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The Ecommerce Glossary: 20 Ecommerce Terms You Need to Know

icon-calendar 2020-11-14 | icon-microphone 29m 20s Listening Time | icon-user Joseph Ianni

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Are you looking to enter the world of e-commerce? If so, there's a lot you'll need to understand in order to be successful. But don't worry, because in this episode we've unpacked 20 of the most important ecomm terms you need to know in this first of an ongoing series we're calling "The Ecommerce Glossary".

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Good to have you here. This is the first in a series of glossary episodes where we’ll be looking at some terminology used in the world of ecommerce. As someone who’s been a customer, a business owner, an employee for others as well as for myself, I’m also going to be providing you with my perspective on them. 

We’re going to go broad with the terms in this episode, but we will get in to more granular detail further down the line.

For those of you with an advanced knowledge, you’ll probably already know these, and to a greater extent than myself, so I can say two things to you; one, is that as an expert in my field, I still consume 101 level media, just in case there’s something I missed, thought I understood but turned out to misunderstand, or just to hear a fresh perspective. The second is that… I have a fresh perspective…. So I’ll also weigh in on these from my own experience and hopefully there’s a takeaway in there for you. 



Yes I know, we’re starting quite broad here. Ecommerce, or electronic commerce, is any platform on the internet that provides a good or service. I’ll give you a moment to parse that. 



Many of you know this quite well, and on this show we’ll be going into it in great depths, as with Ecommerce, just not necessarily this episode. Dropshipping is a business model where a consumer purchases a product online, which is then purchased by the seller at a third party location.


Just in Time Manufacturing

Also known as Just in Time Inventory system, this is a process by which manufacturers try to align the supply they make with the demand for them. In contrast to this is a Just-in-Case system where producers make a broad scope prediction of how much they’ll need, and then manufacture based on that.


Retail Arbitrage

This is a method where sellers purchase products, usually at a reduced price in stores, and then sell it online at a markup. 


PUR (purchase)

If you see PUR, you’re either looking at a brand of water, or an instance of PUR which stands for Purchase. 


ATC (Add To cart)

Next up we have Add To Cart. Again, pretty self explanatory, what’s funny to me is how, you know how the save button is at times still the image of a floppy disk? But no one’s used one in more than 20 years? Anyways, in addition to ATC there is CPATC, the Cost Per Add to Cart. We’ll find a lot of these terms fit in to a bigger picture as they work in tandem with other terms.


BEP (Break Even Point)

Next we have BEP, which stands for Break Even Point, or as I like to call it (heaves massive sigh of relief). This is the amount of money you need to earn to be in a stable position. You got out of losses, congratulations.


CPC (Cost Per Click)

Cost per click is something I tried myself at one point earlier in my life, 7-8 years roughly, it’s been around for quite a few years and I’ve always found it to be a pretty fair system. I didn’t make any headway on it but that’s due to my own inefficiency. 

CPC lets you, the advertiser, decide how much money you’re willing to pay in order to secure someone’s click. It doesn’t mean they’re now going to buy anything… or in some cases if they’re even a person… but what it does allow is for you to have some slice of the pie.

Let’s say you and I are both selling a product, and there are a lot of things in common… or maybe its the exact same thing and we both have the same supplier. If I am willing to pay ten cents per click, and you’re willing to pay 600 dollars, your ad will be displayed first. If your daily budget is 1800 dollars, that means you’ll have 3 clicks that day before I get to have mine displayed. Now, 600 is an absurd money for this comparison, but the more money you’re willing to spend, the longer your ad can be displayed. Once the ad is up, it could be up for hours depending on traffic, so in that sense you’re paying a premium on exposure. What’s great about this system is that it gives everyone a fair chance, but it does also favor whomever has more to spend, which it should.


CTR - Clickthrough Rate

Your  CTR, clickthrough rate is to help you understand how many people are seeing your ad, vs how many people are clicking on it. To have a good clickthrough rate, you’re depending on good ad copy to draw attention to it, because chances are your ad isn’t the only one on screen.



CPP stands for Cost per Purchase, and so that were dealing in official terms here is what it says on Facebook:

This metric is calculated as total amount spent divided by purchases. 

