E-commerce glossary for brands and manufacturers
Working with clients across the world to assist their e-commerce channels management, the Blueboard team has been collecting commonly used e-commerce related terms that we are often used by our clients. In this glossary, we gather all the terms with definitions added, to assist executives, managers, business owners, and online merchants.
In the ever-growing popularity of e-commerce, there are several terms that we have not found in academic textbooks, some are introduced in recent research studies, and some has evolved from their original definitions. Thus, we intend to update this glossary continuously, with new terms and new definitions, to ensure the content quality.
If you are an e-commerce beginner, consider reading through the whole glossary to gain a better idea about the industry; if you are looking for a particular term, just click on the letter to find out. Lastly, we welcome constructive comments to help us grow better, and don’t forget to share if you think it could be valuable to your networking.
Affiliate Blogs: Blogs that write to promote affiliate marketing contents. Bloggers write and create content to review the products of others. The blog posts aim to encourage the audiences to purchase the products via affiliate links. Thus, bloggers will earn a commission from the brand or product provider. It is essential for affiliate bloggers to increase their SEO ranking so that their reviews will appear high in search engine queries.
Affiliate Marketing: The fact for a business to reward partners for bringing traffic or sales. Online retailers like Amazon sometimes have a network of affiliates. Affiliates take the commission for sending buyers to product pages with a percentage of the transaction. This system usually works with custom links that contain the identification of the affiliate partner.
Amazon: Amazon.com, Inc., known as Amazon – is the world’s largest online retailer – based in the US. The website started off selling online books and later extended to consumer electronics products; apparels; furniture; toys; jewelry and not limited to video/mp3 streaming and download service. The company also produces and sells consumer electronics such as Kindle e-reader, Fire TV, Echo; They are also a large service provider of cloud computing services.
Amazon Buy Box: The Buy Box is the Add to Cart button on Amazon product pages. Most of the time, this button means the customer is buying a product that is either sold or at least shipped by Amazon.
However, on Amazon, multiple sellers may be offering the same product. In some cases, the Buy Box will be attributed to an eligible third-party retailer. The choice is based on price, availability and seller reputation among other things.
Manually identifying the Amazon Buy Box is time-consuming for brands. Thus, many brands are using e-commerce monitoring software to track their competitors’ actions and quickly find out who is holding the Amazon Buy Box
Authorized Distributor: A distributor is approved by the manufacturer or brand to sell in significant quantity to the customers online or offline. The distributor has to meet specific requirements from the brand to be authorized.
Authorized E-tailer: Online retailers that are authorized by the brands to sell their products to customers via online retail platforms.
ASIN: Acronym for Amazon Standard Identification Number – An identifier code consists of 10 characters alphanumeric to address the product within an Amazon marketplace, provided by Amazon. The ASIN code might be different in different marketplaces for the same product.
The code can be found on the product page at page address link (Amazon.com/product_name/dp/ASIN number), in Product Information table. Professional online brands and manufacturers who have a large volume of products to manage often use e-commerce monitoring software to efficiently keep track with their online channels in real-time.
It is vital for Amazon marketplace sellers to acknowledge and indicate correctly the ASIN code. Amazon uses this code to identify the catalog data, tracking product inventory and index data to suggest products to buyers. So if sellers indicate the wrong ASIN, their product won’t appear on the same product category in search results.
B2B: Business to Business – also B to B, is a business model in which companies focus on doing transactions with other businesses and not with individuals. This business model often involves manufacturers, wholesalers, service providers, and retailers, not end-users or consumers. Some famous B2B enterprises are IBM (computer manufacturing company), GE ( General Electric) or Intel (Semiconductor manufacturing company).
B2C: Business to Customer – also B to C, is a business model in which companies focus on doing transactions directly with individuals such as end-users or consumers.
B2G: Business to Government, a business model in which the companies focus only on supplying administrations or governments.
