Are your eCommerce ABCs as easy as 1, 2, 3? We’ve compiled an eCommerce dictionary of the industry terms, technology, jargon, online shopping customer experience and logistics that will have you speaking eComm like a pro.
eCommerce is steadily becoming a pillar of the global economy and the landscape is steadily expanding as online shopping becomes the default setting for consumers everywhere.
Average Order Value
Or (AOV) is your revenue divided by the number of your customers. It’s one of the most important metrics in eCommerce. The higher your AOV is, the more you can earn from the same amount of customers.
Cost of Goods Sold
It’s important to look at what your products are costing you as well as understanding how many items you have sold. Cost of Goods Sold (COGS) is essentially the cost of selling each product in your store.
To calculate your cost of goods sold:
- Take the cost of inventory at beginning of the year
- Add the cost of purchases, cost of labour, cost of materials and any other costs
- Minus the cost of inventory at end of year
= Cost of Goods Sold
This figure can help new businesses evaluate their efficiencies and work towards streamlining costs.
Is the hardest and most expensive marketing activity. It can cost up to five times more to attract new customers than to retain an existing one. Dive into your data and calculate what your cost per acquisition (CPA) is for each channel and work towards improving that cost.
Develop your eCommerce product
You need to perfect your product and purpose before developing an eCommerce product. Before launching a business you’ll need to:
- Conduct market research
- Learn from experienced operators
- Get to know your suppliers
- Plan for Beyond the Store
Is an inventory management fulfilment method where a store doesn’t keep their in stock items at their own warehouses or stores, but at a third party supplier. When items are purchased, they are shipped directly from that third party to the customer. Dropshipping requires minimum capital investment and you don’t need to invest thousands of dollars to stock your inventory. It can be an easy way to manage your inventory and orders as they come in.
Is an extremely cost effective channel to build brand familiarity, loyalty and advocacy. 61% of people prefer email marketing over social media.
Email can also help you improve your purchase frequency by remaining top of mind for your target and optimise your customer data through remarketing.
You can use email to move your customers through the funnel by nurturing them until they are ready to make a purchase.
Frequency is the number of times a customer purchases a good or service from your store in a given period, usually a year. The value also indicates the average customer’s willingness to buy from you again and the strength of their loyalty. When you increase frequency, you increase revenue per customer. Email, SMS and social media marketing are all ways you can increase your frequency metric.
Successful eCommerce business owners have a growth mindset. They understand there is no such thing as overnight success and are committed to learning and pivoting as trends and demand changes. As an eCommerce business, you’ll face challenges as you launch and grow, but a positive mindset that puts knowledge in action can be more important than resources alone.
Healthy Relationship with your customers
Take care of your leads and customers to protect your subscriber list. Conduct research and understand how often they expect to be contacted for your industry. Bombarding them with generic content can cause unsubscribes so regularly audit your strategy and personalise content as much as possible.
Is a system to keep track of goods in and goods out of warehouses. Inventory management helps you track the lifecycle of your stock as it enters and exits your store. It’s vital for a successful eCommerce business. Using an inventory management software gives you the ability to create personalised integration based on the needs of your business.
It’s crucial for your CRM to work with Google Analytics so you can optimise your customer journey. You’ll need to make sure your CRM is set up with specific criteria so you are storing any customer data you’ll need later. Track your completions to see what went right or where they exited the sequence to get feedback on what you might need to change.
Assigning Key Performance Indicators or SMART goals will help you determine whether you have been successful – and understand what you are working towards. Clearly defined KPIs can help your business not only when you launch but as a benchmarking guide for years to come.
It is essential to optimise your landing pages and understand what is driving them there. Analyse the behaviour of your website to tap into the minds of your customers.
Adopt a multi-channel approach to your marketing efforts, so they compliment each other and enforce your brand message. By keeping imagery, colour schemes and fonts similar, your offering will be more easily remembered by your target.
A newsletter can be a great way to keep your subscribers notified of any offers that might be of interest to them, products coming soon and strengthen your brand experience.
Organic Social Media
Don’t underestimate the value of organic social media. By creating interesting, tailored content to connect with your followers, you can generate impressions and allow your audience to connect with you.
Consider your impact on the environment and cut down on wasteful packaging. Many 3PLs offer automatic cartonisation, saving both money and trees.
Regularly conduct questionnaires or surveys to make sure you are meeting your customer’s expectations in all of your marketing efforts. Customer feedback is vital for growth and improvement, which is necessary to stay ahead of your competitors.
At present, online sellers suffer from costly handling errors and returns of up to 30%. Returns erode margin through extra shipping, time and resources. Consider the impact on the environment and try to minimise your returns.
The delivery experience is a battlefield as your last touch experience can have a lasting effect on customer satisfaction and reviews. It is vital to create a positive experience, with your product arriving on time and being fulfilled correctly.
Workit offers a range of showrooms and storage solutions to showcase your products, use as office space or a mix!
If you are just starting out, you may be keeping your inventory in your garage, but as you grow, you’ll need to research the options that best suit you. There are a number of warehousing options available if you are looking to self-fulfil, or you may even look into a 3PL to take care of logistics for you.
Supply Chain Management
Is the management of the process of goods, data, information and/or finances related to a product or service from acquiring raw goods to delivering the completed product to its final destination, i.e. the consumer. The five components of Supply Chain Management are:
Modern platforms help businesses to manage their suppliers to 3PL and order fulfilment.
Consumers are more environmentally savvy than ever with 85% wanting retailers to be more transparent about the sustainability of their products. Think about the steps you can implement to make your business more environmentally friendly. You can reduce waste – do you really need that extra plastic insert? – recycle materials, or even look into solar power for your energy usage.
By creating quality, insightful content, optimising SEO and running ad campaigns will drive traffic to your site.
Mobile updates can cause huge issues for advertisers by changing privacy settings in rollouts. Apple’s iOS 14 update allowed users to opt out of being tracked which caused issues in campaign reporting, targeting and personalisation. Stay ahead of the curve by research upcoming rollouts and how they will affect your current practices.
If your eCommerce business does not require a large office space, but you don’t want to work from home either, consider a Virtual Office. Workit Spaces Virtual Offices offer a premium business address, are able to receive packages and pallets as well as four to 16 hours of access to our physical spaces, including desks, meeting rooms and photography studios.
The location of your warehouses is one of the main factors in defining in what your delivery times will be. Consider micro-warehousing facilities, that are closer to CBDs for lower delivery times.
Christmas is typically one of the busiest times of the year for eCommerce businesses. Make sure you prepare for demand increases and delivery delays.
Once your eCommerce business is up and running, you’ll want to report on YoY growth for benchmarking. Keep all order and sales data in a CRM that suits you and put time aside to understand how to get the most out of those metrics.
Generation Z are shaping the future of online shopping with a reliance on social media initiating purchases on Instagram or popularising trends on Tik Tok.
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