If you’ve been listening to these in order as I’ve been making them, surely by now you’ve realised the surface has been scratched, but we have yet to delve deeper into the depths where light is but a trickle above. Today, I’ll be sharing with you 20 more definitions pertaining to ecommerce. And don’t worry, there’s plenty more where this came from. So ground rule, the glossary is a self contained series, the only reason why a term isn’t mentioned here is because it has already been mentioned in another. Ready? Let’s do some learning.
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Good to have you here, my friends, welcome back to Ecomonics, a Debutify podcast, the most comprehensive ecommerce podcast that’s also perpetually at war with autocorrect. If you’ve been listening to these in order as I’ve been making them, surely by now you’ve realised the surface has been scratched, but we have yet to delve deeper into the depths where light is but a trickle above. Today, I’ll be sharing with you 20 more definitions pertaining to ecommerce. And don’t worry, plenty more where this came from. At this point in the journey of our show, we’ve talked to a number of great guests, well over 20, and many a term has been brought up in those as well. So if you’ve been consistently listening to each and every episode, you maaaay have heard a few (or all) of these already. As I was writing scripts and conducting interviews, I would take down notes of terms, so this script is actually written basically from the moment I finished the last one a few months ago, I’ve ordered them roughly in terms not so much of complexity but of specificity.. So ground rule, the glossary is a self contained series, the only reason why a term isn’t mentioned here is because it has already been mentioned in another. Ready? Let’s do some learning.
Content Management System - According to optimizely.com, it’s an application used to manage web content. Some examples they provide include wordpress, ModX and Joomla. In trying to decide on which one to use, some factors to consider are budget, what business functions you actually need settled, like how much content needs to be published or if you need to change SKUs, if you need to link it with Customer Relationship Management (CRM) software or Enterprise Resource Planning software. How easy it is to create content, since the people writing on the blog may be savvy, but not tech savvy. How many user groups as well as ranks there will be, if you have anyone from a junior copywriter to the CEO posting on it. If the platform is SEO friendly, for the most part that’s a necessity but some might need it more than others. And lastly, how big is the developer community? A popular program that’s not quite what you intended may win out if there’s enough people lending their time and talent to the community.
So, since I brought them up Customer Relationship Management Software includes programs like HubSpot, Zoho and Oracle. It’s job is to help manage customer data, support sales management, keeps track of insights based on customer behaviour and gives the staff ways to communicate internally, but also outwardly by way of official channels and social media. Then Enterprise Resource Management, defining it is a bit daunting, but netsuite.com took a crack at it, they ask you to consider all the different processes involved in running a business, inventory, order management, accounting, human resources, CRM etc. ERP software ties all these factors and factories together. Some of these mentioned from computerweekly.com are NetERP from netsuite, SAGE and Microsoft Dynamics.
Lets talk about Dynamic Creative: A Facebook feature, Dynamic Creative allows you to provide a set of assets including text, images and video to Facebook and then it will mix and match these assets when presenting to the audience. The idea is, different people may want your product but each person responds differently to creative, so rather than manually testing each unique attempt, Dynamic Creative will serve the ads based on the customer data.
Year Over Year is where you measure results from one point in the year, say April, and then those same variables in preceding or succeeding years. Kind of a short one so we’ll make that a bonus.
Now we have Pay Per Click, according to the intentionally sparingly used wikipedia, an internet advertising model used to drive traffic to websites, where an advertiser pays a publisher, which is usually a search engine, when the ad is clicked. Also a short one but cmon, I'm not made of bonuses.
Next up is Unique Value Proposition, according to cxl.com, this is the selling point of your good or service to help customers decide on yours over your competitors. The three main factors to a strong UVP are Relevancy, how effective it will be on your customers lives, Quantified Value, the specific benefits, and Differentiation, the parts that separate you from your competitors. It should come up pretty early on, like, right when customers visit your site.
