Daily ArchivesMarch 14, 2022

Whether you’ve worked in brick-and-mortar stores and want to try online sales or are entering sales for the first time ever, you may have come across ecommerce terms that are new to you.

This ecommerce glossary provides definitions and additional information about terms you might have found while learning the basics of ecommerce.

Most of the ecommerce terminology we’ll discuss focuses on what you need to do before you can really think about ecommerce marketing. However, some marketing terms will appear because they affect your business plan even in the earliest stages.

Now, let’s dig into these 36 ecommerce terms to help you on your journey to running your online business.

1. Affiliate Marketing

When a website links to another brand’s products (often in a blog post or similar) in exchange for a commission, this is affiliate marketing.

If you engage in affiliate marketing on your site, you must include a disclaimer letting your readers know you make money off purchases they make via your links.

2. Authorization

Authorization occurs when an online purchase asks a credit card company to approve a transaction. The process involves ensuring a card has sufficient funds, is valid, and is being used legally.

3. Average Order Value (AOV)

Average order value (AOV) is the average amount customers spend at your store, determined by dividing revenue by the number of orders.

AOV = Revenue / # of Orders

4. Bundling/Product Bundling

When you group relevant products as a single package, usually for a lower price than the products would cost separately, you are bundling your products.

5. Business to Business (B2B)

Business to business (B2B) sales occur when one business sells items or services to another business.

6. Business to Consumer (B2C)

Business to consumer (B2C) sales involve selling items to individuals, not businesses.

7. Call to Action (CTA)

More often called a CTA, a call to action is when you ask or tell a customer or member of your audience to do something. Examples include “buy now,” “contact us,” or “learn more,” often with a button to click.

8. Conversion

Conversion is the process of getting a visitor to become a buyer. They go through the conversion or sales funnel, in which they go through the four stages of awareness, interest, desire, and action (i.e., becoming aware of your brand through making a purchase).

The number of people who make purchases divided by the number of visits to your site is your conversion rate.

Conversion rate = Purchases / Site Visitors

9. Cookie

A cookie is a snippet of code in web browsers that tells a website when visitors arrive on the site and what they do while they’re visiting. They help ecommerce companies see:

• How a visitor got to your page.
• What the visitor did on your page.
• How many times they visited your site over a certain period.
• Overall demographics of visitors.
• Which sites people stay on vs. which they quickly leave.

Related reading: Cookies, WordPress, And The GDPR

10. Customer Acquisition Cost (CAC)

Getting customers to show up in your store costs money, and the amount it costs is called customer acquisition cost (CAC). You divide the amount you spent on marketing by the number of people who purchased to determine your CAC.

CAC = (sales + marketing expenses) / (total customers acquired)

11. Customer Lifetime Value (CLV)

CLV, or customer lifetime value, is the amount you can reasonably anticipate an individual will spend at your store over every purchase they ever make from you.

CLV = ([customer’s profit contribution per year] x [total years as a customer]) – CAC

12. Content Management System (CMS)

A CMS, short for content management system, allows you to create, monitor, and alter content on your website. You don’t need to be a web designer or coding expert to use a CMS.

With StoreBuilder by Hostdedi, we power our CMS with WooCommerce in conjunction with WordPress— giving you one of the most customizable CMS options out there.

13. Customer Relationship Management (CRM)

A type of software, customer relationship management (CRM) helps you build and maintain relationships with users from their first visit through all their subsequent purchases.

Related reading: CRMs to use with WooCommerce

14. Cross-Selling

Cross-selling involves linking from one product’s page to another. The second product should be relevant and potentially improve the customer’s enjoyment of or success with the first.

15. Domain

Your domain is your domain name and its corresponding domain extension.

For example, let’s say you manage WinstonsDogs.com, an online brand that sells hot dog supplies. Your domain is:

[winstonsdogs] + [.com ]

[Domain name]+[domain name extension]

16. Dropshipping

With dropshipping, a third party fulfills your orders, while you acquire and facilitate orders for customers. This means you don’t need to store your products.

17. Fulfillment

After your site makes a sale, the fulfillment process begins. It begins with receiving sale confirmation and ends with the item being packaged and shipped.

18. Gateway

Also called a payment gateway, a gateway processes credit card transactions. It transfers the data from the bank or credit card provider, allowing the transaction to occur. This is different from a merchant account provider as it could be considered a middleman between the funds and the merchant account provider.

19. Inventory

Your inventory is the products you have in stock right now. So, if you’re out of something, it is not part of your inventory.

