The Complete Ecommerce Glossary: 135+ Key Business Terms for Dropshippers

Dropshipping has become a crucial way for entrepreneurs to enter the market quickly. The global dropshipping market is expected to reach $476.1 billion by 2026, growing at a 28.8% CAGR.

 

In the fast-paced world of dropshipping, understanding key business terms and having a reliable e-commerce glossary is crucial for success.

 

This article provides a comprehensive e-commerce glossary to help you quickly grasp and apply essential dropshipping terms, avoid common pitfalls, and boost your profits.

 

▶ Business Model

 

Business-to-Business (B2B)

Selling products/services from one business to another.

 

Business-to-Customer (B2C)

Selling products/services directly to end consumers.

 

Dropshipping

Retail fulfillment model where the supplier ships directly to customers, with no inventory held.

 

E-commerce

Buying and selling goods or services online.

 

Print on Demand (POD)

A business model where you sell customized products without holding any inventory.

 

Private Label

Branding products sold by you, manufactured by others.

 

▶ Commercial Model

 

Freemium Business Model

Offering basic service for free, charging for premium features.

 

Original Brand Manufacturer (OBM)

A company that both manufactures products and owns the brand under which those products are sold.

 

Original Design Manufacturer (ODM)

A company that designs and manufactures products according to the specifications of another company, often with customization options like branding or packaging.

 

Original Equipment Manufacturer (OEM)

A company that produces components or equipment that are integrated into another company's final product.

 

▶ Roles

 

Dropshipper

A retailer that sells products online without needing to stock or handle inventory itself.

 

Dropshipping Agent

An individual—either part of a professional dropshipping agency or employed by a fulfillment warehouse—who helps dropshipping companies find products through supplier sourcing, performs quality checks, and assists with order fulfillment.

 

Seller

Someone who sells something.

 

Supplier

A company or person that provides a particular product.

 

Merchant

A person or business that buys and sells goods.

 

Manufacturer

A company that makes large quantities of goods.

 

▶ Platform & Store Operation

 

Esty

A global online marketplace where people come together to make, sell, buy, and collect unique items.

 

Nuvemshop

An all-in-one ecommerce platform that enables businesses to create and manage their online stores.

 

Shopify

An e-commerce platform that enables individuals to create their online stores.

 

Shoplazza

A versatile platform suitable for various types of businesses.

 

Woocommerce

The open-source e-commerce platform for WordPress.

 

Yampi

A Brazilian e-commerce platform. It helps businesses create online stores and manage orders, payments, and delivery. It is mainly used in Brazil.

 

Software-as-a-Service (SaaS)

A cloud computing model where software applications are delivered over the internet, typically on a subscription basis, eliminating the need for users to install and maintain the software on their own devices.

 

Application Programming Interface (API)

A set of computer codes that makes it possible for different types of software to communicate with each other and exchange data.

 

Domain Name

A human-readable address used to identify a website on the Internet.

 

Uniform Resource Locator (URL)

The web address that leads to a specific resource on the internet.

 

Sitemap

A file where you provide information about the pages, videos, and other files on your site, and the relationships between them.

 

Really Simple Syndication (RSS) 

A web feed format used to publish frequently updated content like blog posts, news headlines, and more.

 

Enterprise Resource Planning (ERP)

A software that helps businesses manage and integrate their core business processes in a centralized system.

 

Shopping Cart Integration

The process of connecting an e-commerce platform's shopping cart to various third-party services, such as payment processors, inventory management systems, and shipping providers.

 

Outsource

Delegating tasks to external providers.

 

Subscription

Regularly billed product or service.

 

▶ Order & Inventory Management

 

Inventory Management

The process of overseeing and controlling a company's stock of goods, from procurement to sale.

 

Inventory Orders

Purchase orders specifically for items intended to be held in stock.

 

Order Fulfillment

The complete process of receiving, processing, and delivering customer orders.

 

Order Management System (OMS)

A software solution that streamlines and automates the entire order lifecycle, from order placement to fulfillment and beyond.