Basing Point Pricing: A pricing strategy relying on the end buyer’s location. The seller pins specific locations as basing points and customers will be charged freight costs from that location to their address.
BlueBoard: An e-commerce monitoring software that brands and manufacturers are using to keep track of their e-tailers performances. The software allows users to get real-time updates regards the price changes, product availability, customers reviews, and automated performance report. Find out more about BlueBoard here.
Bounce rate: The rate of website visitors who only access on a specific page on the website, but don’t visit any other page. This measurement varies depending on the industry and business types. A high bounce rate is usually negative, although it does depend on the type of business and strategic goal of the website.
Brick and Click: a business model in which a company operates both an online and an offline store and couples the two into a single retail value-proposition, with features such as Click and Collect.
Brick and Mortar store: refers to businesses who run in physical stores or offices, dealing face-to-face with customers. Example of brick and mortar businesses are IKEA, WalMart, and Lush Cosmetics. In the rise of e-commerce, brick and mortar businesses sometimes struggle to compete with e-commerce giants such as Amazon.
Buy Box: another name for the Add to Cart button on Amazon product pages. An Amazon product page usually has several buying options: shopper can purchase from Amazon or from marketplace retailers. An algorithm determines which option will be triggered by the Add to Cart button.
Read about how brands can maintain control of the Buy Box.
Buying center: All the individuals and units involved in the decision-making process to purchase products or services.
Buzz marketing: Term used in Viral marketing – a marketing method which relies on online conversations to promote and encourage a product or brand. The marketers create contents that are attractive, exciting, either positive or negative to their audiences, and aim to obtain reactions such as likes, shares, and comments. Online influencers also play an essential role in jump-starting the buzz.
Cart Abandonment Rate: The percentage of unfinished purchase on e-commerce website – when the user placed the products on their cart but did not finalize the order.
According to Statista 2018, the average abandonment rate worldwide is 75.6%, in which the travel industry has the highest cart abandonment rate (81.1%), followed by finance industry (80.4%), non-profit and retail industry have the same percentage of 75.6%, and lastly, fashion industry has the lowest rate of 69.1%.
Etailers have been using multiple methods to reduce the cart abandonment rate such as avoiding price shock, abandon reminder email and implying security guarantee certificates during the purchasing process
Click and Mortar companies: Traditional brick and mortar companies that added online commerce channels to their business.
Click-only companies: Companies that operate entirely online with no physical stores or offices.
Competition-based pricing: A pricing method in which a company sets prices based on their competitors’ prices, and similar market offers.
Cost-based pricing: The most commonly used pricing strategy. There are two ways to determine it: full-cost pricing and direct-cost pricing. Full-cost pricing adds up both variable and fixed costs, plus a percentage (%) markup on top. Direct-cost pricing is just variable costs plus a % markup. In the era of e-commerce, many have questioned if this method is still relevant to apply.
Cross-selling: Cross-selling is a revenue increasing tactic that consists in selling additional products or services to existing customers.
E-Commerce cross-selling examples include on-page modules like “Frequently bought together.” Cross-selling often works in addition to up-selling.
Customer value-based pricing: Pricing goods based on (consumer) value means setting the price based on the buyers’ perceptions of value and not on the seller’s costs. Businesses often adopt this strategy for niche segments where customers focus more on product value and are not too price-sensitive. The method is commonly used by premium brands such as Hermes, Patek Phillippe or Apple products.
More about value-based pricing.
Discount-based pricing: Pricing method where the business offers prices lower than the list price for volume purchases, off-season buying or early payment. Discount-based pricing usually has a positive effect on short-term sales. Brands typically avoid abusing it to preserve long-term margins and reputation.
Discount Code: A series of numbers or/and letters to insert at the end of a transaction, mostly online, that offer a direct discount to customers. This code is provided by the brands to encourage buyers to purchase within a particular period of promotion.
E-commerce: Companies or sites that offer online commerce transactions for products or services.