If you sell digital products like MP3s, videos, or documents, your inventory doesn’t need to be replenished. Those items don’t exist in physical form and generally can’t “sell out.”

20. Landing Page

A landing page is where a customer ends up after clicking a link. This doesn’t have to be your homepage.

21. Listing Fee

If you sell through third-party sites and not your own, you may be charged a listing fee. This can be a flat fee, a percentage of your sales, or a combination of the two.

22. Merchant Account Provider

Companies accepting credit or debit cards, online or otherwise, are required to have merchant account providers. When a card is run, the provider temporarily holds the money and ultimately deposits the amount into the business’ account.

Unlike a gateway, the merchant account provider doesn’t contact the credit card company or bank itself — the payment gateway does that for the provider.

23. Metrics

Metrics are important data like revenue, traffic, user engagement, search engine rankings, or demographics. Many platforms provide metrics for users, though you can also use third parties to give you more robust and accurate data reporting.

Related reading: Ecommerce KPIs To Grow Your Business and Increase Revenue

24. Payment Card Industry (PCI) Compliance

Accepting credit cards means you automatically collect data about the purchaser; PCI compliance means following the laws and regulations about storing and protecting that data.

25. Payment Service Provider (PSP)

A payment service provider (PSP) allows you to accept electronic payments, including credit and debit cards and digital wallets (e.g., Google Pay).

26. Point of Sales (POS)

If you’ve previously only worked in physical stores, you may think of point of sale (POS) systems as registers. While that is hardware related to a point of sale, POS in the online world more often refers to a software system that performs transactions, manages inventories, sends digital receipts, and more.

27. Return on Investment (ROI)

Your ROI (return on investment) is the amount of money you make compared to how much you spent. In other words, it states how profitable your company is at a given moment.

28. Search Engine Optimization (SEO)

Search engine optimization, or SEO, is the process of setting your site up for success on search engines like Google, Bing Search, and DuckDuckGo. This involves ensuring you use the right keywords while providing valuable content.

29. Search Engine Results Page (SERP)

Search engine results pages (SERPs) are the pages of results you see when you use a search engine. Your goal is to use ecommcerce SEO effectively enough to end up on the first page (or close to it), either with your homepage or individual pages on your site.

30. Shopping Cart

An online shopping cart lists items a customer has selected for purchase. Whether an item in a cart is considered “on hold” for a customer varies by platform.

31. Abandoned Shopping Cart

An abandoned shopping cart is a cart in which potential customers have placed items, then left the site without completing the purchase. Some sites, particularly larger online retailers, leave items in a customer’s cart indefinitely (assuming they don’t sell out). Others only allow items to stay in a cart for a few hours, days, or weeks.

A platform may allow your business to send emails or notifications to customers if they abandon their carts or when their abandoned carts are about to expire.

32. Software as a Service (SaaS)

Software as a service, otherwise known as SaaS, is essentially a third-party developer that maintains their proprietary software and lets you store and access your data from anywhere. On top of the features that come with their software, SaaS companies provide automatic updates and integration with other external digital services and software.

Experts often urge startups and small companies to use SaaS, as this software allows ecommerce stores and products to go live quickly with a low risk of investing in custom solutions.

33. Third Party Payment Processor

A type of merchant services provider, third-party payment processors allow you to take electronic payments without having a merchant account through a bank. Common third-party payment processors include PayPal, Stripe, and Square.

34. Traffic

Traffic is the number of visits to your website, regardless of how long they stay there or if they make purchases. This metric can be expressed as either unique visitors, sessions, or pageviews.

35. Transaction

A transaction is the sale of a product or service, online or elsewhere.

36. Upselling

Upselling occurs when, right before someone checks out, you suggest an upgrade or addition to their current cart, usually for a comparatively small additional cost.

Next Steps

If you’re ready to jump in now that you understand some of the many ecommerce terms, StoreBuilder by Hostdedi is here to help.

Remember the ecommerce term “CTA” from earlier? Here’s a real-life example — which we’d love you to click on:

To get started with StoreBuilder, click the button below.

Whether it’s skincare products or fresh produce, consumers love the convenience of getting products delivered to their doorsteps at regular intervals.

Daedal Research predicts the global subscription ecommerce market will grow from $51.22 billion in 2020 to $442.62 billion by 2025.

There’s tremendous potential in the growing market of direct-to-consumer product subscriptions. And Magento virtual products are the best way to tap into it and generate recurring revenue for your online business.

Want to learn how?

Here’s a detailed guide that covers:

An Introduction to Magento 2 Virtual Products

A virtual product in Magento is a product type used to sell non-tangible products such as memberships, services, gift cards, and subscriptions. It looks exactly like a simple product on the front end, i.e., it doesn’t have any configurable or customizable product options.

