Understanding retail terminology can feel similar to learning a second language. You might manage to understand most retail terms used in conversations, but a handful of misunderstood words could change the entire meaning. Unfamiliar retail phrases can lead to confusion and misinterpretation.
Alternatively, understanding common retail phrases can have the opposite outcome and increase your success, giving you a competitive advantage.
Here are several advantages of incorporating popular retail terms into your everyday vocabulary:
- Clear Communication: Communicate effectively with colleagues and suppliers to minimize the risk of misunderstandings.
- Operational Efficiency: Navigate day-to-day activities, from inventory tracking to advertising.
- Informed Decision-Making: Gain the knowledge needed for informed decision-making which positively impacts pricing, inventory, and technology inclusion.
- Professional Credibility: Increase confidence in professional negotiations, collaborations, and customer interactions, enhancing their professional credibility.
- Competitive Edge: Use this knowledge to show their expertise, attracting customers and business partners.
Read More: Embracing the Future of Retail with UpStart Commerce
Shieda A. Rad states that studies have even demonstrated that workers who are proficient in industry-specific language have a higher chance of being promoted and paid more than their counterparts who lack this ability.
AOV (Average Order Value)
AOV (Average Order Value) refers to the average amount spent per customer in a single transaction. It is calculated by dividing the total revenue generated by the total number of orders placed during a specific time. Monitoring AOV helps retailers to adjust their marketing strategies, which in turn increases overall revenue.
CRM (Customer Relationship Management)
CRM (Customer Relationship Management) is the technology that manages company relationships and customer interactions. This allows an online store to make personalized recommendations, offer special discounts, and create an all-around enhanced shopping journey.
COGS (Cost of Goods Sold)
COGS (Cost of Goods Sold) calculates the direct expenses associated with manufacturing the products sold by a company. Material and labor costs directly involved in production are included in COGS. It does not include indirect expenditures like distribution and overhead for sales staff. Paying close attention to these costs helps retailers set pricing and determine the most profitable products.
CPA (Cost Per Acquisition)
CPA (Cost Per Acquisition) is a marketing metric used to measure the average cost incurred by a business to acquire a new customer through a specific marketing campaign or initiative. It is calculated by dividing the total cost of the marketing campaign by the number of customers acquired as a result of that campaign. CPA is for retailers as it helps them understand the efficiency of their marketing efforts when acquiring new customers. Retailers can use their CPA to make informed decisions about allocating their marketing budget and optimizing their strategies to maximize the return on investment (ROI) from customer acquisition efforts.
CPL (Cost Per Lead)
CPL (Cost Per Lead) measures the average cost of acquiring a new potential customer through a specific marketing campaign. Retailers can find their CPL by dividing the total campaign cost by the number of leads generated. CPL helps businesses calculate the efficiency of their lead-generation efforts to optimize marketing strategies for better ROI.
CPM (Cost Per Thousand)
CPM (Cost Per Thousand) calculates the cost of reaching one thousand potential customers through a specified advertising channel. It represents the price the advertiser pays for every one thousand impressions or views of their ad. CPM is calculated by dividing the total cost of the advertising campaign by the number of impressions generated, then multiplying by one thousand. CPM for online advertising helps retailers compare different advertising channels.
CPC (Cost Per Click)
CPC (Cost Per Click) is used by retailers to measure the cost for each click on their online advertisements. It represents the amount of money a retailer pays each time a user clicks on their ad. It does not matter if the click leads to a sale or not. To calculate CPC, divide the total cost of the advertising campaign by the total number of clicks generated. Understanding how to optimize CPC is important for retailers with PPC advertising campaigns because it helps measure the effectiveness of their advertising when driving traffic to their websites.
CPO (Cost Per Order)
CPO (Cost Per Order) measures the average cost incurred by an online retailer to generate a single order. It represents the total expenses associated with marketing, advertising, and operational activities divided by the total number of orders received.
It’s important to distinguish CPO from Cost Per Acquisition (CPA), which measures the cost of acquiring new customers. Retailers need to keep a close eye on CPO to make sure their ad spend makes sense and aligns with their revenue targets.
CPS (Cost Per Sale)
CPS (Cost Per Sale) is a metric that an advertising team uses to find out the conversion price of sales from a specific advertisement. It includes all expenses related to marketing, advertising, and operations, divided by the total number of sales. Retailers can use CPS insights to adjust their marketing strategies for a better return on investment.
Read More: Leveraging UpStart Commerce Ratings and Reviews: Supercharging Retail Sales
CR (Conversion Rate)
In ecommerce, CR (Conversion Rate) tells retailers the percentage of online visitors who purchase something on their website. To find CR, divide the number of conversions by the total number of visitors and multiply by 100 to get the percentage. Keeping track of CR helps retailers understand how well their website is performing and adjust strategies to increase customer conversion.
CTR (Click-Through Rate)
CTR (Click-Through Rate) determines how many users click on a specific link, advertisement, or call-to-action (CTA) out of the total number of viewers. Retailers can calculate CTR by dividing the total number of clicks by the total number of impressions and multiplying by 100. Higher CTRs indicate that the advertisement is relevant to the audience, potentially leading to increased traffic and improved conversion rates. CTR helps retailers evaluate advertising performance and optimize their marketing strategies to improve engagement and conversions.
ERP (Enterprise Resource Planning)
ERP (Enterprise Resource Planning) is a comprehensive software system used by retailers to manage core business processes by gathering, storing, and interpreting data from various activities. Their ERP software typically includes modules for different functional areas. It helps businesses effectively plan, manage, and optimize their resources.
