Ecommerce Growth

Understanding Ecommerce: Definitions and Key Terms Explained

Ecommerce Growth

Understanding Ecommerce: Definitions and Key Terms Explained

Are you finding the jargon of ecommerce daunting or confounding your business expansion into the online world? Take comfort in knowing you're not alone in feeling this way. Even seasoned marketers can sometimes struggle to demystify the evolving landscape of digital sales. Making sense of 'ecommerce terms and definitions' becomes crucial in successfully steering your business through the waves of the online marketplace. For at First Pier, we believe that understanding is the first step towards mastery.

In the ecommerce realm, terms have layers of meaning, reflecting the complexities of an ever-evolving industry and the advanced technologies it employs. The key is not just to know the definitions, but to comprehend the operational contexts in which these terms exist. This deep understanding can open doors to leveraging their potential and propelling your business towards growth and innovation.

Let's take a quick glimpse at a few key ecommerce terms to give you a head start:

Infographic explaining ecommerce terms - ecommerce terms and definitions infographic pillar-5-steps

Welcome on board as we untangle the web of ecommerce terminology and simplify the intricate world of online commerce!

Understanding the Basic Categories of Ecommerce

In the realm of ecommerce, understanding the basic business models is crucial as they form the backbone of online transactions. Let's dive right in and explore the four primary categories of ecommerce.

Business-to-Business (B2B)

Business-to-Business, often abbreviated as B2B, refers to transactions that occur between businesses. For instance, a manufacturing company selling components to an automobile company or a software company providing services to another business. These transactions often involve complex processes and longer sales cycles. Understanding the nuances of the B2B model is key to establishing successful partnerships with other businesses in the ecommerce ecosystem.

Business-to-Consumer (B2C)

Next up is the Business-to-Consumer or B2C model, which is probably what comes to mind when most people think of ecommerce. In the B2C model, businesses sell products or services directly to individual consumers. Examples include ordering a book on Amazon or purchasing a subscription for a streaming service. The B2C model is essentially the traditional retail model transferred to the digital world. Enhancing your online store, setting competitive pricing, and leveraging social media platforms are essential strategies for success in the B2C domain.

Consumer-to-Consumer (C2C)

The Consumer-to-Consumer, or C2C model, allows consumers to sell directly to other consumers. This model has gained popularity with the rise of platforms like eBay and Craigslist, enabling individuals to sell their used items, handmade crafts, or even services to others. The C2C model has democratized ecommerce, allowing anyone with an internet connection to become a seller.

Consumer-to-Business (C2B)

Finally, we have the Consumer-to-Business (C2B) model, a more modern ecommerce model enabled by the democratizing power of the internet. In the C2B model, consumers offer their services or products to businesses. Examples include freelancers selling their skills to businesses on platforms like Upwork or Fiverr, or customers offering feedback to a company for market research.

Understanding these basic ecommerce models is the first step in mastering the art of online selling. As you delve deeper into ecommerce terms and definitions, these models will serve as a foundation for understanding more complex concepts and strategies.

Key Ecommerce Terms and Definitions

Now that we have a grasp of the basic categories of ecommerce, let's dive into some crucial ecommerce terms and definitions that will help you navigate online selling more efficiently.

A/B Testing

A/B testing, also known as split testing, is a method used to compare two versions of a webpage or other user experience to determine which one performs better. Essentially, it's a digital duel where you set up two variants (A and B) and analyze which one leads to higher conversions. For instance, you may create two different landing pages with varying color schemes or call-to-action placements and see which one drives more sales.

Average Order Value (AOV)

The Average Order Value (AOV) represents the average total of every order placed over a specific period. It's calculated by dividing total business revenue by the number of individual orders. A higher AOV suggests that your marketing and sales strategies are effectively upselling and cross-selling your products.

Churn Rate

Churn rate is a business metric that quantifies the rate at which customers leave your brand over a specific period. Evaluating your churn rate can provide valuable insight for improving business processes and developing effective customer retention strategies.