E-tailer: Online retailers – retailers who establish and run their stores via internet platforms. Big e-tailers include Amazon, Aliexpress or JD.
E-WOM: Electronic Word of mouth – implies the comments, reviews, discussions of online users towards one or several topics; The provided information often based on personal opinion and perceptions. The users share their experiences with others users in the online community, i.e., blogs, quora; social media platforms, i.e., Facebook, LinkedIn, Twitter, Instagram, and so on.
EAN / IAN: European Article Number (EAN), recently renamed International Article Number (IAN – both acronyms are in use) is a product numbering system that helps manufacturers, distributors, and retailers identify products uniquely. Barcodes are scannable versions of EANs.
Ebook: Electronic documents that can access and download via the internet and read on electronic devices such as tablets, smartphones or computers.
EDLP (everyday low price pricing): A variation of value-based pricing, taking place at the retail level. The retailer continually applies low prices. The Lidl supermarket chain is an excellent example of EDLP pricing.
Exclusive distribution: A distribution strategy in which a single retailer has the exclusivity of the distribution of a product. Exclusive distribution is often associated with luxury or limited editions products.
Fulfillment: The necessary in-between steps in the delivery process from the seller to the buyer. Fulfillment companies often handle warehousing, packaging, shipping, and returns for retailers or brands. Some retailers set up their own fulfillment capabilities, and some use the third parties services such as Fulfilment by Amazon (FBA), FedEx or Rakuten Super Logistics
Google Analytics: Google Analytics is a freemium web analytics service offered by Google that tracks and reports website traffic, currently as a platform inside the Google Marketing Platform brand (Wikipedia, 2018). By adding a short piece of code provided by Google Analytics adding to the websites, the service can generate all the information regarding the metrics of the site such as overall traffic volume, landing pages, engagement rate, on-site behavior and so on. Many companies use Google Analytics to manage their online traffic and make content and structure decisions.
Google Trends: an online search tool that measures the search volume of specific keywords or terms, which have been queried over a particular period. Users can find the popularity of a specific term and filter the data by geography location, time range, topic category and type of search query. Online marketers will find this tool very useful because it allows comparing the popularity of several terms at the same time.
GTIN: Acronym for Global Trade Item Number – International code for managing millions of product references worldwide. The code normally consists of 13 digits, but can be varied depends on product type and country of sale. Its variations includes UPC/ EAN/ JAN (Japanese Article Number)/ ISBN (International Standard Book Number)/ ITF – 14 (14 digits code)
High low pricing: A pricing tactic which the seller (business or individual) charges higher than market prices to certain products and also a lower price for some others. Promotion programme and the discount coupon is often launched along with high low pricing to increase the intention to buy of customers. Using this method can fill in the price gap of the offers and increase overall profitability to the seller. However, the cost of marketing activities are potentially high, with the risk of loss profit by offering too low price
Intensive distribution: A distribution strategy in which a brand or a manufacturer will seek to be distributed by the highest possible amount of retailers. This strategy is often associated with products where sales are correlated with shelf space occupation, usually when consumers have little to no brand preference.
Keystone pricing: Pricing strategy that the retailers set their price by doubling the wholesale cost that they paid. The method does not take into account the variable costs such as sales commissions, credit card fees or inventory cost, thus, retailers risk of setting the price too low or too high. This method is often used when the products have a slow turnover, high shipping cost or retailers want to capture the high profit in a certain period of time.
Lifecycle stages: Lifecycle stages or Product lifecycle stages include 5 stages of product development, from the nurturing to the maturing:
2) Market Introduction
The time range in each stage varied depends on the characters of the product. By evaluating the product performance during its 5 stages will help the business to maximize its profit, managing the product investment and visioning the future of the product range. Apple.Inc is a good illustration for well understood their product lifecycle. The company introduces new flagship models every year and still supplies the previous models, depends on its performance on the market and the targeted segments. Each iPhone model has a very long life cycle in the market. The iPhone 4S has the longest lifecycle because after it reached the maturity, Apple kept its production with few features changes to target on the low budget customers segments.
