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Ecommerce Terms Every Store Owner Should Know (Glossary)

Why Is This Ecommerce Glossary is Important?

Ecommerce is essentially any sale or transaction made electronically via ‘the internet’. Ecommerce is relatively new and even for those who’ve been working within ecommerce for some time, things can be a little difficult to navigate. Especially being a new store owner, knowing exactly what everything means within the ecommerce world is essential.

We at GRAYBOX believe that the only way we can execute anything successfully is when our partners are on the same page as us. We learn from them and make sure they know our process every step of the way. In our ecommerce practice, we’ve found it’s important for people to know the following terms.

Customer-Related Terms

B2C (Business to Consumer)

B2C is when a business sells goods or services direct to end consumers or customers. There is no transaction beyond that once it reaches the customer.

B2B (Business to Business)

This is the business model where you sell your goods or services to other businesses, from one business to another.

B2B2C (Business to Business to Consumer)

This is when companies that market to other businesses create a process for the business to provide services, sell, or engage with end consumers/customers. In theory, B2B2C is meant to harmoniously provide for both direct consumers and businesses in the process.

Brick and Mortar

These are businesses that have a physical store presence where they sell products and services, offering face-to-face customer experiences.

Customer Segmentation

When you divide and target your customer based on a range of variables. This can include: purchase history, demographics, profit margin, and other data.

Buyer Personas

This is a representation of the different customer personas created using market and data research. Demographics, buying patterns, and other behavioral factors are used to determine these.

CLV (Customer Lifetime Value) and LTV (Lifetime Value)

This is the predicted net profit expected from an average customer as long as they stay a buying customer with your company.

Systems-Related Terms


The transport of goods or products to consumers from one place to the other.

  • Flat Rate Shipping: A flat rate is when the shipping rates are set at one standard amount for any package specific to either the weight, size or order amounts.
  • Real Time Shipping: This is the calculated cost during when a customer is browsing through a site and adding items to their cart. Only when they proceed to checkout out do they find the shipping price is something entirely different. This type of shipping often results in shopping cart abandonment.
  • Drop Shipping: When a customer makes an order and the product isn’t kept in stock so the retailer manages the sale to be shipped directly to the consumer or transfers the transaction to the manufacturer.
  • Free Shipping: This is when shipping is offered to clients at no cost, but the shipping the products aren’t necessarily always free and are likely paid by the company through an area where they see a greater profit.

Inventory On-Hand

The amount of products (SKUs) that are ready to sell or ship.


This is a term generally used to cover the picking, packing, labelling and shipping of products. Third party logistics companies (3PLs) are organizations that provide complete fulfillment management for companies that do not want to do their own fulfillment.

Shopping Cart Abandonment

When a user is shopping online and adds items to their shopping cart, but does not complete a purchase.

3PL (Third Party Logistics)

Third party logistics companies manage fulfillment for other businesses. This can include: warehousing, picking, packing, labelling, shipping, and returns management..


A cloud-based Enterprise Solutions Resource Planning (ERP) software platform that provides business, operations and customer relations management within a single system.


Now owned by Adobe, Magento is a modern ecommerce platform written in PHP, which is one of the most popular solutions for building ecommerce websites. You can learn more about Magento here.


Shopify is a Software-as-a-Service (SaaS) ecommerce solution that allows businesses to set up an online store quickly and easily. Templates for Shopify can be customized and the platform has a number of built-in features that makes it a user friendly option.

CRO (Conversion Rate Optimization)

The process of increasing the number of visitors to a website who ‘convert’, where a conversion is the visitor completing a pre-defined goal (purchasing, submitting a form, watching a video, etc.)

SaaS (Software as a Service)

This is a model for delivering software/applications. SaaS offers the ‘service’ on a recurring subscription basis, where the service is cloud-hosted and accessed through a web browser.

Payment Gateway

A payment gateway is a required service that allows you to accept payments online. Payment gateways connect to payment processors (which then connect to your merchant account).

A/B Testing

Also called ‘Split Testing’, this is the process of testing one or more variations from a baseline hypothesis, tracking the results, implementing the best-performing model, and then repeating. A/B testing usually starts with a working hypothesis.


Offering similar products to a customer when they are shopping for a product or service. The products are either related or complementary items.


This is the process of persuading the customer to buy a more expensive item or add on additional items to their final order

WMS (Warehouse Management System)

A software tool for warehouses/distribution centers, which is used to improve the operations and functionality of staffing, inventory distribution, receiving, etc.

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