Click-through Rate (CTR)

The Click-through Rate (CTR) indicates the number of times a link or ad is clicked divided by the total number of visitors. It's a crucial metric for assessing the effectiveness of your online marketing efforts, like pay-per-click ads or email campaigns.


Cross-selling is a sales technique where you promote related products to a customer based on their current or previous purchases. For example, if a customer buys a laptop, you might cross-sell a laptop bag or mouse.

Customer Relationship Management (CRM)

Customer Relationship Management (CRM) refers to strategies used to manage and analyze customer interactions and data throughout the customer lifecycle. It's typically facilitated through CRM software like Salesforce, aiming to enhance customer service, increase customer engagement, and drive sales growth.

Customer Retention

Customer retention is the ability of a company to retain its customers over a specific period. High customer retention means customers continue to do business with your brand, indicating strong customer loyalty and satisfaction.

Key Performance Indicators (KPIs)

Key Performance Indicators (KPIs) are quantifiable measurements used to evaluate the success of an organization, employee, project or campaign against its predetermined objectives. Some examples of KPIs include the number of new subscribers in a quarter or the number of blog articles published during a month.

Lifetime Customer Value (LCV)

Lifetime Customer Value (LCV) is a prediction of the total revenue a business can expect from a single customer throughout their relationship with the company. Monitoring LCV can help you understand the long-term value your marketing strategies bring to your business.

Net Promoter Score (NPS)

Net Promoter Score (NPS) is a customer loyalty metric based on one simple question: "On a scale of 1-10, how likely are you to recommend our business to others?" The score helps you identify your promoters (score 9-10) and detractors (score 0-6), allowing you to measure overall customer satisfaction and loyalty.


Omni-channel refers to a cross-channel content strategy that businesses use to improve their customer experience. It ensures a seamless and integrated customer experience regardless of how or where a customer reaches out.

Return on Investment (ROI)

Return on Investment (ROI) is a financial metric used to measure the probability of gaining a return from an investment. It's calculated by subtracting the cost of the investment from the gain from the investment, and then dividing the total by the cost of the investment.

Search Engine Optimization (SEO)

Search Engine Optimization (SEO) involves strategies to improve a website's visibility in search engine results, thereby increasing site traffic. These strategies can include using relevant keywords, creating quality content, and optimizing website design and structure.

User Experience (UX)

User Experience (UX) refers to a person's emotions and attitudes towards using a particular product, system or service. It includes the practical, experiential, affective, meaningful, and valuable aspects of human-computer interaction and product ownership. A great user experience will make your customers come back for more.

Learning these key ecommerce terms and definitions will equip you with the necessary knowledge to make more informed decisions and strategies for your business. In the next section, we'll cover more advanced ecommerce terms to further enhance your understanding of the ecommerce landscape.

Stay tuned as our ecommerce expert, Steve, shares his insights on these advanced terms and how they can play a significant role in your business's online success.

Advanced Ecommerce Terms and Definitions

As we venture further into ecommerce, it's time to delve into more advanced ecommerce terms and definitions that are vital for optimizing your online business strategies. Understanding these terms can drive your ecommerce success and keep you ahead of the competition.

Amazon Bestseller Ranking (BSR)

The Amazon Bestseller Ranking (BSR) is a unique system that assigns a rank to nearly every product in Amazon's multi-million product catalog, based on its sales history. The lower the BSR, the better a product is selling. Tracking your products' BSRs can help gauge their performance and make informed decisions about inventory and marketing strategies.

Amazon Pay-Per-Click (PPC)

Amazon Pay-Per-Click (PPC) is a marketing strategy where sellers bid on keyword search terms to have their products displayed at the top of Amazon’s search results page. It's an auction-like process, where the seller with the highest bid and the best quality ad usually wins the prime spot. Mastering Amazon PPC can significantly improve your product visibility, leading to increased sales.

