E-commerce glossary

E-commerce and analytics discussions use specialized terminology that can confuse newcomers to online retail. Conversion rate, bounce rate, attribution, SKU, fulfillment, cart abandonment—these terms appear constantly in platform dashboards, marketing articles, and strategy discussions. Understanding this vocabulary is essential for making sense of analytics data and communicating effectively with marketing partners, platform support, and other store owners.

This glossary defines essential e-commerce and analytics terms alphabetically. Each definition explains what the term means, why it matters, and how it typically applies to online store operations.

E-commerce and analytics terminology

A/B Testing

Controlled experiment comparing two versions of webpage, email, or ad to determine which performs better. Half of traffic sees version A, half sees version B. Measure conversion rate, click rate, or other metrics for each version to identify winner. Used to optimize product pages, checkout flow, email subject lines, and ad creative based on data rather than assumptions.

Add-to-Cart Rate

Percentage of product page visitors who add item to shopping cart, calculated as cart additions divided by product page views times 100. Typical add-to-cart rates range from 8-15% depending on product category and price point. Low add-to-cart rate indicates product page fails to convince visitors or pricing discourages purchase. Higher than normal rate indicates strong product-market fit and effective product presentation.

Attribution

Process of determining which marketing touchpoints receive credit for conversions. Last-click attribution credits the final touchpoint before purchase. First-click attribution credits initial touchpoint that brought customer. Multi-touch attribution distributes credit across multiple touchpoints. Attribution model choice significantly affects perceived marketing channel performance and budget allocation decisions.

Average Order Value (AOV)

Average amount customers spend per transaction, calculated as total revenue divided by number of orders. Increasing AOV through product bundling, upsells, or free shipping thresholds improves revenue without requiring more traffic or higher conversion rates. AOV varies significantly by product category—electronics typically have higher AOV than beauty products.

Bounce Rate

Percentage of visitors who leave site after viewing only one page without any interaction, calculated as single-page sessions divided by total sessions times 100. High bounce rate (over 60-70%) may indicate poor traffic quality, slow page load, misleading ads, or content that does not match visitor expectations. However, some pages naturally have high bounce rates (blog posts, contact pages) without indicating problems.

Cart Abandonment Rate

Percentage of shopping carts created that do not result in completed purchase, calculated as incomplete carts divided by total carts created times 100. Industry average is 70%, meaning only 30% of people who add items to cart complete purchase. High abandonment (over 75-80%) indicates checkout friction—unexpected costs, complicated forms, limited payment options, or technical issues.

Churn Rate

Percentage of customers who stop buying from your store over specific time period. Primarily relevant for subscription e-commerce or stores with high repeat purchase expectations. Monthly churn rate of 5% means 5% of customer base stops purchasing each month. Lower churn indicates better customer retention and higher customer lifetime value. Inverse of retention rate.

Click-Through Rate (CTR)

Percentage of people who click link after seeing it, calculated as clicks divided by impressions times 100. Applies to ads, emails, search results, and website links. Email CTR of 2-3% is typical. Ad CTR varies widely by platform and industry—Google search ads average 3-5%, display ads average 0.5-1%, social ads average 1-2%. Higher CTR indicates compelling messaging and relevant targeting.

Conversion Rate

Percentage of visitors who complete desired action, typically a purchase. Calculated as conversions divided by total visitors times 100. Overall store conversion rate of 2-3% is typical for e-commerce. Conversion rate varies significantly by traffic source, device type, and customer type. Primary metric for measuring how effectively site turns visitors into customers.

Cost Per Acquisition (CPA)

Average cost to acquire one customer through paid marketing, calculated as total marketing spend divided by number of customers acquired. If you spend $2,000 on Facebook ads and acquire 50 customers, CPA is $40. Compare CPA to customer lifetime value to determine marketing profitability. Sustainable CPA is typically 20-30% of customer lifetime value, though acceptable ratio varies by business model and industry.

Customer Lifetime Value (CLV or LTV)

Total revenue expected from customer over entire relationship with your store. CLV of $280 means average customer generates $280 in revenue before they stop buying. Calculated by multiplying average order value by purchase frequency by average customer lifespan. High CLV justifies higher customer acquisition costs and enables more aggressive marketing investment.

