A Retail Glossary for E-Commerce Startups

A Retail Glossary for E-Commerce StartupsBy Carole Bennett

I’ve built and worked on many e-commerce sites in my career, for mom-and-pop shops all the way up to well-known retailers such as Zales Jewelers.  In every instance, I’ve seen the confusion that arises when people who are new to retail encounter terms that are specific to the industry.

Recently, I’ve been doing a lot of work with new and upgraded sites leveraging nopCommerce, a .Net-based e-commerce system. My clients take to using it like a duck to water – it’s a great application, and incredibly flexible, especially for those who want to start selling from home.

What they don’t always take to quite as well are the concepts of retail itself.

I’ve found myself explaining retail terms and concepts quite a lot recently, so I’ve prepared a brief glossary of retail terms that will be handy for those who are new to the industry.

  • Affiliate Program – A method of allowing other persons or businesses to refer new customers to your store, in exchange for a percentage of sales generated by the referral or sale. Learn more about affiliate marketing.
  • Cross-Selling – Selling products related to the original item the customer has selected for purchase.
  • Dropshipping – Selling a product, accepting payment, and having the product shipped directly from the manufacturer or wholesaler. Product is never kept in stock by the actual retailer, thus reducing the up-front costs of buying stock to sell.
  • Gross Margin – The amount of profit a company achieves based on sales – product costs, before costs such as marketing, web site maintenance, location costs, salaries & more.
  • Hardlines – Retail products such as appliances, tools, hardware, and furniture.
  • Keystone – the practice of marking up a product price to an amount double that of its wholesale cost.
  • Loss Leader – A tactic of deeply discounting a popular item, potentially taking a loss in profit,  in order to encourage customer to frequent a retail establishment, and purchase more products overall.
  • Markup – The amount you add onto the cost of your product to get to your sale price (see “keystone”).
  • Margin – The amount of profit you make per item.
  • Net Profit – The amount of money made from sales after all other business expenses have been subtracted.
  • Overhead – The actual costs incurred in order to run a business. For an online store, costs will be minimal – think website, hosting, marketing and advertising.
  • Private Label – A product line that is re-branded for a specific retailer.
  • SKU (Stock Keeping Unit) – A unique string of numbers and/or letters that is used to identify a specific product.
  • Softlines – Retail products such as clothing, bedding, curtains & drapes.
  • Upselling – The practice of encouraging a consumer to purchase a product that’s more expensive than the item they initially came in to purchase.

Carole Bennett is the founder and primary voice of IndigoTea. As a professional IT consultant, Carole has provided solutions for companies as diverse as Verizon, Frito-Lay, Capital One Auto Finance, and Zales Jewelers, parlaying a unique talent for acting as a translator between the worlds of business challenges and technology solutions. After nearly two decades of experience in providing business and technology solutions in the corporate space, Carole chose to dedicate her wealth of experience towards creating outstanding results for her small business clientele. She considers her skills gained from simultaneously managing a fire performance troupe, raising a family, and working as a full-time IT consultant excellent preparation for her current career incarnation as the driving force behind IndigoTea Small Business Solutions. “Fire-breathing redhead on a mission” is not just a metaphorical description!

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