10 Essential Terms Every E-commerce Manager Should Know

# 10 Essential Terms Every E-commerce Manager Should Know

## Introduction: Speaking the Language of Data

Running an online store means wearing many hats—marketing, operations, customer service. But when it comes to **analytics**, there’s a specific vocabulary that can feel confusing at first. If you want to make data-driven decisions, you need to speak the same language as your dashboards, marketing reports, and finance team. In this article, we’ll break down **10 essential e-commerce terms**—clear, simple, and with real examples—so you can use them confidently in everyday decisions.

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## 1. Conversion Rate (CR)

**Definition:** The percentage of visitors who make a purchase.

**Example:** If 1,000 people visit your store and 30 buy, your conversion rate is 3%.

👉 **Practical tip:** Track conversion separately for desktop and mobile. Many stores see higher drop-offs on mobile due to clunky checkout.

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## 2. Average Order Value (AOV)

**Definition:** The average amount spent per order.

**Example:** 200 orders worth $20,000 means your AOV is $100.

👉 **Practical tip:** Increase AOV with bundles, upsells (“Add this for just $9.99”), or free shipping thresholds.

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## 3. Customer Lifetime Value (CLV or LTV)

**Definition:** The total revenue a customer is expected to bring over their relationship with your brand.

**Example:** If customers spend $50 per month and stay for 12 months, CLV is $600.

👉 **Practical tip:** Boost CLV with loyalty programs, personalized email campaigns, or subscription offers.

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## 4. Customer Acquisition Cost (CAC)

**Definition:** The cost of getting a new customer, often through ads or promotions.

**Example:** Spend $500 on ads, gain 25 new customers → CAC = $20.

👉 **Practical tip:** Always compare CAC with CLV. If CLV is $200, spending $20 to acquire is healthy.

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## 5. Cart Abandonment Rate

**Definition:** The percentage of shoppers who add products to their cart but don’t complete checkout.

**Example:** 1,000 carts created, 700 abandoned → 70% abandonment rate.

👉 **Practical tip:** Send cart recovery emails or SMS reminders. Even one message can bring back 10–15% of lost sales.

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## 6. Bounce Rate

**Definition:** The percentage of visitors who leave your site without clicking anything.

**Example:** If 60 out of 100 visitors land on your homepage and leave instantly, bounce rate is 60%.

👉 **Practical tip:** Reduce bounce with faster load times, clear CTAs, and relevant landing pages.

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## 7. Gross Merchandise Value (GMV)

**Definition:** The total value of goods sold on your platform before refunds, discounts, or fees.

**Example:** Selling 1,000 items at $50 each = GMV of $50,000.

👉 **Practical tip:** Use GMV to track top-line growth, but pair it with net revenue for the real picture.

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## 8. Return on Ad Spend (ROAS)

**Definition:** How much revenue you earn for every dollar spent on advertising.

**Example:** Spend $1,000 on Google Ads, earn $5,000 in sales → ROAS = 5x.

👉 **Practical tip:** For sustainable growth, aim for a ROAS that covers both CAC and overhead.

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## 9. Cohort Analysis

**Definition:** Grouping customers by shared characteristics (e.g., sign-up month) to track behavior over time.

**Example:** Customers acquired in January vs. February—do they spend differently?

👉 **Practical tip:** Use cohort analysis to test retention strategies. For instance, did your January email campaign keep customers coming back longer?

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## 10. Attribution

**Definition:** The method of assigning credit to marketing channels that lead to a sale.

**Example:** A customer sees a Facebook ad, then later clicks a Google ad and buys. Which gets the credit?

👉 **Practical tip:** Don’t rely only on “last-click attribution.” Explore multi-touch models in GA4 to see the bigger picture.

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## Conclusion: Your Analytics Starter Pack

Understanding these 10 terms gives you a solid foundation to talk confidently with your marketing team, evaluate performance, and make smarter decisions. You don’t need to memorize every formula—just know what each metric represents and how to act on it.

👉 Want an easier way to track these terms without juggling spreadsheets? **Try Peasy at [peasy.nu](https://peasy.nu) and make your e-commerce analytics effortless.**