 

Warehouse

A building for storing goods.

 

Stock Keeping Unit (SKU)

A unique alphanumeric code used by retailers to identify and track inventory items.

 

Average Selling Price (ASP)

Average price at which products/services are sold.

 

▶ Product Strategy & Management

 

Niche

A specialized segment of a market or a specific area of interest.

 

A/B Testing

A method of comparing two versions of a webpage or app to see which performs better.

 

Bulk

Buying or dealing in large quantities.

 

Bundling

Selling multiple products together as one package, often at a discount.

 

Cost of Goods Sold (COGS) 

The direct cost of producing or purchasing the goods sold by a company.

 

Manufacturer’s Suggested Retail Price (MSRP)

The price that a manufacturer recommends retailers charge for a product.

 

Minimum Order Quantity (MOQ)

The smallest number of products a supplier will sell in a single order.

 

Tiered Pricing

A pricing strategy where a product or service is offered at different price points based on quantity, features, or usage.

 

Upselling

A sales technique where a salesperson encourages a customer to purchase a more expensive, upgraded, or premium version of a product or service than the one they initially intended to buy.

 

White labeling

A business practice where a company purchases generic goods or services from a manufacturer and then rebrands them as their own, essentially selling the product or service under their brand name.

 

Wholesale

The business of selling goods in large quantities at low prices to other companies, rather than to the general public.

 

Wholesale Distributor

A business that purchases goods in bulk from manufacturers or other suppliers and resells them to retailers, businesses, or other organizations, rather than directly to consumers.

 

Quality Control (QC)

A process that ensures products, services, or processes meet a defined set of quality standards and requirements.

 

▶ Logistics & Tariff

 

Logistics

The process of planning, implementing, and controlling the efficient flow and storage of goods, services, and related information from the point of origin to the point of consumption.

 

Tracking Number

Numbers given to packages when they are shipped.

 

Backorder

When a product is unavailable for immediate purchase because it’s out of stock, the seller is still accepting orders with a promise to ship it once new stock arrives.

 

Supply Chain Management (SCM)

The oversight of the entire production flow of a good or service, from raw materials to the end consumer.

 

Third-Party Logistics (3PL)

Outsourcing a company's logistics and supply chain operations—like warehousing, packing, shipping—to a specialized provider.

 

Fourth-Party Logistics (4PL)

A logistics model where a company outsources its entire supply chain management to a single external provider.

 

Fulfillment by Amazon (FBA)

A service where sellers send their products to Amazon's fulfillment centers, and Amazon handles storage, picking, packing, shipping, and customer service for those products.

 

Import One-Stop Shop (IOSS)

A system created by the European Union to simplify the collection, declaration, and payment of VAT on low-value e-commerce imports into the EU.

 

Value-Added Tax (VAT)

A consumption tax assessed on the value added in each production stage of a good or service.

 

VAT on E-commerce (VOEC)

The VAT applied to online sales.

 

CPF

The tax ID is issued once you have been registered with the Brazilian revenue.

 

▶ Payment & Transactions

 

Boleto

A payment method in Brazil.

 

Payoneer

A financial services business that provides online money transfer and e-commerce payment services.

 

Paypal

An American company operating a worldwide online payment system.

 

PIX

The Brazilian instant payment system.

 

Transaction

Exchange between buyer and seller.

 

Address Verification Service (AVS)

A fraud prevention system used in credit card processing that compares the billing address provided by the customer with the address on file at the card issuer's bank.

 

Cart Abandonment

A scenario where potential customers begin an online transaction—for example, adding items to their online shopping cart or starting to sign up for a subscription service—but leave the website without completing the transaction.

 

Cash on Delivery (COD)

Payment method where the customer pays for goods at the time of delivery.

 

Chargebacks

A transaction reversal initiated by a cardholder through their bank or credit card issuer.

 

Checkout Process

The steps a customer takes to complete an online purchase.

