In this comprehensive list, we cover ShopGroks’s most important definitions for helping you understand Retail & eCommerce in 2023.
1. MAP Pricing
Minimum Advertised Price (MAP) is the lowest price at which a retailer can advertise a product for sale, as set by the manufacturer or brand. Retailers are not allowed to publicly advertise the product below this price, although they might be able to sell it at a lower price during checkout or in private communication with the customer.
2. MAP Policy
A Minimum Advertised Price (MAP) policy is an agreement imposed by manufacturers or brands that dictates the minimum price at which retailers or distributors are allowed to advertise a specific product. It also states the penalties for violating the MAP, and the procedures to follow when a MAP violation is detected. Manufacturers enforce MAP policies by monitoring advertising and taking actions against retailers who violate the policy by advertising prices below the specified minimum. MAP policies are used to prevent price wars amongst competing retailers, which can result in price erosion. In the absence of a strong MAP policy, retailers and brands will eventually face challenges such as diminished perceived value of their products and reduced profit margins.
3. MAP Violation
A MAP violation occurs when a retailer or seller advertises or sells a product below the manufacturer’s specified Minimum Advertised Price (MAP). A MAP violation goes against the terms and policies set by the manufacturer or brand, which dictates the lowest price at which the product can be publicly advertised.
Manufacturer’s Suggested Retail Price (MSRP) is the price at which a manufacturer recommends that a retailer sell a product to consumers. MSRP serves as a suggested price point and is typically provided by the manufacturer to guide retailers in setting their own selling prices. It represents the value the manufacturer believes the product should be sold for based on factors such as production costs, market competition, and perceived value. Retailers may choose to sell the product at the MSRP or offer discounts or promotions to attract customers. MSRP is commonly used in various industries, including automotive, electronics, and consumer goods, to provide a consistent pricing reference for both manufacturers and retailers.
5. Product Matching
Product matching refers to the process of identifying and associating the same or similar products across different datasets or sources. This is particularly important in eCommerce where products might have varying titles, descriptions, and identifiers. Efficient product matching improves inventory management and customer experience.
6. Price Elasticity
Price elasticity measures how sensitive the quantity demanded or supplied of a product is to changes in its price.
7. Price Elasticity of Demand
This concept refers to the responsiveness of the quantity demanded of a product to changes in its price. If demand is elastic, a small change in price leads to a proportionally larger change in quantity demanded. If demand is inelastic, changes in price have a relatively smaller impact on quantity demanded.
8. Price Elasticity of Supply
Price elasticity of supply measures the responsiveness of the quantity supplied of a product to changes in its price. Elastic supply means that producers can quickly adjust their output in response to price changes, while inelastic supply indicates that producers are less able to adjust output in response to price fluctuations.
9. Cross Elasticity of Demand
Cross elasticity of demand measures how the quantity demanded of one product responds to a change in the price of another related product. It helps to determine whether two products are substitutes or complements.
10. Substitute Goods
A substitute good is a product that can be used in place of another product for the same purpose. When the price of a substitute good increases, the demand for the original product may increase as consumers switch to the less expensive option. In other words, substitute goods are those that compete with each other for consumer demand. For example, if the price of brand A’s coffee increases, consumers might switch to brand B’s coffee.
11. Complementary Goods
A complementary good is a product that is used together with another product. When the price of a complementary good increases, the demand for the main product may decrease because it becomes more expensive to use the two products together. Complementary goods have a mutual relationship where the demand for one product affects the demand for the other. For instance, if the price of smartphones increases, the demand for smartphone cases might decrease.
12. Loss Leader
A loss leader is a pricing strategy in retail where a product is intentionally sold at a price lower than its cost or market value. The goal of using a loss leader is not to generate immediate profits from the sale of that particular item, but rather to attract customers into the store or onto an eCommerce platform with the aim of encouraging them to buy additional products that are more profitable.
13. EAN Number
An EAN (European Article Number), also known as International Article Number, is a standardized barcode system used globally for identifying products in retail and commerce. EANs are unique 13-digit codes assigned to individual products, providing a way to uniquely distinguish each item from others. These barcodes are typically found on product packaging and labels.