Amazon Search Engine Optimization (Amazon SEO)

Amazon SEO involves optimizing your product listings to rank higher in Amazon's search engine results. This includes using relevant keywords in your product titles and descriptions and optimizing your product images. Higher rankings can increase organic web traffic to your product pages and boost sales.

Brand Loyalty

Brand loyalty is the tendency of consumers to continue purchasing from the same brand over competitors due to a strong perception of the brand. Unlike customer loyalty, brand loyalty is influenced by factors like logo, design, and reputation. Building brand loyalty can lead to repeat purchases and higher customer lifetime value (CLV).


Bundling involves selling several related products or services together in one product listing to increase average order value. This strategy can help enhance customer value perception and boost your sales revenue.

Buy Box

The Buy Box is a feature on Amazon product detail pages that allows consumers to add products to their carts. Winning the Buy Box often determines how much of the demand for a product is captured directly by Amazon versus how much is captured by third-party merchants.

Buy Now, Pay Later (BNPL)

BNPL is a payment method that allows customers to purchase goods on credit and pay for them after a set interest-free period, or in installments. This feature can increase your conversion rates by offering customers more flexible payment options.

Buy Online, Pick up In-Store (BOPIS)

BOPIS is a shopping option where customers can purchase products online and pick them up at a physical store location. This method combines the convenience of online shopping with the immediacy of in-store pick-up, enhancing the customer shopping experience.

Buyer Persona

A buyer persona is a semi-fictional representation of your ideal customer based on market research and real data about your existing customers. Creating detailed buyer personas can help tailor your marketing efforts to meet the specific needs, behaviors, and concerns of different customer groups.

Cart Abandonment

Cart abandonment refers to the situation when a customer adds items to their online shopping cart but leaves before completing the purchase. Understanding the reasons for cart abandonment can help you implement strategies to reduce it and improve your conversion rates.


Chatbots are AI-powered software designed to interact with humans in their natural languages. These bots are usually conversational agents that are embedded in websites, apps, or instant messengers to provide instant customer support.

Consumer Behavior

Consumer behavior refers to the study of how individuals make decisions to spend their available resources (time, money, effort) on consumption-related items. Understanding consumer behavior can help you tailor your marketing strategies to meet customer needs and preferences.

Conversion Funnel

The conversion funnel, also known as the sales funnel, refers to the journey a consumer takes from the first interaction with your brand to the final purchase. Understanding each stage of the funnel can help you optimize your marketing strategies to guide customers towards conversion.


Cross-shopping is when a consumer shops at more than one retailer for the same or similar products. Understanding cross-shopping behavior can help you develop strategies to retain your customers and increase their loyalty.

Customer Acquisition Cost (CAC)

CAC is the total cost of acquiring a new customer, including all marketing and sales expenses. Keeping track of your CAC can help you understand how much you're investing to attract new customers and whether your marketing strategies are cost-effective.

Customer Lifetime Value (CLV)

CLV is a prediction of the total revenue you can expect from a single customer over their lifetime. Monitoring CLV helps you understand the long-term value of your customers and focus on customer retention.

Customer Loyalty

Customer loyalty refers to the likelihood of a customer choosing to repeat business with a company or brand. It's a measure of both a customer's preference for a brand and the frequency of their purchases.

Cyber Monday

Cyber Monday is a marketing term for the Monday after Thanksgiving in the United States. It was created by retailers to encourage people to shop online.

Direct-to-Consumer (D2C/DTC)

D2C refers to a business model where a company sells its products directly to consumers, bypassing any middlemen such as wholesalers, distributors, or retailers.


Dropshipping is a retail fulfillment method where a store doesn't keep the products it sells in stock. Instead, when a store sells a product, it purchases the item from a third party and has it shipped directly to the customer.

Frequent Buyer Programs

Frequent buyer programs, also known as loyalty programs, reward customers for making repeated purchases. These programs can help enhance customer loyalty and increase repeat purchases.


Fulfillment refers to the process of storing, packing, and shipping orders to customers. This can be done in-house or outsourced to a third-party logistics provider.