Then I looked up the definition of of amount spent:

The estimated total amount of money you've spent on your campaign, ad set or ad during its schedule.

Amount spent lets you see how much you've spent against your maximum budget during the time period you're looking at. It may include amounts already invoiced as well as billable amounts that haven't been invoiced yet.

This metric is used as the numerator for calculating all cost per action or cost per result metrics. If your ads are currently running, these numbers may be an estimate, since it can take up to 48 hours for ad results to be processed.

Now, if you had asked me if CPP involves all facets of business, Id’ve said yes; overhead, cost of product, staff, taxes.. And that is arguably all true. However in the context of Facebook business, it seems to only value the money spent on advertising that has led to sales. 

So how do we parse this information? 

The amount of money we need customers to spend on the product is a result of cost, anything standing in the way of the product being on sale. So that means manufacturing, labor, and distribution but not necessarily shipping, since people are all over the place that’s an inconsistent variable. One business I worked for, my teammates had to rent a Tesla to drop a product off at his house since FedEx didn’t cover it. Pretty smooth ride, I was told… I was… on the phones...

Now, CPP in this context doesn’t have anything to do with product cost, what it has to do with advertising. Now, we might ask, isn’t advertising cost? Well… In the sense that a brick and mortar store needs to put a sign up and that the sign should look appealing, yes.. But advertising is a lot more nuanced than that.

We advertise in order to draw attention to our product, but we also use it as a form of investment and retention. We can use it to show solidarity with modern issues, such as all the companies letting you know they’re aware of covid-19. We can use it to retain trust in customers, by reaffirming them after they purchased. We can use it to send a message about what our brand means to us. We can use it as promotion, and of course we depend on it to let customers know the product exists and is for sale. But it’s not essential in the same way the product itself is essential. This is why marketing and advertising requires its own budget and it’s own strategy. And that’s why we want to track it separately. 


CPM - Cost per Thousand (Cost per mile)

CPM stands for Cost Per Mile, which is a colloquial term, it actually means thousand. As you can guess, this is more critical to scaling an operation. But if you’re using dropshipping, it’s likely that you will be scaling, so this will be an important metric to deploy at that time. There is also Cost Per Minute so just keep that in mind based on context. As with CPP, this also is referencing the cost to advertise to a thousand people. 


ROAS (Return on Advertising Spending)

ROAS, Return on Advertising Spending is a metric to figure out what your revenue is based on your ads. It’s not the same thing as ROI, Return on investment, which determines your profit. 


PUR CC (Purchase custom conversion)

Purchase Custom Conversions is a Facebook tool you can use to optimize your advertising. If I’m selling instruments, what I can do is set a custom rule to find out of those sales, how many are of a certain demographic such as gender, as well as how many of them spent over a certain amount of money. From that kind of key detail, it helps me fine tune my advertisements to sell more efficiently to that target audience. 


CBO (Campaign Based Optimization)

This is another optimization based term, Campaign based Optimization in Facebook. It’s a three step process to refine your advertising strategy. You have your Campaign, which is your objective, which may be to sell cat food.

Within your campaign you have ad sets. A collection of advertisements that have something in common, such as geography or budget.

And then within each ad set are the advertisements, the creative copy that the customers see. 

As with any term that involves detail and specificity, CBO is critical to the success of your business, as you’re not just competing with other ads, but with the customer’s willingness to even pay attention.


Carousel ad

I’m confident that you’ve seen one of these already. A Carousel ad lets the seller use up to ten images in a space that customers can scroll through. It can be used to sell one product, but show it in multiple ways. It can also be used to show a variety of products if your store is more general. Like if it were a general store. It allows for a narrative, if each image leads in to the next. I haven’t seen one myself but I imagine a comic book art style would be a great fit.


DPA - Dynamic Product Ad

I wanted to read this quote from adespresso.com as it’s rather eye opening:

“In a world overrun by advertising, consumers are becoming immune. Or actively taking steps to replace ads altogether. That’s why the average banner ad click-through rate is 0.1%.” end quote

Advertising has two challenges, step 2, sell the product, step 1, sell the ad. 

DPA’s job is to help the seller refine their advertising so they can better tailor what they’re selling to whom. As I read on with research, the key takeaway is that the more assets you have, the easier it is to set up a successful DPA, but the smaller your business or the less products you're selling (all the way to selling one product) the less there is that can be dynamic. 