A markup refers to the amount added to the wholesale cost of a product by a retailer to determine its selling price. It’s usually expressed as a percentage and represents the difference between the cost price (the price at which the retailer acquires the product) and the retail selling price (the price at which the product is sold to customers).
A markdown refers to a reduction in the original selling price of a product. It’s a temporary or permanent price reduction that aims to stimulate sales, clear out excess inventory, or attract customers. Marking down prices can be a strategic decision made by retailers or eCommerce sellers for various reasons, such as end-of-season sales, holiday promotions, or to quickly move products that aren’t selling well.
16. Revenue Management
Revenue management, also known as yield management, is a strategic approach used by retailers to optimize their pricing and inventory availability in order to maximize revenue. The goal of revenue management is to sell the right product to the right customer at the right price and at the right time.
17. Recommended Retail Price (RRP)
The RRP, short for Recommended Retail Price, is the price that manufacturers or brands suggest retailers and sellers should charge consumers for a particular product. It serves as a reference point for pricing, helping to maintain consistency and providing consumers with an expected price range for the product. However, actual selling prices can vary due to factors like market conditions and promotional strategies.
In retail and eCommerce, a “category” is a grouping of products with similar features or characteristics such as ‘Men’s Shoes’ or ‘Dairy Products’. These groupings help organize products in stores and online platforms, making it easier for customers to understand a brand’s offerings and find what they’re looking for. Categorizing products also aids in inventory management, marketing, and sales analysis for retailers and eCommerce sellers.
19. Amazon 1P
“Amazon 1P” refers to Amazon’s first-party selling program. Brands which have a 1P relationship with Amazon sell their products wholesale directly to Amazon Retail as a supplier through its Vendor Central portal. After receiving the product shipment, Amazon is in charge of sales. These products are labeled “Ships from and sold by Amazon.com” on the product detail page. Amazon’s merchandising team decides on the price, and it has the right to charge the 1P seller fees for handling customer service, chargebacks and cooperative advertising.
20. Amazon 2P
“Amazon 2P” is a less commonly used model where Amazon sources a product from a distributor who is not the manufacturer. The 2P seller essentially resells the product to Amazon, who then similar to 1P, takes control of the product prior to the sale. 2P is less common as Amazon prefers to buy directly from the manufacturer, but occasionally uses this model to supplement its inventory. 2P products are listed on Amazon’s product detail page as being “Sold by [Brand Name], ships from Amazon.”
21. Amazon 3P
“Amazon 3P” refers to Amazon’s third-party selling program. In the 3P model, ‘third party sellers’ sell their products directly to consumers on the Amazon marketplace and manage their own inventory, pricing, advertising, and customer service on Amazon’s Seller Central portal. The third-party seller is either responsible for their own fulfillment, which can include shipping orders directly to customers (Fulfillment by Merchant) or may use Amazon’s fulfillment services (Fulfillment by Amazon, or FBA). Customers see these products labeled as being “Sold by [3P Seller Name] and Fulfilled by [Amazon/Merchant].”
22. Buy Box
The Buy Box is a crucial feature on Amazon’s platform that allows customers to easily add products to their cart for purchase. It is prominently displayed on product detail pages and provides a streamlined way for customers to buy products from a specific seller. The Buy Box is especially important for third-party sellers on Amazon. For a single product listing on Amazon, there can be multiple sellers offering the same item, often at different prices and conditions. Amazon’s algorithm evaluates various factors, including seller performance, pricing, shipping speed, and customer service, to determine which seller’s offer gets featured in the Buy Box. The seller whose offer wins the Buy Box is featured prominently on the product detail page, with a “Add to Cart” or “Buy Now” button. Customers can directly add the product to their cart and proceed to checkout without having to select a seller. While the Buy Box winner enjoys an advantage, other sellers’ offers are often listed on the same page, allowing customers to choose from various sellers if they prefer
23. Purchase Order (PO)
A Purchase Order (PO) is a commercial document issued by a buyer to a seller, indicating the buyer’s intent to purchase products or services. It outlines the details of the transaction, including the items to be purchased, quantities, prices, terms of payment, delivery dates, and any other relevant terms and conditions. Purchase orders serve as a formal agreement between the buyer and the seller, specifying the terms of the transaction and ensuring clarity and accuracy in the procurement process.
