facility issued by banks to approved customers. It comes in the form of a thin rectangular piece of plastic (PVCA polymer) or metal. A credit card can be used to make payments to merchants or draw funds from ATMs, subject to a preapproved credit limit. There are many varieties of credit cards available to customers, such as classic, gold, business and prepaid.

Credit Card Design
A typical credit card design. Image courtesy of Pixabay

Credit Card Account Number
A unique 16-digit identification number that contains details about the issuing bank (first six digits) and customer (next nine or ten digits). The last four digits are also frequently used as a soft verification mechanism (such as during phone verifications).

Credit Card Authorisation
An electronic request sent through a card system to authenticate whether the credit card account is allowed to perform a transaction and has sufficient credit for purchase or verification.

Credit Card Authorisation Code
When a credit card authorisation is approved, the issuing bank will issue a five- or six-digit authorisation code for reference.

Credit Card Interchange
A payment system process where acquiring banks submit a settlement sheet to issuing banks to process payments to merchants.

Customer Acquisition
A strategic process to convert prospects into paying customers for your business.

Customer Acquisition Cost (CAC)
The per capita cost of every new customer acquired during a specified period or campaign. The cost is calculated by dividing total expenditure during a specified period or campaign with the total number of new customers acquired.

Customer Churn
The ratio or percentage of customers who stopped purchasing or using a company’s product or service over a specified period. Also known as customer attrition.

Customer’s Journey
A set of experiences, which define how customers discover, react and interact with your website or brand.

Customer Lifetime Value (CLV)
A metric which calculates/estimates the amount of money customers will pay to your organisation throughout the time they remain as customers.

Customer Relationship Management (CRM)
A set of practices and technological applications (such as Freshworks, Salesforce and HubSpot) for managing interactions with customers and prospects. This spans from quotes and ordering to delivery and after-sales service.

Customer Retention
Refers to strategies and practices aimed at retaining customers and reducing attrition.

 

D

Days Sales Outstanding (DSO)
The average number of days required by companies to collect payment after a sale or service has been completed.

Delayed Delivery Transaction
When delivery is not made after customers made an initial payment. Such payments are usually made as deposits.

Depreciation Schedule
Forecast of declining asset value for bookkeeping purposes. Charts the projected depreciation of company assets over a period of time.

Digital Wallet
A digital version of your financial instruments like credit and debit cards and cryptocurrencies. Popular digital wallets include Google Pay, Apple Pay and Electrum. Also referred to as an e-wallet.

Download Insurance Service (DIS)
DIS allow redownloads of software or application if the initial download is corrupted or lost. Ensures that download links of software or digital products are active up to two years after purchase.

Dunning Management
An automated recurring billing solution for hard declines. Enables smart retries of charges at intervals.

 

E

E-Commerce Platform
An end-to-end software which allows organisations to create and manage e-commerce stores. E-commerce platforms are typically delivered via cloud and on-premise platforms. Popular platforms include Magento, Salesforce Commerce Cloud, Shopify, Storm and WooCommerce.

Electronic Draft Capture
A software which captures or ‘blocks’ a specified amount on a credit card at the point-of-sale. This prevents cardholders from making multiple fraudulent purchases while approvals are sought from issuing banks.

Electronic Storefront
A website that conducts sales of goods and services. Perfect for small businesses like catering service, content creation agency or design services that do not require an actual physical storefront when selling out-of-state or internationally. Not to be confused with online stores or e-commerce platforms.

Expired Card Handling
An automated process that identifies expired credit cards and enables payment service providers to update new expiry dates in their database. Very useful for subscription-based services and deferred or instalment payment schemes.

 

F

Fintech
A portmanteau of the word financial and technology. An umbrella term used for start-ups in the e-commerce and financial sectors.

Fraud
Activities designed to deceive online merchants to accept fraudulent transactions.

Bank Card Fraud
In 2018, £17.45 billion was lost due to credit and debit card fraud worldwide. Image courtesy of Pixabay

Freemium
A marketing strategy where potential customers are offered premium software for free. However, additional or hidden features are subsequently introduced for a price.