Email Open Rate

Percentage of email recipients who open email, calculated as opens divided by delivered emails times 100. Average e-commerce open rate is 15-25% depending on list quality and email relevance. Subject line quality, sender reputation, and send timing significantly affect open rates. Declining open rates indicate list fatigue or declining email relevance to subscribers.

Engagement Rate

Measure of how actively audience interacts with content, typically on social media. Calculated as total engagements (likes, comments, shares, clicks) divided by reach or followers times 100. Engagement rate of 2-5% is typical for most social platforms. Higher engagement indicates content resonates with audience. More predictive of business outcomes than follower count alone.

Fulfillment Time

Time between receiving order and shipping order to customer. Fast fulfillment (same-day or next-day) improves customer satisfaction and reduces customer service inquiries. Slow fulfillment increases cancellation requests and negative reviews. Most customers expect fulfillment within 1-3 business days. Clearly communicate expected fulfillment time at checkout to set appropriate expectations.

Funnel

Series of steps customers progress through from initial awareness to purchase. Typical e-commerce funnel: visit site → view product → add to cart → begin checkout → complete purchase. Each step loses percentage of visitors. Funnel analysis identifies which steps lose most customers, indicating where optimization delivers highest return. Also called conversion funnel or sales funnel.

Impressions

Number of times content is displayed, regardless of whether anyone clicks or interacts. Ad impressions, email impressions, search impressions all measure potential reach. Impressions differ from reach (unique viewers) because same person can generate multiple impressions by viewing content multiple times. Used to calculate click-through rates and engagement rates.

Inventory Turnover

Number of times inventory is sold and replaced during time period, calculated as cost of goods sold divided by average inventory value. Higher turnover indicates efficient inventory management—products sell quickly without tying up capital. Lower turnover suggests overstocking or slow-moving products. Optimal turnover rate varies by product category and margins.

Key Performance Indicator (KPI)

Metric that directly connects to business goals and drives decisions. Not every metric is KPI—KPIs are subset of most important metrics that indicate business health and inform strategic decisions. Common e-commerce KPIs include revenue, conversion rate, customer acquisition cost, and customer lifetime value. Most stores should track 5-10 KPIs maximum to maintain focus.

Landing Page

Webpage specifically designed for visitors arriving from particular marketing campaign or traffic source. Landing pages typically focus on single product or offer with clear call-to-action. Different from homepage because landing page eliminates distractions and focuses entirely on conversion. Effective landing pages match ad messaging and maintain consistent design and copy from ad to page.

Multi-touch Attribution

Attribution model that distributes conversion credit across multiple customer touchpoints rather than assigning full credit to single interaction. Customer might discover product through social ad, research through organic search, and purchase through email campaign. Multi-touch attribution recognizes all three touchpoints contributed to conversion. More accurate than single-touch attribution but more complex to implement and analyze.

Organic Traffic

Visitors who arrive at site through unpaid search engine results rather than paid advertising. Organic traffic typically converts better than paid traffic because these visitors actively searched for relevant terms. Building organic traffic requires SEO optimization, quality content, and time. Contrast with paid traffic from advertising campaigns.

Pageviews

Total number of pages viewed across all site visitors. Single visitor viewing five pages generates five pageviews. Pageviews measure overall site engagement but do not directly predict conversion. More valuable when analyzed as pageviews per session (indicating engagement level) or when segmented by specific high-value pages like product pages and checkout pages.

Payment Gateway

Service that processes credit card and other electronic payments for e-commerce transactions. Common payment gateways include Stripe, PayPal, Square, and Authorize.net. Payment gateway handles secure transmission of payment information, fraud detection, and fund transfers from customer to merchant. Charges transaction fees typically ranging from 2.5-3.5% plus fixed per-transaction fee.

Product Page

Webpage displaying single product with images, description, price, specifications, reviews, and add-to-cart button. Product page conversion rate measures how effectively page convinces visitors to add item to cart. Optimization focuses on photography quality, description clarity, social proof through reviews, and addressing common objections. Most important page type for e-commerce conversion optimization.