So here’s an interesting one, not to denigrate any of the other ones here but, anyways, Progressive Web Apps are, according to developer.mozilla.org, are webb apps that use emerging web browser APIs, which are Application Performance Interface. While we’re on the subject, API, according to howtogeek.com is, in their words, like a menu in a restaurant, but they found a more accurate and specific analogy is being able to bring your ingredients to the restaurant and get the kitchen to cook with them. There are some examples here, one that I found helped me understand an API clearly is if you’re making an app that needs to take photos or video, the iPhone has a built in camera app, so just use that. Now, back to PWAs, another definition by medium.com says a PWA is a website that has the look and feel of an app. So all the features with none of the installation. Some real world examples you can look at include the AliExpress web app, Flipkart, an Indian Ecommerce site, Twitter Lite, which gets people on twitter if they don't want the app, Pinterest has one, and Pureformulas, a US supplement site.
Next we have VAN, Value Added Network. According to corporatefinanceinstitute.com, it’s a closed network, the data contained within accessible only to members. Generally, a VAN will be responsible for your Electronic Data Interchange, your EDI. Some examples include telecommunication companies, industry groups and specialized service providers. There’s three kinds, one to one, two businesses directly exchanging data, one to many, say a retail business connected to many suppliers, and many to many, popular in the financial sector because many companies are intertwined. They bring more automation to the process, and cut down on human error as a result. The exchange speed of data is now in real time, it’s more secure and standardized. The downsides however, are building costs since you’d need to hire developers to build and maintain it.
Let’s do SaaS, software as a service. According to softwareadvice.com, it’s also known as cloud based software. At this point whether you’re a one person operation or an enterprise, you’re likely using something that counts. Now, as I go through this definition, what I’m trying to understand is if something like the Adobe Creative Suite of products counts, since those are installed on a computer but accessible via the cloud, to me they seem to be SaaS because the other kind is on-premise, which are paid for upfront with a license. There are some adobe products you can pay for upfront but they tend to aim for a casual market. The first main point is you can hire people capable of using the software, wherever that may be, all they’d need is the password. On premise software can be a massive cost upfront, but a subscription model let’s you spread the budget out over months, giving you the maximum value upfront since you’d have full access to the software upfront. Oftentimes, this leads to smaller companies being able to punch above their weight class and afford more pristine software to give them an edge. Because the development is in the hands of a dedicated backend team, I mean the services backend, they can continue to work on the service as well as offer you flexibility on the service.
OTO, One Time Offer. The more I look into this, the more commonplace it becomes. In essence, it’s a sale, but the distinction is for one reason or another, it justifiably comes to an end. Unlike when once a month unsalted butter goes on sale at the supermarket, you know who you are! It could be say, a toy collection at McDonalds that ties in to a movie release. This was an article from medium.com, written by convrrt, it’s written in 2016, an age ago, but most of it holds up. The first sticking point of a one time offer is urgency. Terms like “while supplies last” appeal to each of our understanding that resources are limited in all things. This is less convincing with digital products, but the answer to that is to offer a large amount so that the customer recognizes that it is still a business and there can only be so many offers. So imagine offering 500 of a discounted subscription, number 501 has no excuse. The article goes even further to suggest putting a countdown timer in the event that you have a time limit on the sale. The second point is regarding bandwagoning, tying in to the 500 people signing on, if my friends and family for instance all get into Game of Thrones, I will avoid watching it, but that’s because I’m a contrarian, you get the idea. The third is price anchoring, which by the way, funny how within this we’re getting a bunch of bonus definitions in there isnt it? Anyways, Price anchoring is giving customers a frame of reference so they know they’re getting a good deal, or at least they think they are, not that they have any reason to doubt it, right? It’s one thing to provide a short term offer, it’s another to compare it to other active offers OR what the price would be on regular. The next point is that your email subscribers will be some of your best customers, since they know what value to expect typically.