The only difference between a simple and virtual product is that the Magento virtual product type doesn’t have any weight.

Customers can add them to their cart and purchase them without entering a shipping address as virtual products aren’t shipped or delivered.

You can sell a Magento 2 virtual product individually or as a grouped, bundle, or configurable product. For example, you can sell a yoga class membership as a virtual product or combine it with a yoga mat and sell it as a grouped or bundle product.

A Magento 2 virtual product cannot be shipped or downloaded when sold independently. Customers only receive an order confirmation email after placing their online orders.

So if you’re using virtual products to sell event tickets, you’ll need to manage ticket sales manually or build an integration between your Magento store and event software.

How To Create a Virtual Product in Magento 2

Although you can create a virtual product programmatically in Magento 2, it’s easier to do it from the Magento admin panel.

Here’s how to set up a virtual product in Magento:

Step 1: Choose the Product Type

In the Magento admin, go to Catalog > Products.

Expand the Add Product menu and select the Virtual Product template.

Step 2: Assign an Attribute Set to the Product

Choose an attribute set for the virtual product by expanding the dropdown and selecting from the available options.

If you haven’t created attribute sets, you can use the default Magento 2 attribute set or create a new one using the Add Attribute button.

Step 3: Configure the Required Settings

Complete the required settings as described below:

• Product Name: Enter the product name.
• SKU: Use the default SKU generated from the product name or replace it with a custom SKU.
• Price: Add the product price.

After updating the required fields, switch the Enable Product toggle from the default Yes to No and save it. We’ll update this setting after completing the Magento 2 Virtual product creation process.

After the product saves, the Store View option will appear on the top-left corner under the product name.

Assign the product to a store or set it to All Store Views to assign the product to all stores.

Step 4: Update the Basic Settings

Configure the value for the following basic product settings:

• Tax Class: Assign a tax class by setting it to Taxable Goods or exclude it from taxation by setting it to None.
• Quantity: Add the number of products in stock.
• Stock Status: Set the status to In Stock.
• Weight: This is disabled by default. If you override this setting and add weight, the product will convert into a simple product.
• Visibility: Set it to Catalog, Search.
• Categories: Assign the product to relevant categories.
• Set Product as New From: Set a timeframe to display the product in the New Products widget.

The above list of product attributes may vary based on your attribute set.

If you’re using Multi Source Inventory Management, you may not see the Quantity and Stock Status options. Instead, you’ll see a Source section below. We’ll demonstrate how to configure quantities for Multi Source in the next step.

Step 5: Assign Sources and Quantities (for Multi Source Merchants)

If you aren’t using Multi Source Inventory Management, skip this step.

Multi Source merchants can assign sources and quantities to Magento virtual products using the Assign Sources button in the Sources section.

Find the sources you want to associate with the product and select the checkbox beside them. Click Done to add the sources.

To manage the sources, you can:

1. Set the Source Item Status to either In Stock or Out of Stock.
2. Add the stock on hand in the Qty column.
3. Enable notifications when the stock drops below a preset quantity by setting a value in the Notify Qty column. Alternatively, you can select the Use Default checkbox to use the global value.

Step 6: Configure the Optional Product Information Sections

Complete the product information in each of the following sections:

• Content: Add the product description.
• Images and Videos: Upload images, rearrange them, and configure display settings.
• Search Engine Optimization: Add an SEO-friendly meta title and product meta description.
• Related Products, Up-Sells, and Cross-Sells: Set up promotional product blocks.
• Customizable Options: Allow adding customizations such as text, date, or other selection options.
• Products in Websites: Assign the product to different websites when using a multisite deployment.
• Design: Customize the product page layout.
• Gift Options: Allow buyers to add a gift message during checkout and set a price for it.

Step 7: Publish the Product on Your Store

Switch the Enable Product toggle to Yes.

Click Save to publish the product.

Final Thoughts: How To Add a Virtual Product in Magento 2

Learning how to create a virtual product in Magento 2 opens a new realm of possibilities for your online store. It allows you to sell product subscriptions, extended warranties, and exclusive memberships that can help you improve sales and reduce churn.

No matter how you use it, make sure your store has the resources it needs to deliver a seamless shopping experience. Don’t know where to start?

Check out Managed Magento hosting by Hostdedi. It gives you access to hosting that’s purpose-built for Magento. You also get 30-day backups, unlimited email accounts, and instant auto-scaling.

Sign up for a plan today!