 

G

General Data Protection Regulation (GDPR)
A legislation designed to protect the privacy of EU citizens. Effective as of 25 May 2018.

Growth Hacking
Accelerated testing and trials in various channels and funnels to help businesses grow quickly.

 

H

Hard Decline
A permanent and irrevocable authorization failure. It usually involves accounts that have been closed or cards that have been stolen.

Hypertext Transfer Protocol Secure (HTTPS)
Enhanced security protocol between merchant websites and servers.

 

I

Independent Sales Organisation (ISO)
Marketing agencies that promotes and signs merchants to accept debit and credit cards on behalf of acquiring banks.

Influencers
An individual, brand or organisation that are able to influence the purchasing decisions of others due to their proven authority, expertise or influence in a particular market or industry. Influencers may include celebrities, athletes, politicians, gamers, business leaders and social media personalities.

Influencer Marketing
A marketing discipline which uses endorsements and mentions from influencers to drive engagement and sales.

Intelligent Payment Routing
A global network of secure gateways to route merchant transactions to acquiring banks. Also facilitates failover transactions and retries for soft declines.

Issuing Bank
Banks or financial institutions which issue credit cards to end-users.

 

J

JavaScript
A computer language that is designed specifically for the internet. This scripting language is the backbone of many major e-commerce portals.

 

K

Key Performance Indicator (KPI)
Quantifiable metrics which are used to measure the performance of employees, companies, partners and markets over a period. The metrics may include financial, traffic, production, revenue and cost data.

Knowledge Assets
Data that makes up an organisation’s business function. Includes employee, organisational, customer and framework data.

 

L

Localisation
Adapting content such as text, video and audio to new markets. Aside from language translation, local culture is also taken into consideration.

 

M

Merchant
The term used to describe online sellers or vendors who accept credit or debit card payments from customers and submit them to acquiring banks.

Merchant Account
Each approved merchant is provided with a single account. This account will be used to conduct authorisation transactions, settlement and other related functions. Payments from issuing banks will also be sent to this account.

Merchant Category Code (MCC)
A four-digit code issued by credit card companies to merchants to categorise the type of business.

Merchant Discount Rate
Fees of between 1% and 3% applied to each transaction submitted by merchants.

Metadata
Metadata communicates to search engines what a website or page is about. Description of a website contents such as a page title (title tag), summary of content (meta description) and alternative text tag (typically to describe images and videos).

Monetisation Model
An umbrella term to describe how organisations generate revenue. May include sales of products or services, ads, subscriptions, sponsorships, etc.

Monetisation Platform
A collaborative platform where you can monetise your products or services, like Amazon, Google Play and Microsoft Advertising.

Monthly Recurring Revenue (MRR)
The amount of revenue generated by individual customers over a one-month period.

 

N

Native advertising
Paid advertising; frequently described as sponsored content. Native advertising is similar to advertorials, but more emphasis is given to blend with the hosting platform. Native advertising can be in the form of text, audio and video.

Net Promoter Score (NPS)
A metric used to measure customer experience and satisfaction and their likelihood of promoting your business to their social circle.

 

O

Omnichannel
A comprehensive approach that attempts to provide customers with a unified experience across all sales and marketing platforms.

On-premises
Software that is accessed from the vendor’s server instead of customers’ computers or servers. For example, Microsoft 365 or Adobe Creative Cloud.

 

P

Payment Card Industry Data Security Standard (PCI)
Established by the Payment Card Industry Security Standards Council and consists of some of the biggest brands in card payment solutions. Designed to reduce instances of debit and credit card fraud.

Payment Gateway
Servers that route sensitive transaction details to acquiring banks and reroute responses from issuing banks

Payment Processor
A service platform which facilitates communications between the merchant, issuing bank and acquiring bank, and vice versa. Sometimes referred to as merchant service.

Payment Processors
Payment processors take the data from virtual card terminal and disseminate them to multiple recipients. Thereafter, they collate the responses and deliver them back to merchants. Image courtesy of Pixabay

Payment Service Provider (PSP)
Partners with acquiring banks to enable merchants to accept payments after settlement.

Personalisation
A marketing and conversion strategy that is tailored to individual customers using purchasing, behavioural and browsing data.

