If you’re running an eCommerce business, you’ve probably encountered an overwhelming array of acronyms and technical terms that sound like they belong in a secret language. Don’t worry – you’re not alone. Digital marketing has its own vocabulary, and understanding these terms is crucial to making informed decisions about your online store’s growth.
In this guide, we’ll break down the most important eCommerce digital marketing terms in plain English, so you can confidently navigate conversations with marketing professionals and understand exactly what’s driving your business results.
If you want support implementing any of these concepts to grow your online store, our team is always ready to help you turn insights into measurable results.
Why understanding eCommerce terminology matters
Running a successful online store requires more than just listing products and hoping customers find you.Digital marketing is filled with specialized terminology that can feel overwhelming when you’re just starting out.
Whether you’re launching your first eCommerce business, managing an existing store, or looking to improve your marketing strategy, understanding these fundamental terms is crucial for making informed decisions and achieving measurable results.
Behind each term is a concept that influences how your store attracts visitors, converts customers, and generates revenue. When you understand the language, you make better decisions, communicate more clearly with partners, and avoid costly mistakes.
The good news? Most core eCommerce digital marketing terms follow logical patterns once you understand the basics. This guide breaks down the essential terminology you need to know to navigate the world of online selling and digital marketing with confidence.
Core eCommerce marketing concepts
eCommerce funnel
The eCommerce funnel describes the stages a potential customer goes through before making a purchase. It typically includes:
- Top of funnel (TOFU) – Awareness: people discover your brand or products
- Middle of funnel (MOFU) – Consideration: they compare options and evaluate value
- Bottom of funnel (BOFU) – Conversion: they make a purchase
- Retention: they return and buy again
Understanding the funnel helps you tailor marketing messages and budgets to different stages, rather than expecting every ad or email to generate an immediate sale.
Customer journey
The customer journey maps all interactions a user has with your brand, from the first click on an ad to post-purchase emails and repeat orders. Unlike the funnel, the customer journey, the path from “just looking” to “purchasing” is rarely a straight line. Customers may leave, come back days later, or interact with multiple channels before converting.
Getting your store found: SEO, PPC, SEM, SMM, Influencer and Affiliate Marketing
Before you can make a sale, people need to find your store. These terms focus on how you attract eyes to your products.
SEO (Search Engine Optimization): This is the practice of improving your website so it ranks higher in search results (like Google) for specific keywords. The goal is to get “organic” (free) traffic. SEO efforts are never free, costing time and money, results are not guaranteed (and will never stay the same, if you get them), but SEO traffic can be seen as free.
Unlike paid advertising, SEO focuses on earning visibility through relevance and authority. eCommerce SEO involves optimizing product pages, category pages, and other content specifically for search intent related to products customers are looking for.
PPC (Pay-per-Click): A model of internet marketing where you pay a fee each time one of your ads is clicked. It’s essentially buying visits to your site rather than “earning” them organically. The most common PPC platforms are Google Ads and Facebook Ads, but there are plenty of other options you can try.
Unlike SEO where you only pay for results, PPC allows you to immediately drive traffic to your site. However, PPC requires ongoing budget management and optimization to remain profitable. Once you stop paying for ads, you stop seeing results.
Don’t forget to read our comprehensive guide on most used PPC advertising terms
SEM (Search Engine Marketing): An umbrella term that covers both SEO and PPC. It refers to any tactic used to increase a brand’s visibility on search engine results pages.
SMM (Social Media Marketing): involves using platforms like Facebook, Instagram, TikTok, and LinkedIn to promote your products, engage with customers, and build brand awareness.
Social media is valuable both for advertising and for building community around your brand. Many eCommerce businesses use social platforms to showcase products, share customer stories, and drive traffic to their store.
Influencer Marketing: involves partnering with social media personalities who have large, engaged followings to promote your products to their audience.
When an influencer recommends your product, their followers perceive it as a genuine recommendation rather than a traditional ad, which can significantly impact brand awareness and sales.