Repeat Customer Rate

Percentage of customers who make more than one purchase, calculated as customers with 2+ orders divided by total customers times 100. Repeat rate of 25-35% is typical for most e-commerce stores. Higher rate indicates strong product-market fit and customer satisfaction. Lower rate suggests one-time purchase behavior or customer acquisition is attracting bargain hunters rather than loyal customers.

Retention Rate

Percentage of customers who remain active over time period. Calculated as customers still active at end of period divided by customers active at beginning of period times 100. Monthly retention rate of 70% means 70% of customers from previous month remain active this month. Opposite of churn rate. Higher retention increases customer lifetime value and reduces dependence on continuous new customer acquisition.

Return Rate

Percentage of orders that customers return, calculated as returned orders divided by total orders times 100. Return rate of 5-10% is typical for most product categories. Fashion and apparel often have higher return rates (15-30%) due to sizing and fit issues. High return rates reduce profitability but generous return policies often increase initial conversion rates by reducing purchase risk.

Revenue

Total sales generated over time period. Most fundamental e-commerce metric. Revenue equals number of orders multiplied by average order value. Revenue growth comes from increasing traffic, improving conversion rate, or increasing average order value. Always compare revenue to previous period to identify trends. Revenue without profit context can be misleading—unprofitable revenue growth is not sustainable.

Return on Investment (ROI)

Measure of profitability for specific investment, calculated as (gain from investment minus cost of investment) divided by cost of investment times 100. Marketing ROI of 300% means every dollar spent generates three dollars in return. Positive ROI indicates profitable investment. Compare ROI across different marketing channels or optimization efforts to prioritize resource allocation.

Sessions

Group of interactions one user has with website within time period, typically 30 minutes. Single user can generate multiple sessions by visiting at different times. Sessions more accurately reflect distinct visits than simple visitor counts. Average session duration and pages per session indicate engagement level. Sessions form denominator for calculating conversion rate and other performance metrics.

SKU (Stock Keeping Unit)

Unique identifier for each distinct product variation in inventory system. Blue t-shirt size medium has different SKU than blue t-shirt size large. SKUs enable tracking inventory, sales, and fulfillment for specific product variations. Store selling t-shirts in 5 colors and 4 sizes has 20 SKUs (5 × 4) even though it is conceptually one product.

Social Proof

Psychological phenomenon where people assume actions of others reflect correct behavior. In e-commerce, social proof includes customer reviews, ratings, testimonials, number of purchases, and user-generated content. Displaying social proof increases conversion because visitors trust other customers more than brand marketing. Products with 50+ reviews typically convert 2-3× better than products without reviews.

Traffic Sources

Channels through which visitors arrive at website. Primary sources include organic search, paid advertising, direct traffic (typing URL), email campaigns, social media, and referral from other websites. Different sources have different conversion rates and costs. Track traffic volume and conversion rate by source to identify which channels deliver best ROI and warrant increased investment.

User Experience (UX)

Overall experience person has when interacting with website, including ease of navigation, page load speed, mobile optimization, checkout simplicity, and visual design. Good UX makes purchasing easy and enjoyable. Poor UX creates friction and confusion that increases abandonment. UX optimization typically improves conversion rates by 15-30% by removing obstacles between visitor intent and purchase completion.

User-Generated Content (UGC)

Content created by customers rather than brand, including photos, videos, reviews, and social media posts featuring products. UGC provides authentic social proof that brand-created content cannot match. Permission-based UGC can be used in marketing, on product pages, and in social media. UGC-based ads typically generate 3-5× higher engagement than brand-created ads because they appear more authentic and trustworthy.

Vanity Metrics

Metrics that look impressive but do not directly connect to business goals or drive decisions. Examples include social media follower count, total pageviews, and email list size without engagement context. Vanity metrics can increase while revenue declines because they do not measure meaningful business outcomes. Focus on actionable metrics that inform specific decisions rather than vanity metrics that just sound good.

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