GMV (Gross Merchandise Value)
GMV (Gross Merchandise Value) represents the total dollar value of all transactions processed, regardless of whether the items have been shipped or not. However, GMV typically excludes discounts, returns, and taxes. It provides insights into the overall sales performance and growth of a retail business. GMV helps retailers assess the effectiveness of sales strategies, track revenue growth, and make informed business decisions.
LTV (Customer Lifetime Value)
LTV (Customer Lifetime Value) determines the total revenue a business can expect from a single customer throughout their relationship with the company. Customer Lifetime Value considers the average purchase value, purchase frequency, and customer retention rate to estimate a shopper’s long-term profitability. Retailers use LTV to make informed decisions about customer acquisition costs, marketing strategies, and more. Retailers work hard to make this number as large as possible by building strong connections with customers and keeping them happy for long-term customer loyalty.
MQL (Marketing Qualified Lead)
MQL (Marketing Qualified Lead) is a term used in retail to describe a prospective customer who has shown a specific level of interest in a company through marketing but is not ready to make a purchase. MQLs are typically identified through various marketing strategies, such as engagement with content, website visits, or interactions with marketing campaigns. Retailers can use MQLs to focus their marketing efforts on engaging with prospects more likely to convert into customers, improving overall sales effectiveness from marketing initiatives.
MRR (Monthly Recurring Revenue)
MRR (Monthly Recurring Revenue) is a key financial metric that represents the total recurring revenue generated from subscription-based services or recurring billing arrangements within a specific month. For ecommerce retailers offering subscription services or products with recurring billing cycles, MRR provides insight into the stability of their revenue streams. It includes the total value of active subscriptions or recurring purchases, excluding one-time purchases or non-recurring revenue. By monitoring MRR, retailers can track revenue trends, forecast future cash flow, and understand the performance of their subscription offerings.
OMS (Order Management System)
The OMS (Order Management System) is a centralized software solution used by retailers that manages and streamlines the entire order processing lifecycle, from order creation to fulfillment and delivery. OMS provides retailers with real-time visibility into order status and inventory levels, allowing them to optimize order fulfillment processes, reduce order processing times, and increase customer satisfaction. Additionally, OMS integrates with business systems like CRM and ERP systems to provide seamless communication and data synchronization.
PPC (Pay-Per-Click)
PPC (Pay-Per-Click) is a digital advertising model where retailers pay a fee each time a viewer clicks on one of their ads. These ads are typically on search engines like Google or Bing, as well as on social media platforms like Facebook and Instagram. Retailers bid on specific keywords or target demographics, and their ads are displayed to users based on their search queries or browsing behavior. PPC campaigns allow retailers to reach a highly targeted audience and track the effectiveness of their advertising efforts through metrics like click-through rate (CTR) and conversion rate. By effectively managing PPC campaigns, retailers can drive qualified traffic to their websites and generate measurable results in terms of website visits, leads, and sales.
SEO (Search Engine Optimization)
SEO (Search Engine Optimization) refers to the process of enhancing a website’s visibility and ranking in search engine results pages organically, without paying for placement. For retailers, SEO is crucial as it enables them to attract more organic traffic to their online stores. So, when a user searches for ‘cool sneakers,’ your store pops up right at the top of the search list, making it easy for them to find and explore.
SKU (Stock Keeping Unit)
A SKU (Stock Keeping Unit) is a unique alphanumeric code assigned to each product variant in a retailer’s inventory. Retailers use SKUs for internal tracking and management purposes so that they can easily identify and manage individual products within their inventory system.
is a unique alphanumeric code assigned to each distinct product or item in a retailer’s inventory. SKUs are used for internal tracking and management purposes, allowing retailers to easily identify and manage individual products within their inventory system. Each SKU includes details about the product (size, color, style, or variant) to accurately track and manage inventory levels, fulfill orders, and analyze sales performance.
UI (User Interface)
The UI (User Interface) refers to the visual elements and interactive features of a website or app that allow users to navigate through the online shopping journey. A user-friendly UI ensures a smooth and hassle-free shopping experience for customers. Retailers often improve UI design to boost customer satisfaction and increase sales.
UX (User Experience)
UX (User Experience) encompasses the overall experience that a user has while interacting with an online shopping platform, including their emotions and behaviors before, during, and after the shopping process. Elements of UX include website design, usability, navigation, accessibility, performance, and content presentation. Effective UX provides a seamless and satisfying shopping experience for users. By prioritizing UX in ecommerce, retailers can enhance customer satisfaction, drive conversions, and much more.
WISMO (Where is my order?)
WISMO (“Where Is My Order?”) is a common customer service phrase used by retailers. It refers to customers checking on their order status and location, seeking details like shipment tracking and delivery estimates. Retailers receive these requests from customers who are eager to track their packages and anticipate delivery dates. Retailers should have systems in place to track orders and provide timely updates to customers to manage and respond to WISMO inquiries quickly.
In conclusion, understanding common retail terms not only increases proficiency but also provides a competitive advantage, leading to increased success. Understanding these phrases creates a quicker and deeper comprehension of concepts to create a solid foundation for navigating the industry with confidence. Retailers can use these phrases and abbreviations to communicate with colleagues and stakeholders, make informed decisions, and swiftly adapt to business operations. Ultimately, mastering retail terminology enhances overall proficiency and effectiveness in the retail sector.