Digitally Native Vertical Brand, which I bet is almost everyone here. I really should just say everyone, but I’m a hedger of bets. A DNVB is a brand born and raised on the internet. While many businesses have transitioned where necessary to online, or capitalized on it, integrated it into their business, however many large and successful businesses of today do so because the internet is baked into their DNA from the beginning. It encapsulates much of what we discuss on the show. But I guess the most key element to the definition is that it’s entirely in control of the product it sells, be it dropshipping or wholesaling. At first I did think Amazon counts as one of them, and according to medium.com there are some similarities but DNVBs build their brand based on the passion and respect they have for their product, usually just the one. Medium.com points to a few key elements such as transparency, authenticity and premium service. Some of the brands, all of which have been mentioned before are Bonobos, Warby parker, Glossier and Casper. The difference is, of the 17 products in my place right now I got from Amazon, I wouldn’t think of them as Amazon products, but I also don’t have a clear connection to the brand that did sell them to me. But as I type this script out and look at the onecompress gloves on my hands, I recall that more vividly.
Let’s now talk about RLSA, remarketing lists for search ads; a google ads feature that lets you customize your ads and bids based for visitors who have already visited your site. Essentially, you would want to use one set of ads to try and capture people’s attention but why would you want the same ads for people who already are aware? RLSA lets you hone content specifically for them, in the same way a salesperson who recalls a previous customer would want to pick up where things were left off. This by the way is from the support.google.com website; the two ways to strategically deploy this is A. to optimize bids based on behaviour, like increasing your bid for people who were recent visitors, giving you more time to be on their mind. B. Is to use keywords you don’t normally bid on incase you need to tweak your strategy to get their interest again.
Next we have a Product Listing Ad. It’s a Google Ad format that features images of products. According to mobilemoxie.com, products are uploaded to google by way of an XML feed that is sent to google merchant center. Now, I search things on google alot, I’m sure so do you. But having only learned of this for the first time I went and typed in Tires on Google. Why tires? Because I wanted to throw the algorithm off as much as possible. Looking at its full page on a desktop, the carousel had 6 ads, rows 3 by 3 and I’d say rounded out the page nicely. I clicked on one of the links and it goes to the website, but in order for these to get you to google shopping, you’d have to be dissatisfied with all 6 top hits and want to delve more into the list.
Here is Fast-Moving Consumer Goods or FMCG, characterized by investopedia as products that sell quickly at relatively low cost. Also known as consumer packaged goods. They’re in high demand, so you don’t expect the product to last long on the shelf, or in the car lot. To compare to a slow moving good, would be something like a fridge, which lasts a long time and doesn’t expire. The article goes into detail to say that there are three kinds of products in general: durable, nondurable and services. I did think there might be a word that fits more than nondurable, but fragile, nor flimsy, delicate, brittle or decrepit are palatable marketing terms so I digress. Durables have three years shelf life, non durable less than one, services are.. Services FMCG fall into nondurable, since they are consumed right away and don’t last long. You can picture plenty of items that go into this category, but here's the full list; processed foods, prepared meals, beverages, baked goods, fresh/frozen or dry goods, medicines, cleaning products, cosmetics and toiletries and office supplies. In regards to ecommerce, the market has largely been dominated by non-consumable goods - durables and entertainment products. However as we’ve seen, the FMCG ecommerce market is growing in demand, swiftly.
This pairs nicely with CPG, consumer packaged goods. A highly competitive market seeing as how products in this line are always going to be something people need more of; food, drinks, clothes… investopedia put tobacco up on the list right next to these, sure why not?
Let’s do CLTV next, Customer Long Term Value. According to blog.hubspot.com CLTV is a critical metric since it’s by design it emphasizes forward planning. It says and I quote, by measuring the CLTV in relation to the Customer Acquisition Cost, or CAC, which is what you need to spend in advertising and sales to acquire their business, companies can figure out how long they need to recoup the investment required to earn a new customer, for instance the cost of sales and marketing. The two main ways the article recommends improving the CLTV are customer satisfaction and retention. Which are accomplished through quality customer service and a product they’re not keen to replace with another or to stop using altogether. The key takeaway is that you don’t need to market to customers already buying from you, so retaining them is how that investment pays off in the long term. They also provide a five step calculator to figure out what the value is. And they use starbucks as an example so thankfully I… er we can understand it. Step 1, calculate average purchase value; so if a customer spends 5 bucks on a cup of coffee, but they come in to the shop 3 times a week, they then compare that to four other customers and how much they spend per week. Add that averaged together and then divide that by the number of customers. Step 2 is to calculate the Average Purchase Frequency Rate, the APFR, this is specifically regarding the amount of visits, so across five people the average might be 4.2 visits. Step 3 is calculate the average customers value; examine all five customers one by one, multiply average purchase value by purchase frequency rate. Average those five calculations together to get the Customer Value. Number 4, calculate the customer’s lifetime span, which the article presumes from their own source, kissmetrics, that it’d be 20 years. Final step, multiply acv by 52, because 52 weeks in a year, then multiply by customer lifespan value (20 years) the amount they came back with was 25k over 20 years per person. This is also why I’m starting to get my coffees at ANW. Some bonuses in there.