Fulfillment by Amazon (FBA)

FBA is a service provided by Amazon where sellers can store their products in Amazon's fulfillment centers. Amazon takes care of storage, packaging, and shipping, as well as customer service and returns on these orders.

Fulfillment by Merchant (FBM)

In contrast to FBA, FBM is a method of selling on Amazon where the seller is responsible for managing inventory and fulfilling orders directly to customers.

Lightning Deals

Lightning Deals are promotions on Amazon where a limited number of discounts are offered on an item for a short period. These deals can help increase product visibility and boost sales.

m-Commerce (Mobile Commerce)

m-Commerce refers to the buying and selling of goods and services through wireless handheld devices such as smartphones and tablets. This trend is growing rapidly as more consumers prefer shopping on their mobile devices.


Marketplaces are online platforms where goods and services are exchanged. The marketplace owner is responsible for attracting buyers and sellers, while the transactions are processed by the marketplace operator.

Multichannel eCommerce

Multichannel eCommerce involves selling on multiple online channels beyond a traditional ecommerce website. This could include marketplaces like Amazon and eBay, social media platforms, and more.

Onsite Search Optimization

Onsite search optimization involves improving the search functionality and results on your website. This can lead to increased usability, customer satisfaction, and conversions.

Payment Gateway

A payment gateway is a service that authorizes credit card or other forms of electronic payments for online businesses. It's the equivalent of a physical point of sale terminal in a retail store.

Point-of-Sale (POS) and Point of Purchase (POP)

POS and POP refer to the location and time of making a sale. In ecommerce, the POS would be the checkout page on a website or app, while the POP would be the display or promotional area that influenced the purchase.

Prime Day

Prime Day is Amazon's annual deal event exclusively for Prime members. It offers significant discounts across all categories and can be a great opportunity for sellers to boost their sales.

Private Label

Private label products are those manufactured or provided by one company for offer under another company's brand. Private-label goods are available in a wide range of industries from food to cosmetics.

Product Listing Optimization

Product listing optimization involves improving your product listings to increase their visibility and appeal to potential buyers. This can include optimizing product titles, descriptions, images, and more.

Return on Ad Spend (ROAS)

ROAS is a marketing metric that measures the efficacy of a digital advertising campaign. It's calculated by dividing the revenue from ad campaign by the cost of that ad campaign.

Seller Central

Seller Central is the web interface used by sellers to manage and view their orders on Amazon. Sellers can view real-time sales data, manage inventory, send shipments to Amazon fulfillment centers, and more.

Share of Voice (SOV)

SOV is a measure of the market your brand owns compared to your competitors. It's often used in competitive analysis to understand a brand's dominance in a particular market.

Sponsored Brands

Sponsored Brands are cost-per-click (CPC) ads that feature your brand logo, a custom headline, and up to three of your products. These ads appear in prominent locations within Amazon's search results.

Stock Keeping Unit (SKU)

An SKU is a unique identifier for each distinct product and service that can be purchased. SKUs are used to manage inventory levels and track sales.

Subscribe & Save

Subscribe & Save is an Amazon program that offers a discount on eligible products when customers subscribe for regular deliveries of the product.

Third-Party (3P)

Third-party sellers are independent individuals or companies that sell their products on an online marketplace like Amazon. These sellers are responsible for setting their own prices and handling their own inventory and shipping.

Universal Product Code (UPC)

A UPC is a type of barcode used globally for tracking products in stores. Each UPC consists of a number that uniquely identifies a product along with a barcode symbol for quick scanning.


Upselling is a sales technique where a seller encourages a customer to purchase a higher-priced item, upgrade, or add-on in an attempt to make a more profitable sale.

Vendor Central

Vendor Central is an invite-only platform used by manufacturers and distributors to sell directly to Amazon. Amazon buys products in bulk from vendors and resells them to customers.