Affiliate Marketing: is a partnership model where external partners (affiliates) promote your products in exchange for a commission on sales they generate. For example, a blogger might write a review of your product and include a special link that tracks sales from their recommendations.
Affiliate marketing is attractive because you only pay for actual sales, making it a low-risk way to expand your reach.
Conversion and sales metrics
Conversion
A conversion is any desired action taken by a user. In eCommerce, the primary conversion is usually a purchase, but other conversions may include:
- Adding a product to cart
- Signing up for a newsletter
- Creating an account
Conversion rate (CR or CVR)
Conversion rate is the percentage of visitors who complete a desired action. It is calculated as:
Conversions ÷ total visitors × 100
Improving conversion rate (CRO) often delivers faster growth than simply increasing traffic. Plus it doesn’t cost more in PPC terms.
Shopping cart abandonment rate
This metric shows the percentage of shoppers who add items to their cart but leave without completing the purchase. The average cart abandonment rate across eCommerce is around 70%, so if yours is high, you’re not alone – but there’s definitely room for improvement through tactics like abandoned cart emails.
Cart abandonment is one of the biggest challenges in eCommerce, but it’s also an opportunity. Many customers abandon carts due to unexpected shipping costs, complicated checkout processes, or security concerns – all issues you can address.
Average order value (AOV)
AOV shows the average amount spent per order. It is calculated by dividing total revenue by total number of orders.
Increasing AOV through bundles, upsells, or free shipping thresholds can significantly boost revenue without increasing ad spend. Together with conversion rate optimization, AOV helps improve revenue from existing traffic. Monitoring AOV also helps identify trends and refine pricing strategies.
Revenue
Revenue is the total income generated from sales, before deducting costs such as advertising, shipping, or product expenses.
eCommerce performance metrics
Cost per acquisition (CPA)
CPA measures how much you spend to generate a conversion, such as a sale. It is calculated as:
Total ad spend ÷ number of conversions
This is one of the most important metrics for evaluating campaign profitability.
Return on ad spend (ROAS)
ROAS shows how much revenue you earn for every unit of currency spent on advertising. For example, a ROAS of 4 means you earn €4 for every €1 spent.
ROAS helps you quickly assess whether campaigns are scalable or need optimization.
Repeat purchase rate (RPR)
The repeat purchase rate shows what percentage of your customers return to make additional purchases. This metric directly reflects customer satisfaction and the quality of your products and service.
A high repeat purchase rate is far more valuable than constantly acquiring new customers, as returning customers typically have a higher customer lifetime value and require less spending to convert.
Net promoter score (NPS)
Net Promoter Score is a metric that measures customer loyalty by asking customers how likely they are to recommend your business to others. Customers rate their likelihood on a scale of 0-10, and their responses are categorized as promoters (9-10), passives (7-8), or detractors (0-6).
NPS provides insight into customer satisfaction and loyalty, helping you identify whether you should focus on product quality, customer service, or price adjustments.
Profitability and lifetime value
Customer acquisition cost (CAC)
CAC represents the total cost of acquiring a new customer, including advertising, tools, and marketing efforts. Lower CAC means your marketing is efficient and scalable. Understanding CAC is critical for long-term growth planning.
Customer lifetime value (CLV or LTV)
CLV estimates the total revenue a customer generates over their entire relationship with your brand. A high CLV means customers return often and spend more – usually a sign of strong retention and brand loyalty. Businesses with high LTV can afford higher acquisition costs and invest more aggressively in growth.
Profit margin
Profit margin shows how much of your revenue remains after all costs are deducted. Strong marketing performance is only meaningful if it contributes to healthy margins.
Improving eCommerce stats
Conversion Rate Optimization (CRO)
The process of testing and improving your website to increase the percentage of visitors who buy. This might involve changing button colors, simplifying your checkout, or rewriting product descriptions. CRO helps squeeze more revenue from existing traffic and shouldn’t be ignored.