BOGO stands for “Buy One, Get One” and is a promotional offer commonly used in retail and marketing. In a BOGO promotion, customers are given the opportunity to purchase one item at the regular price and receive another item for free or at a discounted price. The second item can be of equal or lesser value, depending on the specific terms of the promotion.
BOPIS stands for “Buy Online, Pick Up In-Store.” It’s a retail service that allows customers to make purchases online through a retailer’s website or app and then pick up their ordered items from a physical store location. BOPIS combines the convenience of online shopping with the immediate gratification of in-store pickup.
26. Web Crawling
Web crawling, also known as web scraping or spidering, is the automated process of extracting data and information from websites across the internet. This is achieved by deploying software programs called web crawlers or bots that navigate through web pages, following links, and collecting relevant data. Web crawling is used for various purposes, such as data mining, content aggregation, research, and more.
EDLP stands for “Everyday Low Price” – a pricing strategy that involves setting consistent, low prices for products rather than offering frequent sales or discounts. Under the EDLP strategy, customers are presented with steady, affordable prices on a regular basis, as opposed to the fluctuating prices often associated with promotional pricing strategies. This approach aims to attract customers who value consistent affordability. Retailers employing an EDLP do not have to invest as much in promotions, however setting lower prices naturally implies smaller margins. Therefore, the success of EDLP relies on maintaining high sales volumes over the long run.
A Merchant of Record (MOR) is the legal entity that assumes ownership of inventory before it reaches the customer. The MOR holds the responsibility of processing credit and debit card transactions and is authorized by a financial institution for this purpose. The MOR’s name is visible on the customer’s card statement. Acting as the final seller in the transaction, MORs manage various tasks including setting up merchant accounts, handling payment processing, and overseeing the collection of sales tax and card processing fees. Additionally, MORs must ensure compliance with Payment Card Industry (PCI) standards, address refund requests, and manage chargebacks. This role is pivotal in securing smooth and regulated financial transactions within e-commerce.
29. Buy Box Win
A “Buy Box Win” refers to an Amazon seller’s achievement of winning placement on the prominent “Buy Box” of a product page. The Buy Box is where customers initiate purchases, and winning it means that a seller’s offer is automatically selected when a customer clicks “Add to Cart” or “Buy Now.” Factors like competitive pricing, reliable shipping, strong seller performance, and product availability influence a seller’s chances of securing the Buy Box. Achieving this coveted position significantly enhances a seller’s visibility and sales potential on Amazon’s platform.
Cannibalization is defined as the loss in sales of existing products caused by the introduction of new products. This can occur when the new product competes with and draws customers away from the retailer’s established offerings. Cannibalization means that the launch of a new product will not necessarily increase a company’s revenue as much as expected. Despite the additional sales generated by a new product, a percentage of these gains (measured by the cannibalization rate) may have simply been transferred revenues from customers who were already purchasing the established product. As such, gains from the new product are offset by the total loss of original product sales.
31. Price perception
Price perception refers to how consumers perceive the value and cost of a product or service based on factors like its price, features, quality, and brand reputation. It plays a crucial role in purchasing decisions, as customers assess whether the price aligns with their perceived benefits. Companies often engage in price wars or use tactics like lower prices, strategic promotions, and tailored experiences to influence this perception. However, consumers’ perceptions of price relative to competitors can differ from actual prices, highlighting the importance of managing perception through various strategies to effectively shape consumer understanding of a product’s affordability and value proposition.