 

Handling Fee

A charge added to an order to cover the costs associated with preparing and shipping an item.

 

Payment Card Industry Data Security Standard (PCI DSS)

A set of security standards designed to protect cardholder data during payment card transactions.

 

Payment Gateway

A service that processes credit card and debit card payments for online or in-person transactions.

 

Payment Processor

A third-party service that facilitates electronic payment transactions between customers and merchants, ensuring secure and efficient processing of payments.

 

Payment Service Provider (PSP)

A third-party company that enables businesses to accept various forms of electronic payments, such as credit and debit cards, digital wallets, and online banking, without needing to set up their merchant accounts.

 

Point-of-Sale (POS)

The place or shop where a product is sold.

 

▶ Marketing & Traffic

 

Marketing

Activities a company undertakes to promote its products or services.

 

Affiliate marketing

A performance-based online marketing strategy where an individual or company (the affiliate) earns a commission by promoting another company's products or services.

 

Add to Cart (ATC)

The action of a user adding a product to their online shopping cart indicates a purchase intent.

 

Buying Persona

A fictionalized characterization of your ideal customer(s) based on information about them and how they use your product or service.

 

Call-To-Action (CTA)

A marketing term for any text designed to prompt an immediate response or encourage an immediate sale.

 

Conversion Funnel

A visual representation of a potential customer's journey from initial awareness to completing a desired action, like making a purchase.

 

Blog

A platform for publishing articles to attract visitors, improve SEO, and engage customers.

 

Guest Blogging

A content marketing strategy where individuals or companies write and publish articles on another website, often in their industry or niche, to promote their brand and build relationships.

 

Direct Message (DM)

A private message sent to another user on a social media platform.

 

Electronic Direct Mail (EDM)

A digital marketing strategy.

 

Dofollow Link

A standard hyperlink that search engines follow to crawl and index the linked page, passing along "link juice" or SEO value to the linked website.

 

Nofollow Link

An HTML attribute that tells search engines not to follow a specific link, meaning they won't pass any "link juice" or authority from the linking page to the linked page.

 

Hyperlink

A reference to data that the reader can directly follow by clicking or tapping.

 

Inbound Link

A hyperlink from another website that directs users to your website.

 

Inbound Marketing

A business methodology focused on attracting customers through valuable content and experiences.

 

Internal Link

Link connecting pages within the same site.

 

Search Engine Optimization (SEO)

The practice of improving a website's visibility in search engine results pages (SERPs) to attract more organic (unpaid) traffic.

 

Search Engine Results Page (SERP)

The page displayed by a search engine in response to a user's query, showing a list of relevant results.

 

Meta Description

The short summaries of web page content that appear in search engine results pages (SERPs) below the page title.

 

Organic Search

A search engine's method of finding and ranking website content naturally, without the influence of paid advertising.

 

Keyword

Search term targeted in SEO/SEM.

 

Latent Semantic Indexing (LSI) Keywords

Terms that are conceptually related to your target keywords.

 

Long Tail Keyword

A more specific, longer search phrase than a generic, short-tail keyword.

 

Landing Page

A standalone web page specifically designed to convert visitors into customers or leads by encouraging them to take a specific action.

 

Native Advertising

A form of online advertising that matches the look, feel, and function of the media format it appears.

 

Off-Page Optimization

SEO done outside your site (e.g., backlinks).

 

On-Page Optimization

SEO done on your website (e.g., meta tags, content).

 

Pop up

A small browser window that appears (e.g., an ad or a message).

 

Top of the Funnel (TOFU)

The marketing activities carried out to create awareness about a brand or product.

 

Middle of the Funnel (MOFU)

The stage in the marketing and sales process where potential customers, having shown initial interest, are now actively evaluating their options and considering a purchase.

 

User Experience (UX)

A user's overall experience when interacting with a product or service encompasses their perceptions of utility, ease of use, and efficiency.

 

User Interface (UI)

The means by which a user interacts with a device or application.