Using a good attribution model
Rarely a customer that finds your store for the first time will complete a purchase without interacting with your brand through multiple channels.
An attribution model determines how credit for a conversion is assigned across different marketing touchpoints. Common models include:
- Last-click attribution
- First-click attribution
- Linear attribution
- Data-driven attribution
Choosing the right attribution model helps you understand which channels truly contribute to sales. This is why we encourage you to read our detailed guide on marketing attribution.
Remarketing and retargeting
Retargeting and remarketing are two terms which are often used interchangeably, but there are key differences between the two.
Remarketing has the scope of connecting with users who are already in your channels. Remarketing applies whether you’re trying to re-engage your customers using emails, social media, or other promotional efforts. In a nutshell, remarketing means engaging customers in channels that you own.
On the other hand, retargeting’s primary goal is to engage customers on the open web, on channels you don’t control. Retargeting targets customers who have already converted in the past and given you contact details or customers who have previously interacted with your brand, but haven’t yet converted (warm leads).
| Remarketing | Retargeting | |
| Who is engaged? | Customers that a store already has in their own channels. | Any customer who has visited the store in the past. |
| How are customers engaged? | Through various messages sent via SMS, email, push notifications, etc. | Through display ads in the channels outside the store’s control. |
Email marketing and automation
Email marketing involves sending targeted messages to subscribers to nurture leads and drive sales.
In eCommerce, this could mean welcome series for new sign-ups, promotional newsletters, or personalized product recommendations based on past purchases.
Automation refers to sending emails automatically based on user behavior, such as abandoned cart emails or post-purchase follow-ups. Automation is one of the highest return on investment (ROI) channels in eCommerce.
The key is segmentation and personalization – sending the right message to the right person at the right time, rather than blasting everyone with the same message.
Cross-selling and upselling
Cross-selling is the practice of suggesting complementary products to customers based on what they’re already buying. If someone is buying a coffee maker, you might cross-sell coffee filters, ground coffee, or a cleaning kit.
Cross-selling increases the average order value while also improving the customer experience by helping them discover products that work well together.
Upselling involves encouraging customers to purchase a higher-priced or premium version of the product they’re considering. If a customer is looking at a basic smartphone, you might upsell them on a model with more storage or better camera features.
Unlike cross-selling, which adds a different product to the order, upselling tries to increase the value of the primary purchase.
Business models and platforms for eCommerce
Understanding different eCommerce business structures helps you choose the right strategy for your needs. This is best done before launching your store.
Direct-to-consumer (DTC)
Direct-to-consumer refers to a business model where companies sell their products directly to end customers through their own websites, without using intermediaries like retailers or marketplaces.
DTC brands have more control over their brand experience, customer relationships, and pricing, but they’re also responsible for their own marketing and fulfillment.
Dropshipping
Dropshipping is a fulfillment model where you don’t keep inventory. Instead, when a customer orders, you forward the order to a supplier who ships directly to the customer.
Dropshipping requires less upfront investment than traditional retail, but it offers lower profit margins and less control over product quality and shipping times.
Omnichannel eCommerce
Omnichannel commerce means selling through multiple channels – your website, marketplace, social media, physical store – while providing a seamless, integrated experience.
Customers might browse on Instagram, purchase on your website, and pick up in a physical location. Omnichannel strategies require integrated inventory management and consistent brand experience across channels.
Why these terms matter for your bottom line
You don’t need to be a data scientist to run a successful eCommerce store, but you do need to be a “fluent” business owner. When you know what CAC, CLV and ROAS mean, you can tell your marketing team (or agency) exactly what your goals are. You move from “I hope this works” to “I know exactly why this is working.”
If you find yourself spending more time trying to decode reports than actually shipping products, it might be time to bring in the experts. Digital marketing is a moving target, and having a partner who speaks the language fluently can save you thousands in wasted ad spend.And yes, we are talking about working with us, so feel free to reach out and we’ll set up a free consultation where we’ll explain how you can help your store grow.