Let’s say I’m running a clothing store; if I’m basically selling a couple of articles of clothing, I need to cater a target market around those clothes. But let’s say I sell hundreds of different kinds of clothing; hats, shoes, pants...masks… a Dynamic Product ad has already filtered through the data I’ve accumulated and can make sure I’m showing the right product to the right person.


Upsell / Downsell / Cross Sell

Upselling is when you try to get customers to purchase a more expensive version of what they were interested in.

Downselling is.. The opposite…

And cross selling, this is interesting to me because when I worked in Brick and Mortar sales environments, I did cross selling thinking it was upselling. If someone wanted to buy a watch, by the time they had reached checkout, I was offering them a polishing cloth, extra bands… a purse… And I thought that all counted as upselling. Well, I was wrong. 

Ecommerce platforms will attempt to use these three… tactics… I mean that in a pragmatic sense… to make sure simply that if customers are going to spend money, that it will be well spent. 

Again, using my watch analogy, which totally isn’t based on real experience, someone might be interested in a watch but are about to pay extra money for features that are of no use to them, whereas I know the product by virtue of standing there for hours, and I know there’s a model similar in every way except it is lower in price and it doesn’t have the features. Of course I sometimes had to do this in hushed tones because If my floor manager hears me talking someone in to spending less money there’s going to be trouble, so on that note, I would defer judgement to whomever has the most contact with the person. 

Back to Ecommerce, with any successful business intent on scaling, having individual sales agents can lack a certain effectiveness. So using modernity to our advantage, we can tell when a customer should be enticed one way or another based on what they do. If they click away, try a downsell, if they add to card, show them what else they might like, if they get something low cost, make sure they see the other offers incase they end up having better value. And above all else, look out for their best interest. I’ve been a buyer for a long time, I remember who pressured me and who didn’t. 

One other thing I want to weigh in on is what role does a sales agent have if the process is automated? Well, I learned on my first day in sales from the best seller at the time, the product sells itself. Our job as sales agents is to validate the customer’s mind that probably was already made up, and then to make sure they’re having a quality experience and are spending their money wisely. If you work for someone who says “SELL SELL SELL” it's because they’re under pressure, someone else is telling them the same thing, and so on, and so on. 

The best sales jobs I ever had were also the ones with the least amount of pressure on me to close, where I could just talk to customers as people, and leave them with a positive feeling. Even if they didn’t spend money that day, the chances of them coming back increased tenfold. 


LLA - Look Alike Audience

A Lookalike Audience is a Facebook tool that can take information you have of your current audience, and turn cold leads into potential buyers. As we, and I, well know, Facebook collects your data, and it then businesses use that data to figure out who they can market their product to. 

Finding an audience is tough to begin with, but using LLA helps you turn your audience in to a resource to help find similar people. Now think about what kind of good this is doing. Let’s say you have a community built around your brand. If you use LLA to draw more people in, the community expands. If you know your product is marketed to people who are busy or stressed, by doing the legwork of figuring their needs out, you can reach out to them in specific to resolve their needs and save them time. If you believe your product is doing good in the world, and..you should… then it makes sense to try to find all the people it can do good for. 

It’s up to you the seller to decide how specific the details for the audience are, if you refine the details you’ll attract less people but are likelier to be in line to buy. If you go broad you’ll attract a lot of people but they’re less likely to turn warm. One way I look at this is if I’m running a successful business and I want to open a second location, a lookalike audience would have the same commonality as the people in a mall. Depending on which mall I go to, the people there will have different commonalities, as we want to make a good strategic choice as to where to open up a shop, we also want to find the right balance between reaching out to people and also drawing them in. 


SKAG (Single Keyword Ad Group)

Specificity is a powerful ally. The difference between someone looking for a mahogany shoe vs a dark brown shoe can mean the difference between 1000s of sales. The kind of specificity we’re talking about here is hard for me to quantify with any Brick and Mortar examples. I could say, a magazine with a niche interest would attract advertisers looking to target that particular market is along these lines. It’s The Economist over Time, and Gold Monthly over The Economist, and then Golden Teeth Implants monthly over Gold Monthly.