Virtual Product Bundling (VPB)

VPB is a strategy where multiple products are sold together as a package. Unlike traditional bundling, virtual bundles don't require the products to be physically packaged together. This allows for greater flexibility in creating attractive product combinations for customers.

Understanding these advanced ecommerce terms is crucial for optimizing your ecommerce strategies and staying competitive in the fast-paced world of online retail. Armed with this knowledge, we at First Pier are ready to help you drive your online business to success!

The Importance of Understanding Ecommerce Terms for Your Business

As we navigate through the digital world of ecommerce, mastering the ecommerce terms and definitions becomes more than just a necessity - it's a competitive advantage. This understanding is not about memorizing definitions, but about leveraging these concepts to optimize your business strategies and achieve your business goals.

Enhance Communication - Understanding ecommerce terminology is crucial when communicating with partners, vendors, and even customers. It ensures that everyone is on the same page, reducing misunderstandings and increasing productivity. Whether discussing strategies with a marketing firm, or explaining policies to a customer, clarity is key.

Optimize Business Operations - Ecommerce terms often refer to operational processes such as dropshipping, B2B, B2C, and many more. By understanding these terms, you can effectively streamline your operations, make informed decisions, and identify areas for improvement.

Improve Marketing Strategies - Many ecommerce terms are closely tied to marketing strategies, such as SEO, PPC, and conversion rate. Understanding these terms allows you to develop and implement effective marketing strategies, drive more traffic to your site, and ultimately, increase sales.

Drive Growth and Innovation - The ecommerce industry is constantly evolving with new trends and technologies. Keeping up with these changes and understanding the associated terminology can help you adapt your business strategies, stay ahead of the competition, and drive growth.

At First Pier, we believe in empowering our clients with knowledge. We are committed to demystifying the complex world of ecommerce and providing you with the tools and understanding you need to drive your online business towards success. Whether you're looking to improve your marketing strategies, streamline your operations, or simply want to communicate more effectively, our team of experts is here to guide you every step of the way. Contact us today to learn more about how we can help you navigate the digital realm of ecommerce.

Conclusion: Leveraging Ecommerce Terminology for Business Success

Understanding ecommerce terms and definitions is not just about learning new words. It's about gaining the necessary knowledge to make informed decisions and steer your online business towards success. The world of ecommerce is continually evolving, and staying updated with the latest terminologies can help you adapt and stay ahead of the competition.

At First Pier, we believe in the power of knowledge. We understand that mastering these terms is a crucial step towards optimizing your ecommerce operations. That's why we strive to provide comprehensive resources that demystify the complex world of ecommerce, making it easier for you to navigate and succeed in the digital marketplace.

By understanding terms like 'conversion rate', 'SEO', 'omni-channel retailing', and 'mobile commerce', you can leverage their potential to its fullest. For instance, understanding the concept of SEO can help you improve your website's visibility, drive more traffic, and ultimately, increase sales. Similarly, being familiar with 'mobile commerce' can help you optimize your online store for mobile users, enhancing their shopping experience and boosting your conversion rates.

Moreover, comprehending advanced ecommerce terms like 'fulfillment', 'dropshipping', and 'payment gateway' can improve your operational efficiency. For instance, understanding 'fulfillment' can help you manage the packaging, labeling, and tracking of orders more efficiently. Knowing the term 'dropshipping' can help you better coordinate with your suppliers about customer orders and shipment details.

In conclusion, mastering ecommerce terminology is not just about enriching your vocabulary. It's about empowering yourself with the knowledge to drive your online business towards success. In the dynamic world of ecommerce, the more you know, the better you can adapt, innovate, and thrive.

For more insights and guidance on ecommerce, explore our ecommerce strategy plan and discover how you can grow your online business to new heights. You can also check out our ecommerce development services to learn how we can help you build a high-performance online store.

At First Pier, we're not just about providing you with the tools to succeed. We're about guiding you every step of the way, helping you understand, adapt, and master the ever-changing landscape of ecommerce. So, if you're ready to take your online business to the next level, contact us today.

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