Limit pricing: The pricing strategy which the product is sold at a very low price – that discourage new competitors from entering the market because it won’t make any profit.
MAP: Minimum Advertised Price. A policy that brands and manufacturers may set in place that determines the lowest price at which its retailers may advertise their products. In some specific cases, the retailers may be allowed to sell the product below the MAP as long as it is not displayed on the product pages.
MSRP: Manufacturer’s Suggested Retail Price – the price recommended by manufacturers and brands to the retailers, considering all the merchant costs and margins.
Multi-channel E-commerce: The practice of selling products on several online platforms. For example, cosmetics brand L’oreal sell their products via their e-commerce website, also setting up their online store on retail platforms like Amazon, eBay or Walmart. Expanding e-commerce channels can increase sales and brand awareness but also more challenging to manage and keep track of the sale performance on all the channels. Thus, e-commerce monitoring software is a solution to this problem, helping the business to control their online channels and get the data in real-time.
Niche marketing: a marketing strategy that focuses only on a very specific market segment with a unique value proposition. Brands will usually try to reach a very high market share on a very small portion of the overall market.
Off-page Optimization: A Search Engine Optimizing technique that involves all the measurements – outside the website – that need to be considered to increase the ranking in search engine. This is a long-term process that requires many good quality backlinks to the website.
The goal of this technique is to obtain better search rankings and build a good online reputation. The activities in building off-page optimization contain:
– Create links on third party websites
– Include keywords/ website hyperlinks in the web page
– Create links on social media networks
– Register website to search engines and web directories
On-page Optimization: A Seach Engine Optimizing technique that involves all the measurement – directly on the website – that need to be considered to improve its ranking on search engine and improve readability of the web page. This technique should be done at the beginning of building search engine optimizing for the page.
There are some simple activities to build on-page SEO, which are:
– Good content that encourages user engagement (like, share, comments)
– Tittle tags include keywords
– URL shows the brief summary of the content
– Image Alt Text consists of the subject and SEO keywords
– SEO Keywords placement
Pricing Algorithm: An algorithm, a set of mathematical rules, that determines the price of a product based on a number of factors. Factors may include:
- Competitor prices (competition-based pricing)
- Current demand (demand-based or surge pricing)
- Customer profiles or demographics (price discrimination – illegal in many countries)
- Stock levels.
Psychological Pricing: Pricing that considers the psychology of prices, not simply the economics; The strategy that focuses on triggering consumers mind. One variation of this method is the pricing with the odd number, especially number 9. For example, using $8.99 instead of $ 9.00, consumers tend to perceive the price closer to 8 than 9, thus, consider $8.99 is a good deal.
Price Bundling: Pricing strategy in which the business puts a few products to sell them together at one price instead of selling them individually. The value of each product is different, one offers higher values than the other. This strategy helps the business to get rid of the unwanted inventory and increase the customer perceived value in the brand.
QR code (short for “quick response” code): a type of barcode that contains a matrix of dots. Individuals can scan it using a QR scanner or a smartphone app. Once scanned, software on the device converts the dots into a string of characters. The characters may form a URL that opens in your phone’s web browser.
Reseller: Company or individual who purchased inventory from brands or manufacturers in order to sell to other customers. Their profits often come from the price difference between buying and selling and the commission offered by the supplier. Resellers sell the products to retailers, wholesalers, and end-users. In recent years, many individuals made a fortune by reselling products from famous brands via e-commerce, such as Benjamin Kapelushnik (Sneakers reseller) or Jane Angert (Hermes bags reseller).
