Essential Ecommerce Terms Explained

Tap a term to see what it means.

Cart Abandonment

When a customer adds items to their cart but leaves the site without completing checkout β€” a key metric online stores try to reduce.

SKU (Stock Keeping Unit)

A unique code assigned to manage inventory down to detailed variations like color or size.

Checkout

The process of entering shipping and payment information for items in the cart to complete a final purchase.

Fulfillment

The entire logistics process of packing and shipping an order once it comes in β€” a growing number of specialized services now handle this on a store's behalf.

Dropshipping

A sales model in which the seller doesn't hold inventory directly β€” when an order comes in, a manufacturer or wholesaler ships the product straight to the customer.

Conversion Rate

A key performance metric measuring the share of website visitors who complete a purchase (or another target action).

Whether You Run a Store or Just Want to Understand One

Even if you don't run an online store yourself, knowing these terms helps you understand how stores manage and sell products. Cart abandonment and conversion rate in particular are among the metrics store operators care about most.

Curious About Online Shopping Safety Too?

If you're curious how to shop safely as a consumer, it's worth also checking out a guide to online shopping safety.

Frequently Asked Questions

How can dropshipping sell products without holding inventory?

The seller only runs the online storefront β€” when an order comes in, the manufacturer or wholesaler ships the product directly to the customer, so the seller never needs to hold stock themselves.

How can a store reduce its cart abandonment rate?

Simplifying the checkout process and clearly disclosing unexpected extra costs (like shipping fees) upfront are widely cited as effective ways to reduce cart abandonment.