Dropshipping noun
A retail fulfillment model where the store doesn't keep products in stock; instead, it transfers customer orders to a supplier (wholesaler/manufacturer) who ships directly.
A seller lists a $39 gadget on Shopify; when an order comes, they pay their AliExpress supplier $22, who ships it to the customer—pocketing the $17 difference.
Print on Demand noun
A fulfillment method where items (t‑shirts, mugs) are printed only after a customer orders, eliminating inventory risk.
A designer uploads a cat illustration to Printful; a customer buys a hoodie for $45, Printful prints and ships it, and the designer nets $20.
Wholesale noun
Buying goods in bulk directly from manufacturers or distributors at a discounted price, then reselling at retail.
A boutique buys 100 handbags at $15 each (wholesale) and retails them for $49, making $34 per bag.
Private Label noun
Products manufactured by a third party but sold under the seller's own brand name.
A seller works with a Chinese factory to produce “ZenBrew” coffee makers, branding the product and packaging exclusively.
White Label noun
A generic product produced by one company that other companies rebrand and sell as their own.
A skincare company sells a generic shea butter cream; a boutique buys it, adds its own label, and sells it as “Savannah Glow.”
Fulfillment noun
The process of receiving, packing, and shipping orders to customers, often outsourced to a 3PL.
After 50 orders/day, the seller stops packing herself and hires ShipBob to handle fulfillment.
3PL noun
An external provider that manages fulfillment, warehousing, and shipping for e‑commerce businesses.
A seller sends inventory to a 3PL warehouse in Nevada; the 3PL picks, packs, and ships orders via UPS.
FBA noun
Amazon's service where sellers send inventory to Amazon warehouses; Amazon picks, packs, ships, and handles customer service.
A seller sends 500 units of a yoga mat to Amazon FBA; they become Prime‑eligible and sell out in a month.
FBM noun
A model where sellers handle storage, packing, and shipping themselves, often to save on Amazon fees.
A vintage book seller uses FBM because items are unique and can't be sent to Amazon warehouses.
MOQ noun
The smallest number of units a supplier requires for a single order, often 500–1000 pieces for custom manufacturing.
A factory requires a 1,000‑unit MOQ for custom packaging, so the seller must invest $8,000 upfront.
SKU noun
A unique alphanumeric code assigned to each product/variant for inventory tracking.
A T‑shirt comes in three colors; each gets a distinct SKU: TSHIRT-BLK-S, TSHIRT-RED-S, etc.
UPC / EAN noun
Universal Product Code (US) and European Article Number – barcodes that identify products for retail scanning.
To list on Amazon, you need a GS1‑issued UPC for your private‑label product.
Inventory Turnover noun
The number of times inventory is sold and replaced over a period (usually a year). Higher is better.
A store sells $120,000 worth of goods and holds $30,000 average inventory; turnover = 4x per year.
Stockout noun
A situation where a product is unavailable because inventory has been depleted; leads to lost sales.
A viral TikTok causes 500 orders in one hour, but the seller only had 300 units—stockout costs them 200 sales.
Backorder noun
Accepting orders for products that are temporarily out of stock, shipping them later.
A popular planner sells out, but the store allows backorders with a 2‑week shipping delay.
Dead Stock noun
Inventory that cannot be sold, often due to obsolescence, damage, or low demand, tying up capital.
A fashion retailer ends up with 50 unsold neon jackets after the trend fades—dead stock that must be liquidated.
COGS noun
The direct cost of producing or purchasing the products sold, including materials, labor, and shipping from supplier.
A candle sells for $24; the wax, wick, jar, and label cost $8, and the supplier charges $2 shipping – COGS = $10.
Gross Margin noun
(Revenue – COGS) / Revenue, expressed as a percentage. Shows profitability before overhead.
Revenue $10,000, COGS $4,000 → gross margin = 60%. Healthy e‑com stores aim for 50‑70%.
Net Margin noun
Profit after all expenses (COGS, marketing, salaries, fees) divided by revenue.
After ads, platform fees, and hosting, a store keeps $2,000 from $10,000 revenue → net margin = 20%.
AOV noun
Total revenue divided by number of orders. Increasing AOV is a key profit lever.
A store sells 100 orders for $5,000 total → AOV = $50. They introduce a “buy 2, get 10% off” and AOV rises to $62.
CAC noun
Total marketing spend divided by number of new customers acquired. A critical efficiency metric.
A store spends $2,000 on Facebook ads and gets 100 new customers → CAC = $20.
LTV noun
The total profit a customer generates over their entire relationship with the brand.
Average customer buys 3 times a year for 2 years, $50 profit per order → LTV = $300.
ROAS noun
Revenue generated per dollar spent on advertising. Usually expressed as a ratio (e.g., 4:1).
A $500 ad campaign generates $2,500 in sales → ROAS = 5.
CTR noun
Percentage of people who click on an ad or link after seeing it. (Clicks / Impressions) * 100.
A Facebook ad gets 1,000 impressions and 20 clicks → CTR = 2%.
CPC noun
Amount paid each time a user clicks on an ad. Varies by platform and competition.
Google Ads for “yoga mat” costs $1.50 CPC in the US.
CPM noun
Cost per 1,000 impressions of an ad. Often used for brand awareness campaigns.
A TikTok influencer charges $15 CPM, so 100,000 views cost $1,500.
Conversion Rate noun
Percentage of website visitors who complete a desired action (purchase, sign‑up).
1,000 visitors, 25 purchases → conversion rate = 2.5%. Good Shopify stores average 1‑3%.