 

▶ Statistics Analytics

 

Ahrefs

A comprehensive suite of SEO tools primarily used for website analysis, competitor research, and keyword research.

 

SimilarWeb

A digital intelligence platform used for analyzing website and app traffic and performance.

 

Semrush

A leading online visibility management and content marketing SaaS platform.

 

Google Ads

An online advertising platform developed by Google.

 

Google Trends

A tool showing search volume trends over time.

 

Google Analytics

A web analytics service offered by Google that tracks and reports website traffic.

 

Attribution Model

A framework that helps marketers understand which marketing touchpoints are most effective in driving conversions.

 

Average Order Value (AOV)

The average amount of money spent each time a customer makes a purchase, calculated by dividing the total revenue by the number of orders.

 

Average Transaction Value (ATV)

The average amount of money a customer spends per purchase from a business. It’s calculated by dividing total revenue by the number of transactions over a specific period.

 

Bounce Rate

A web analytics metric that indicates the percentage of visitors who leave a website after viewing only one page.

 

Click-Through Rate (CTR)

A metric that measures the percentage of people who click on a specific link or ad after seeing it.

 

Conversion Rate Optimization (CRO)

The process of increasing the percentage of website visitors who take a desired action, such as making a purchase, filling out a form, or signing up for a newsletter. It's about improving the user experience and removing friction points to encourage more conversions.

 

Cost Per Acquisition (CPA)

A marketing metric that measures the cost of acquiring a new customer or converting a potential customer through a specific marketing campaign or channel.

 

Cost Per Click (CPC)

A metric used in online advertising that represents the amount an advertiser pays each time someone clicks on their ad.

 

Cost Per Mille (CPM)

The cost an advertiser pays for one thousand views or impressions of an advertisement.

 

Customer Acquisition Cost (CAC)

A key business metric that represents the total cost a company spends to acquire a new customer.

 

Engagement Rate

A key metric in social media marketing that measures how much interaction users have with content, calculated by dividing the number of interactions (likes, comments, shares, etc.) by the number of impressions or reach, and then multiplying by 100 to express it as a percentage.

 

Gross Profit

The net sales minus the cost of goods and services sold.

 

Key Performance Indicators (KPIs)

Quantifiable metrics that measure progress toward specific business objectives.

 

Margin

The difference between what it costs a business to buy or produce something and what they sell it for.

 

Monthly Recurring Revenue (MRR)

The income that a company expects to receive in payments every month.

 

Net Profit

The actual profit without the inclusion of working expenses in the calculation of gross profit.

 

Net Promoter Score (NPS)

A metric to gauge customer loyalty via willingness to recommend.

 

Pay-Per-Click (PPC)

An online advertising model where advertisers pay a fee each time one of their ads is clicked.

 

Quarterly Recurring Revenue (QRR)

A metric that shows how much customers spend quarterly on certain subscriptions or services.

 

Return On Investment (ROI)

A critical business term measuring profitability, essential for every dropshipper to track their investment returns.

 

FAQs

 

1. What is the importance of knowing business terms for dropshippers?

 

Knowing business terms is crucial for dropshippers, as it directly impacts their ability to operate efficiently, communicate effectively, and make informed decisions in a competitive e-commerce landscape.

 

2. How can an e-commerce glossary help new dropshippers?

 

An e-commerce glossary enables new dropshippers to quickly understand key terms, enhance communication, make informed decisions, minimize risks, and elevate their professionalism.

 

3. Is this glossary suitable for experienced dropshippers or only beginners?

 

This glossary covers terms useful for both beginners and experienced dropshippers looking to deepen their knowledge. Mastering essential business terms and the e-commerce glossary is a crucial foundation for every dropshipper aiming for success.

 

Whether you’re a beginner or an experienced seller, this e-commerce glossary of 135+ key business terms will help you better understand dropshipping language, enhance communication, and make smarter dropshipping decisions.

 

Start applying these key dropshipping terms today to take your dropshipping business to the next level! 

 

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