32. Key Value Item (KVI)
Key Value Items (KVIs) are a small number of products which retailers identify as being the most frequently added to baskets and the most important for driving customer price perception. These are the products which most customers buy, whose prices tend to get noticed and remembered, such as eggs in a grocery store. Retailers and e-commerce sellers monitor the price of KVIs carefully to stay competitive. Mispriced KVIs are the biggest driver of store switching, whilst well positioned KVIs can have a ‘halo effect’ on the perceived value offering of the entire store
33. Revenue Optimization
Revenue optimization is a strategic approach focused on maximizing a retailer’s overall sales by employing data-driven insights and effective pricing strategies. This involves analyzing customer behavior, market trends, and inventory levels to determine optimal pricing, product placement, and promotional tactics. The goal of revenue optimization strategies are to ensure that the right products are sold to the right customer at the best time and place, for the maximum price.
34. Repricing Software
Repricing software is a type of tool that allows ecommerce sellers to automatically adjust or update the prices of products or services in response to changing market conditions, competitor pricing, supply and demand dynamics, or other relevant factors. These adjustments are based on rules and parameters set by the user.
35. Price Localization
Price localization refers to the practice of adjusting product or service prices to suit the preferences, economic conditions, and market dynamics of a specific geographic location or target market. This strategy takes into account factors such as local purchasing power, inflation rates, exchange rates, cultural expectations, and competition. Price localization aims to create pricing structures that are tailored to the unique characteristics of different regions or markets, ultimately optimizing sales and profitability by ensuring that prices are competitive and attractive within each specific context.
36. Surge Pricing
Surge pricing, often referred to as dynamic pricing, is a strategy used by businesses to adjust the prices of their products or services based on real-time shifts in demand and supply conditions. This practice involves raising prices during periods of high demand or low availability and lowering them when demand is lower or supply is abundant. Commonly utilized in industries such as transportation and hospitality, surge pricing aims to balance consumer demand with available resources, encouraging customers to adjust their purchasing behavior while maximizing revenue for businesses during peak times. However, surge pricing can also spark debates about fairness and customer perception due to its potential to significantly alter prices in response to various factors.
A Stock Keeping Unit (SKU – pronounced “Skew”) is a unique identification code or number assigned to a specific product or item available for sale. SKUs are used by retailers to efficiently manage inventory, track sales, and organize products in their systems. Each SKU corresponds to a distinct product variation, such as size, color, or style, enabling retailers to accurately monitor stock levels, reorder products, and analyze sales data. Companies issue their own internal SKU codes. Two companies selling the same item would likely issue two different SKUs
38. Anchor Store
An anchor store refers to a large and prominent retail establishment, typically a well-known and established brand, strategically positioned within a shopping center or mall. Anchor stores play a pivotal role in attracting foot traffic and customers to the retail location, serving as key attractions that draw shoppers to the overall shopping complex. These stores often occupy significant space and contribute to the overall image and identity of the shopping destination. Common examples of anchor stores include department stores, major fashion retailers, or large grocery chains. The presence of anchor stores can have a significant impact on the success and vitality of a retail center by creating a strong customer base and generating traffic for smaller, surrounding retail tenants.
39. Big Data
Big data in retail refers to the massive volume of diverse and complex data generated from various sources including customer transactions, online interactions, inventory management, supply chain operations, social media, and competitor price monitoring. This data is characterized by its high volume, velocity, variety, and veracity. Retailers collect and analyze this data using advanced technologies and analytical methods to uncover insights, patterns, and trends that can inform business strategies, enhance customer experiences, optimize operations, and improve decision-making processes.
40. Cross Merchandising
Cross merchandising is a retail strategy in which products from different categories or departments are strategically placed together in order to encourage customers to make additional purchases. This technique involves grouping complementary or related items in close proximity to each other, with the intention of increasing the average transaction value and encouraging impulse buying. By presenting products that are often used together or have a natural association, retailers aim to create a seamless shopping experience, increase customer exposure to various offerings, and enhance the perceived convenience of purchasing related items in a single visit.
41. Omni-Channel Retailing
Omni-channel retailing is a strategic approach that seamlessly integrates various shopping channels, such as physical stores, online platforms, and mobile apps, to provide customers with a consistent and interconnected shopping experience. This strategy allows customers to interact, browse, and purchase products seamlessly across different touchpoints while maintaining uniform product information, pricing, and services. By prioritizing convenience and cohesion, omni-channel retailing aims to enhance customer satisfaction, loyalty, and engagement by catering to diverse shopping preferences and behaviors.
