E-Commerce Glossary

All essential terms, metrics and concepts for your online store. With formulas, interactive calculators and practical tips.

A

Average Order Value (AOV) (AOV)

The Average Order Value indicates how much a customer spends on average per order in your online store.

Average Revenue per User (ARPU) (ARPU)

Average Revenue per User shows how much revenue you generate per customer on average within a specific time period – a key metric for customer value and growth.

B

B2B E-Commerce (B2B)

B2B e-commerce refers to digital commerce between businesses — manufacturers, wholesalers, or service providers selling through online channels to commercial buyers rather than end consumers.

Bounce Rate (BR)

Bounce Rate shows what percentage of visitors leave your website after viewing only one page, without further interaction.

Break-Even Point (BEP)

The Break-Even Point shows when revenue equals total costs – beyond this point, your online store becomes profitable.

C

Cart Abandonment Rate (CAR)

Cart Abandonment Rate shows what percentage of visitors add products to their cart but don't complete the purchase.

Churn Rate (Churn)

Churn Rate shows the percentage of customers who leave and stop buying within a specific time period.

Click-Through Rate (CTR) (CTR)

CTR shows the percentage of users who actually click on your ad after seeing it – a direct indicator of ad attractiveness.

CLV:CAC Ratio (CLV:CAC)

The CLV:CAC Ratio shows how much revenue you generate per dollar invested in customer acquisition. It is the ultimate indicator for sustainable growth.

Contribution Margin (CM)

Contribution Margin is the amount remaining after deducting all variable costs from revenue, contributing to fixed cost coverage and profit generation.

Contribution Margin I (CM1) (CM1)

Contribution Margin I shows how much remains from the selling price after deducting the cost of goods sold (COGS). It's the first level of contribution margin analysis and forms the basis for all further calculations.

Contribution Margin II (CM2) (CM2)

Contribution Margin II includes not only COGS but also all variable distribution costs such as shipping, packaging, and payment fees. It shows the true profitability per order.

Contribution Margin III (CM3) (CM3)

Contribution Margin III shows profitability after considering product-specific fixed costs such as allocated storage and marketing expenses. It's decisive for assortment decisions.

Conversion Rate (CVR)

Conversion Rate shows what percentage of your shop visitors actually complete a purchase.

Conversions API (CAPI) (CAPI)

The Conversions API is Meta's server-side tracking solution: conversion events are transmitted directly from the advertiser's server to Meta — without dependency on browser cookies, iOS restrictions, or ad blockers.

Cost per Click (CPC) (CPC)

CPC shows how much you pay on average per click on your ad – a crucial factor for the efficiency of your paid campaigns.

Cost per Mille (CPM) (CPM)

CPM shows the cost per 1,000 impressions of your ad – the central metric for reach and awareness campaigns.

Customer Acquisition Cost (CAC) (CAC)

Customer Acquisition Cost shows how much you invest on average to acquire a new customer.

Customer Lifetime Value (CLV) (CLV)

Customer Lifetime Value shows how much revenue a customer generates over their entire relationship with your business.

D

Direct to Consumer (D2C) (D2C)

Direct to Consumer is a distribution model in which manufacturers or brands sell their products directly to end customers — bypassing retailers, distributors, and marketplace intermediaries.

Double Opt-In (DOI) (DOI)

Double opt-in is a two-step signup process: the user enters their email address in a form (first opt-in) and then confirms their consent by clicking a link in a confirmation email (second opt-in).

E

ERP (Enterprise Resource Planning) (ERP)

An ERP system is a central business software platform that connects inventory management, procurement, accounting, order management, and reporting in one integrated system.

G

Gross Margin (GM)

Gross Margin shows the percentage of revenue remaining after deducting direct cost of goods sold - a key indicator of profitability.

H

Headless Commerce (Headless)

Headless commerce is a shop architecture in which the frontend (presentation layer) is fully decoupled from the commerce backend (business logic and data) and communicates exclusively through APIs.

I

Inventory Turnover (ITO)

Inventory Turnover shows how many times average inventory is sold and replaced within a year.

M

Marketing Efficiency Ratio (MER) (MER)

MER (also called Blended ROAS) shows the ratio of total revenue to total marketing spend – independent of individual channels or attribution.

N

Net Margin (NM)

Net Margin shows the percentage of revenue that remains as profit after deducting all costs – the ultimate measure of profitability.

Net Promoter Score (NPS) (NPS)

Net Promoter Score measures your customers' willingness to recommend on a scale from -100 to +100.

Net Revenue

Net Revenue is the actual revenue after deducting returns, discounts, allowances and sales tax - the foundation for all profitability calculations.

O

Out-of-Stock Rate (OOS)

The Out-of-Stock Rate indicates what percentage of SKUs (product variants) are currently unavailable.

P

PIM (Product Information Management) (PIM)

A PIM system is the central platform for managing, enriching, and distributing all product data — from copy and images to technical attributes — across every sales channel.

Product Margin (Margin)

Product Margin shows the percentage profit share of a product after deducting the purchase price and all variable costs from the selling price.

Profit on Ad Spend (POAS) (POAS)

Profit on Ad Spend shows the actual profit per advertising dollar spent – a significantly more meaningful metric than traditional ROAS.

R

Repeat Purchase Rate (RPR)

Repeat Purchase Rate shows the percentage of customers who have made more than one order. It is a key indicator for customer retention.

Retention Rate (RR)

Retention rate measures the percentage of customers who remain active over a defined time period — returning to purchase again rather than switching to a competitor or going dormant.

Return on Ad Spend (ROAS) (ROAS)

ROAS shows how much revenue each invested advertising dollar generates – the central metric for performance marketing.

Return Rate (RR)

The Return Rate indicates what percentage of all orders are sent back by customers.

Revenue per Visitor (RPV) (RPV)

Revenue per Visitor (RPV) shows how much revenue each visitor to your online store generates on average – a key metric for overall performance.

S

Sell-Through-Rate (STR)

Sell-Through-Rate indicates what percentage of purchased inventory was sold within a specific time period.

T

Topical Authority (TA)

Topical authority describes the degree to which a website is recognized by search engines as a authoritative information source for a specific subject area — measured by the completeness, depth, and semantic interconnection of its content.

W

Working Capital (WC)

Working capital is the difference between current assets and current liabilities. It shows how much liquid capital a business has available for day-to-day operations after all short-term payment obligations are accounted for.

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