Retailer: The business form (online and offline) that sell products to end-users/customers. Retailers often buy merchants from manufacturers, brands, wholesalers, and resellers. They make the profit by taking commisions from the transaction or the differences between buying and selling price. Example of retailers are Amazon (online) and Walmart (online and offline)
RRP: acronym for Recommended Retail Price – also known as MSRP (Manufacturers Suggested Retail Price)
Selective distribution: A distribution strategy in which a restricted number of retailers are selected by a manufacturer to assert and sell a product. This strategy is most often used by brands which have specific requirements for the distribution of their products or want to protect their brand image or customer experience by only working with prestigious or reliable retailers.
SKU: Acronym for Stock Keeping Unit. A unique, manufacturer-determined reference number for a product. Variations (color, size, capacity) of the same product all have different SKUs. See also EAN and IAN.
Surge pricing: Sometimes used interchangeably with dynamic pricing. A strategy where a retailer or service provider temporarily modifies the price of a product to adjust to a change in the demand for this product.
SEO: Search Engine Optimization – the process of putting contents, structure elements and links on the website so that it has a better rank on the search engines such as Googe; bing, thus, generates more traffic to the website
SRP: acronym for Suggested Retail Price – also known as MSRP (Manufacturers Suggested Retail Price)
Third-party payment processor: Financial companies or organizations that perform background tasks necessary to process payments on account of online merchants. There are two parts in the payment processors process:
– Front-end processor: links to several card associations and supply authorization and settlement services to the merchant banks’ merchants
– Back-end processor: authorize settlements from front-end processors and transfer the money from the issuing bank to the merchant bank.
Some popular payment processing companies are PayPal, Amazon Payments, Apple Pay or Due.
UI (User Interface): Everything that end-users can see and interact with, regarding the application or a website.
A good user interface has to be “user-friendly”, which means it is easy for users to look at the website or app, knowing how to interact with it in common logic. Users can easily find the information they need and can navigate themselves through several pages without getting confused. A good user interface is important in e-commerce because it is what the customers mainly interact with. A better visual experience will encourage engagements, increase credibility and brand perception.
Up-selling: Up-selling is a revenue increasing tactic that consists in increasing the profitability of a sale by inducing the buyer to purchase a more expensive item, more units of the same item or add-ons and options. It is often used in conjunction with cross-selling.
UPC: Acronym for Universal Product Code – a uniquely assigned code for each trade item, that remains unchanged along the product’s shelf life. It is a standardized global identifier product bar code, that allows tracking it through the supply chains. The UPC code is used in many countries, along with the EAN (European Article Number).
UPP: Unilateral Pricing Policy, a manufacturer-set price threshold under which products may not be sold by the retailer. If a brand or manufacturer witnesses a violation of this policy, it may send a violation notice to the reseller and eventually stop selling its products to this particular retailer.
Value-added pricing: A variation of Customer value-based pricing. This strategy focuses on adding extra features that competitors don’t have and its value is appreciated by customers. This strategy is useful when direct price competition is too intense with hardly any profits, the added values will make the brand stand out in the market and more appreciated by customers. For instance, Fnac prices a washing machine model at a slightly higher price than Darty – its competitor. However, Fnac offers free delivery and installation service after purchase, thus, this offer stands out more attractive to the buyers because they appreciate the added value that is free delivery and installation service.
Wholesaler: A business that engages entirely in large volume commercial activities.
WOMM: Word of Mouth Marketing – marketing strategy which promotes products through users online reviews and recommendation. Traditionally, Word of mouth is ones sharing their experiences towards the product or services to another. In e-commerce, Word of Mouth Marketing uses customers online reviews and recommendations to promote the products or services and try to get the targeted users to spread the words around.
Yield Pricing: The pricing method designed to maximize profit by applying different prices over time. A great example is the sale of concert tickets. Concert venues will typically offer early bird tickets several months ahead of the event, regular tickets designed to run out a few days ahead of the date, and last minute tickets that come at a premium.
Zone Pricing: Pricing strategy that based on geographical location. The business defines different zones to set their price and the further distant from the central zone, the higher price. For example, Zara – retail clothing brand from Spain – priced their products almost double in Japan, compare to the price in Spain due to transportation cost, tax, and other expenses.