42. EPOS System
An Electronic Point of Sale (EPOS) system is a computerized solution utilized by retailers to manage and streamline sales transactions. It combines hardware, such as touchscreens, barcode scanners, and printers, with software that facilitates sales processing, inventory management, and reporting. EPOS systems enhance transaction accuracy, provide real-time inventory updates, and offer insights into customer behavior, ultimately optimizing retail operations and improving customer service through data-driven insights and efficient transaction management.
43. Carrying costs
Carrying costs, also known as holding costs, refer to the expenses and costs associated with holding and maintaining inventory in a retail or business environment. Carrying costs are calculated by dividing the total inventory value by the cost of storing the goods over a given time. It is usually expressed as a percentage. These costs encompass various factors, including storage, warehousing, insurance, depreciation, opportunity cost of tying up capital, and potential obsolescence. Effective inventory management aims to strike a balance between carrying costs and the benefits of having sufficient stock to meet customer demand, minimizing excess inventory while avoiding stockouts.
Shrinkage in retail refers to the loss of inventory between the time it’s acquired by a retailer and the time it’s sold to customers. This loss can occur due to various factors, including theft, shoplifting, fraud, employee pilferage, administrative errors, supplier issues, damaged goods, and inaccurate inventory tracking. Shrinkage represents the discrepancy between the recorded inventory levels and the actual physical inventory on hand. It can have a significant impact on a retailer’s profitability by reducing potential sales and increasing costs associated with replacement, security measures, and inventory management. Effective loss prevention strategies, employee training, inventory controls, and technology solutions are often employed by retailers to mitigate shrinkage and maintain accurate inventory levels
Showrooming is a shopping behavior where consumers visit a physical retail store to examine products in person and then use their smartphones or other devices to compare prices, read reviews, and potentially make a purchase online from a different retailer. This practice allows shoppers to take advantage of the tactile experience of seeing and touching products in-store while still benefiting from the convenience and potentially lower prices offered by online retailers. Showrooming can pose a challenge for brick-and-mortar retailers, as it can lead to lost sales and reduced foot traffic. To counteract showrooming, some retailers implement strategies such as price matching, exclusive in-store offers, or creating a unique in-store experience that online retailers can’t replicate.
46. Conversion Rate
A conversion rate in retail and ecommerce refers to the percentage of visitors who make a purchase vs the number of people who visited the store. It is calculated by dividing the number of transactions (purchases) by the total number of visitors and then multiplying by 100. For example, if 100 people visit a store and 20 of them make a purchase, the retail conversion rate would be 20%.
47. Top of Mind Awareness (TOMA)
Top of Mind Awareness (TOMA) refers to a psychological state in which a brand or product is the first to come to a person’s mind when thinking about a particular industry, category, or need. It reflects a high level of brand recall and recognition, indicating that the brand has successfully established a strong and memorable presence in the consumer’s mind.
48. Pay-Per-click (PPC)
Pay-Per-Click (PPC) is a digital advertising model where advertisers bid on specific keywords or phrases relevant to their products or services. When a user conducts a search using these keywords, the ad is displayed prominently in search engine results or on websites. Advertisers only pay when a user clicks on their ad, directing them to the advertiser’s website. This approach allows for targeted marketing, as advertisers can tailor their campaigns to reach a specific audience, and it offers measurable results by tracking the effectiveness of each click in terms of conversions and sales against the average ‘cost per click’.
Return on Investment (ROI) is a performance metric used to assess the profitability of an investment. It calculates the ratio between the net gain or loss generated from an investment and the initial cost of that investment, expressed as a percentage. A positive ROI indicates that the investment has generated more returns than the cost, while a negative ROI signifies a loss. ROI is a valuable tool for evaluating the effectiveness of various activities in retail such as promotional investments or opening new outlets.