Checkout Optimization noun
Improving the checkout flow to reduce friction and increase completion rates (e.g., fewer fields, progress bars).
A store adds Shop Pay and reduces fields from 8 to 4; conversion rate jumps from 2.1% to 2.8%.
Abandoned Cart noun
When a customer adds items to their cart but leaves without completing the purchase.
100 users add to cart, 65 leave → 65% cart abandonment rate. Automated emails recover 10% of them.
Cart Recovery noun
Automated emails or SMS sent to customers who abandoned their cart, often with a discount to incentivize purchase.
A customer abandons a $60 cart; an hour later they get an email with a 10% off code. 15% of recipients complete the purchase.
Payment Gateway noun
Technology that authorizes credit card or digital payments for e‑commerce stores (e.g., Stripe, PayPal, Authorize.net).
A Shopify store uses Stripe as its gateway; customers enter card details, and Stripe handles the secure transaction.
Merchant Account noun
A bank account that allows businesses to accept credit/debit card payments, often provided by acquiring banks.
A high‑volume seller opens a merchant account with Chase to get lower transaction fees than a standard gateway.
Payment Processor noun
A company that handles the transaction between the merchant, card networks, and banks (often part of the gateway).
Stripe acts as both gateway and processor, moving funds from the customer's bank to the merchant's account.
PCI DSS noun
Payment Card Industry Data Security Standard – a set of security requirements for handling cardholder data.
A store must complete a PCI DSS self‑assessment questionnaire yearly to remain compliant.
SSL Certificate noun
A digital certificate that encrypts data between the user's browser and the server, shown by a padlock icon.
A customer sees “https” and a padlock, reassuring them to enter credit card info.
AVS (Address Verification System) noun
A fraud‑prevention tool that checks if the billing address provided matches the one on file with the card issuer.
A high‑risk order triggers an AVS mismatch; the seller cancels and requests a different payment method.
Chargeback noun
A forced reversal of funds initiated by the cardholder's bank, often due to fraud or dispute. Costly for merchants.
A customer claims they never received the package; the bank initiates a chargeback, and the seller loses both product and revenue.
Chargeback Ratio noun
Number of chargebacks divided by total transactions. Exceeding 1% can lead to account termination.
A store processes 500 orders and gets 8 chargebacks → ratio 1.6%, high risk of losing payment processor.
Return Policy noun
A store's rules about accepting returns, exchanges, and issuing refunds. Clear policies reduce disputes.
The policy states “30‑day returns, buyer pays shipping.” A customer returns a defective item; the store refunds after inspection.
RMA noun
A tracking number and process for returned items, ensuring the seller can identify and process them efficiently.
A customer requests a return; the seller issues an RMA number to include in the return package.
Chatbot / AI Agent noun
Automated software that handles customer inquiries via chat, often using AI to answer common questions.
A customer asks “Where is my order?”; the chatbot pulls tracking info from the carrier API and responds instantly.
Marketplace noun
A platform where multiple sellers list products, and the platform facilitates transactions (Amazon, eBay, Etsy).
A handmade jewelry seller lists on Etsy and pays a 5% transaction fee plus listing fees.
Shopify noun
A leading e‑commerce platform that allows merchants to build online stores, manage inventory, and process payments.
A dropshipper uses Shopify + Oberlo to import products from AliExpress and fulfill automatically.
WooCommerce noun
An open‑source WordPress plugin that turns a site into a customizable e‑commerce store.
A blogger adds WooCommerce to sell e‑books and courses directly on their WordPress site.
Headless Commerce noun
Decoupling the frontend presentation layer from the backend e‑commerce engine, allowing flexibility across devices.
A brand uses Shopify backend but builds a React frontend for a super‑fast mobile experience.
PWA noun
A website that functions like a native app on mobile, with offline capabilities and push notifications.
A fashion store implements a PWA; users can browse offline and add to cart, and conversion rates increase by 20%.
TikTok Shop noun
An in‑app shopping feature where users can purchase products directly from videos or livestreams.
A beauty influencer demonstrates a skincare product; viewers tap “Shop Now” and buy without leaving TikTok.
Live Shopping noun
Livestream events where hosts showcase products and viewers can purchase in real time, common in China and growing globally.
A seller on Amazon Live hosts a 30‑min stream demoing a blender; 200 viewers purchase during the stream.
Influencer Marketing noun
Paying social media personalities to promote products to their followers.
A fitness brand sends free leggings to a yoga influencer with 100k followers; she posts a video and the brand gains 300 new customers.
UGC noun
Content created by customers (reviews, photos, videos) that brands can repost, building social proof.
A backpack company encourages buyers to tag #MyAdventure; they repost customer hiking photos on Instagram.
Product Listing SEO noun
Optimizing product titles, descriptions, and images to rank higher in search engines and marketplaces.
A seller includes “wool cashmere blend scarf winter” in the title, helping the product appear on page one of Amazon.
A+ Content noun
Amazon's feature for brand‑registered sellers to add enhanced images, comparison charts, and detailed descriptions.
A supplement brand uses A+ Content to show ingredients, benefits, and a comparison table, boosting conversion by 8%.
Subscription Model noun
A recurring revenue model where customers pay periodically (monthly/quarterly) to receive products or services.
A coffee roaster offers a subscription: $25/month for a bag delivered every 4 weeks. LTV increases significantly.
The E‑commerce & Dropshipping Lexicon — v.2026 — Dollarland Central Bank of Knowledge