Plugins
Software additions to enhance or customise existing programs or applications.

Point-of-Sale (POS)

Traditionally, point-of-sale is a physical location where customers present merchants with credit cards at cash registers. In e-commerce, POS can refer to checkouts or once data has been received by payment service providers.

Product Information Management
A software which centrally manages the product data of a company’s entire inventory. The data can be used to populate webstores, e-commerce sites, inventory software, sales content, etc.

Product Texts
Texts that describe a product, such as product descriptions in e-commerce stores or product reviews on funnel sites.

Purchase Flow
A part of the customer journey. Details they browsing and decision-making flow before finalising a sale.

 

Q

Quarterly Recurring Revenue (QRR)
A metric used to calculate/estimate the revenue generated by a single customer in one annual quarter.

 

R

Recurring Billing
A scheduled billing that occurs over a period of time. Usually involves subscriptions and instalment plans. Not to be confused with a recurring transaction.

Recurring Revenue
A company’s projected revenue based on expected recurring billing.

Recurring Transaction
Payments that are split over a duration of time. Typically involve deposit or milestone payments.

Refund
Reimbursement of funds from merchants to customers. Usually due to product or service defects.

Renewal
A manual or automated process taken to renew an existing subscription.

Retargeting
A type of advertising, in which website visitors are ‘tagged’ using cookies or web beacons. Ads mirroring their interests are periodically served on third-party websites. Also referred to as remarketing.

 

S

Sales Channel
Mediums to get products or services to customers. This may include field sales, inside sales and website sales. Also known as a distribution channel.

Sales Closing Ratio
A ratio or percentage of the number of conversions against the number of total pitches or presentations.

Sales Receipt
A record, either in the form of paper or electronic, of completed sales transactions.

Search Engine Optimisation (SEO)
A marketing and technical discipline which aims to drive organic traffic to websites by improving their search engine rankings.

Search Engine Marketing (SEM)
A digital marketing strategy that focuses exclusively on the placement of ads on search engines’ result pages. Also known as pay per click (PPC).

SEO Copywriting
SEO (search engine optimisation) copywriting is the technique of writing content based on historical search engine data and standard industry practices. This enables content to gain enhance visibility on search engine ranking pages (SERPs) and social media.

Shipping
The process of delivering physical products to buyers. Rarely includes ships.

Shopper
The customer who makes a purchase from a merchant.

Shopping Cart
A software that allows customers to tag items they intend to purchase for easy retrieval during checkout.

Soft Decline
A debit and credit card transaction that may be declined temporarily due to insufficient funds or technical issues. Subsequent retries are usually successfully authorised.

Software-as-a-Service (SaaS)
A licensing model which enables software to be accessed using browsers and customised windows, e.g., Amazon Web Services, Salesforce and Zendesk.

Split Payment
When a purchase is paid using more than one credit card or payment method.

Sponsored Merchant
Merchants which connect to selected payment service providers for access to payment services.

Subscription
A recurring transaction over a defined interval (typically one month) to gain access to a product or service.

Subscription Lifecycle
The contracted length of access to products or services.

 

T

Tax (Sales Tax)
A legislated tariff levied on every transaction, payable to the government.

Transaction Settlemen
When the customer’s issuing bank sends payment to the merchant (via a payment processor).

Transition to Subscriptions
A change from a permanent licensing model to a subscription-based model. Instead of making a one-off payment, payments are converted into monthly subscriptions. E.g., Adobe recent conversion of Device Based Licensing to Named User licensing.

Trial
A marketing strategy which offers customers free access to a product or service for a defined period of time.

 

U

Up-selling
Just like McDonald’s – a sales strategy that attempts to increase order value by introducing more products or services during checkout.

Usage Billing
A billing model that is reliant on a customer’s volume of use. Also known as metered billing.

 

V

Voice Shopping
Sales support in the form of a virtual assistant, normally in the form of a chatbot.

Voice-activated Banking
Allows customers to access their bank accounts using voice verification and commands.

 

W

Waterfall Methodology
A linear and sequential approach to management characterised by the cascading effects of triggering the start of new projects based on the completion of previous projects.

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