SKAG stands for Single Keyword Ad Group. And I’ll specify that it doesn’t actually have to be one word, it can be several grouped together, since one word would lead to less specificity. Which I think is ironic but so far my research hasn’t yielded any answers to that.

This method is used to target customers who already know what they want to a fine degree, and you want to make sure their needs are met by you. To pull this off well, you need a website that’s optimized and is consistent with the specificity you’ve been using. So if someone is looking for lime-green paint, when they reach the landing page, don’t suddenly have a list of colors and make them take time to find that exact color. 

It’s not recommended as the one size fits all approach to ecommerce, but it is for when you are very confident in your brand and target market, and can write copy with razor precision. 


VA (virtual assistant)

The last one I want to talk about is also one I have a significant amount of experience in, VA, virtual assistant.

It’s the year 2020, and many of us have been confined to our homes for an indescribable amount of time. Some of us, myself included, were practicing social distancing and working remote way before we were required to, my generation, the millennial, is the first to fully mesh the online world with our world around us and it’s there’s no going back. With that said, I wanted to take a moment and express my genuine sympathy for all the people who’ve lost their jobs and their businesses in all this, not to mention there have been worse losses than that. I’ve done my fair share of physical labour, and I spent ten years pursuing podcasting and media. While I have done the work, I still consider myself very lucky to be where I am right now. I have great compassion, but more so I also have faith in the human race, as difficult as these times are, each of us have the capacity to take care of ourselves and those in need. We’re a great bunch of people, we’ve come this far and I’m very proud of us.

Now, with that said, Virtual Assistant is a new way to work and it might be right up your alley. According to Canadians internet . com, a virtual assistant works for a company, either as a freelancer or as an employee, in their own environment, not in a centralized office. 

If you’re running an online business, whether it’s in ECOM or… can’t really think of any other examples at the moment… You will very likely need a VA for customer service, book keeping, research, writing, and in fairness I technically am one as well as I’m working from home.

I’ve also done VA work as a freelancer for a number of clients as an audio editor, but I’ve also been employed virtually as a Customer Success Agent. If you’ve, and I don’t mean if because you probably did, notice a little speech bubble in the bottom right corner of the screen on some sites you’ve been visiting, some of them will have a person you can talk to, others will have an AI that helps you navigate through your issue by searching their database, and some use a mix.

Once in a while, someone would thank me for being a person to talk to, rather than a machine, to which I reply “Sorry for the confusion, I am a machine, we’ve perfected the technology”

Being a customer service representative online is a great job because it’s easy to be efficient. We used Intercom, which would show me messages as they came in, and my job was to answer them as quickly and effectively as I could. I was able to be a little more productive over time because when I would get a similar question, I had a list of answers on a google doc I would copy, paste, edit for context and send. It goes to show that anything can become an asset with a little ingenuity, and a willingness to spend extra time in the present to save time later. 

Once a business scales however, I’ve found the higher the scale, the more likely the position will be handled by AI such as Ali Express, or by a staff member that’s rather clearly outsourced. I can also say that, depending on the company, being a CSA can involve a lot of improvisation and quick thinking. Not all solutions are present, and unlike in an office building where I can pop over the cubicle and bother Patrick, when I’m home and doing this work, it can feel isolating.

One other thing I’d like to warn people about if they decide to be a VA, and something for companies to keep in mind when hiring people, is that while work and life can be blended in a new and efficient way, it can also mean stress takes on a new form as well. When we work from home, it can be difficult to compartmentalize the stress of work because it’s now manifested where we live and are arguably at our most vulnerable. A bad day at the office at least stays at the office. The way I resolve this is that I have my bedroom, and I have my office. My bedroom has no devices in there, and when I get up in the morning, my phone is by my push up pad in the living room. My office on the other hand has so much wifi darting around I should be wearing a hazmat suit. It can get stressful in there but it stays in there. I strongly recommend finding a similar way to put your work in its rightful place. If you don’t have the luxury, I believe in you that you’ll make it to that point. It’s worth it.

I also recommend after a shift, to go for a walk. That way when you get back you can have a renewed feeling, and it mimics the sense of coming home from a day of work. Hey, you saved an hour or more in commuting time, use that time and get some exercise in.

Written by

Joseph Ianni

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