An important one you only get so one of is an IPO, Initial Public Offering. According to MVP of the day, Investopedia, an IPO is when a company offers shares of a private corporation to the public in a new stock issuance. This is where the company seeks to raise funding for their business through public investors. Often, businesses will already have funding from private investors, and this is where those private investors are going to want to see some returns on their investments. Private investors are people more closely tied to the well being of the company, families, the creators, angel investors and venture capitalists. The advantages are of course, access to more money, easier to convince more potential investors, increased transparency which improves their ability to secure credit, secondary offerings are on the table now, they can use it as a bargaining tool to secure highly skilled employees, and makes the company more prestigious in the eyes of the public. The downsides are that an IPO is a whole new financial cost, and a taxing one at that, there’s legal, accounting and marketing costs. They have to disclose financial information which may reveal business techniques others can steal, a chance of failure, new shareholders can vote and therefore the private investors have less say in the company. And risks are harder to take. And you can see this in many publicly traded companies, taking risks becomes anathema to the company.
Now let’s do TAC, Traffic Acquisition Cost. This is the monetary investment required to get people to potentially become customers, it’s applied specifically, according to seekingalpha.com companies like Yahoo, Baidu, Google and Facebook all of whom rely quite heavily on advertising. The article defines it like this “TAC is the percentage of those advertising revenues paid to third parties that direct surfers to their websites and advertisements.” For instance, the article supposes that the web page it’s on has a google ad or three on there, so if someone clicks on the ad, Google gives the website a cut.
Last today is White Label Product. In the words of investopedia, which arguably could end up being the biggest contributor to this episode if I’m not careful, these are products manufactured by a third party but labeled by the brand itself. Grocery stores are notorious for this, grotorious…? Wanted to try it out. You can tell what they are when you see a brand exclusive to the store like “Great Value” or “Good Product Yes Happy Fun Time” depends on where you shop. In ecommerce, there’s an article by deliverr.com which encourages creatives and makers to consider making a product with a blank label, and letting a brand market the product on their behalf. Marketing, as I’m learning the hard way, is a skill some have infinite knack for, others don’t. But not everyone can make a great belt or pouch. One of the most interesting aspects, putting myself in the position of someone making a product, is seeing other companies take my idea and tell a story with it. Ecomdash provides some helpful points when looking for a manufacturer, request a sample if you’re going to verify quality. Verify how long it took to deliver as well as the condition on arrival. Ask for total manufacturing costs and how they handle defects and damaged goods. White label is more involved than a routine dropshipping operation… droperation..? Wanted to try it out.. With dropshipping, the standard kind we talk about a lot with guests and in general, you’re just finding products that are currently in a winning position, which leads to making assumptions about it. If it’s reviewing alright, demand is rising, it’s fair to assume the product isn’t a disaster waiting to happen. However, the assumption is that you aren’t looking to brand it with specific messaging or packaging. With a white label operation you’re more involved in the product, adding your own brand and message to it. You can also white label a product and see how it performs in the market, and if you then want to invest in an upgraded version of the product you have some brand foundation. So it’s an important and effective strategy.
Alright! 20 more down, plus bonuses, hope you got a few new ones today in your repertoire. Like I said, plenty more where that came from. As always, let’s get your feedback sent to firstname.lastname@example.org