A DC, or Distribution Center, is a strategically located facility within a retailer’s supply chain network. Its primary purpose is to efficiently manage the storage, sorting, and distribution of products to various retail locations or directly to customers. Distribution centers play a pivotal role in enhancing supply chain management by enabling streamlined inventory control, reducing transportation costs, and facilitating faster order fulfillment. They act as hubs where products are received from manufacturers or suppliers, sorted based on demand, and then dispatched to retail outlets or consumers.
Clienteling is a personalized customer relationship management (CRM) strategy employed by retailers and ecommerce sellers to enhance customer engagement and loyalty. Clienteling aims to provide a more personalized shopping experience, offering customized recommendations, special offers, and targeted marketing based on customers’ preferences, purchase history, and behaviors. Clienteling often involves the use of technology, such as CRM software, to manage customer data and interactions effectively.
CRM, or Customer Relationship Management, is a business strategy and technology solution used by retailers to manage and nurture interactions with customers. CRM solutions help companies track customer interactions, purchase histories, preferences, and behaviors. This information is used to create personalized marketing campaigns, offer tailored product recommendations, and improve customer service.
BNPL stands for “Buy Now, Pay Later,” a payment option allowing customers to make purchases and receive products immediately, while spreading the cost over a series of installments, usually without any interest or fees if paid within the specified timeframe. BNPL services are offered by third-party providers or integrated directly into e-commerce platforms, giving shoppers greater flexibility in managing their finances and making higher-priced items more accessible. This payment model has gained traction due to its convenience and ability to attract consumers who prefer a more manageable approach to payments, potentially boosting sales for merchants by reducing purchase barriers. However, responsible use is important, as improper management of BNPL options could lead to accumulating debt.
54. Just-Walk-Out Technology
Just-Walk-Out technology is an innovative technology spearheaded by Amazon that enables shoppers to enter a store, select items, and simply leave without having to go through a traditional checkout process. Sensors, cameras, and advanced machine learning algorithms are employed to track the items customers pick up and automatically charge their accounts as they exit the store. The technology aims to provide a frictionless shopping experience, eliminating the need for waiting in lines or scanning items individually.
55. Consumer Packaged Goods (CPG)
Consumer Packaged Goods (CPG) is a category in the retail industry that encompasses everyday products that are consumed and replaced frequently. These goods are typically sold in packaging designed for easy handling and convenience. CPG items include a wide range of products, such as food and beverages, toiletries, cleaning products, over-the-counter medications, and other household essentials. They are typically found in grocery stores, supermarkets, convenience stores, and online retailers. The CPG sector is characterized by high competition and the need for effective marketing strategies to attract consumers, as well as the constant demand for innovation to meet changing consumer preferences and trends.
56. First Party Data
First-party data refers to the information that retailers collect directly from their own customers such as purchase history, website interactions, demographics, preferences, and other behavioral insights obtained from interactions. First-party data is considered highly valuable because it is owned and controlled by the business, providing a direct and accurate understanding of its customer base that is inaccessible to competitors. This data is commonly used for personalizing marketing efforts, improving customer experiences, and informing strategic decisions.
57. Headless Commerce
Headless Commerce is an e-commerce architecture approach that decouples the front-end and back-end of an online store, allowing for greater flexibility and customization in delivering the user interface and user experience. In a traditional e-commerce setup, the front-end (the visual presentation layer that customers interact with) and the back-end (the underlying systems handling inventory, transactions, and data) are tightly integrated. In a headless commerce architecture, these two components are separated. This separation allows for quicker front-end updates and a more tailored user experience across various devices. With headless commerce, retailers can experiment with the integration of new technologies without disrupting the back-end.
58. Last Mile Delivery
Last mile delivery, often referred to as the “final mile,” is the crucial stage of the logistics process where goods are transported from a distribution center or store to the ultimate destination, which is typically the customer’s doorstep or a designated delivery point. Despite being the shortest distance in terms of transportation, the last mile is often the most complex and costly phase due to factors like traffic congestion, varying delivery locations, and the need for precise timing. Companies strive to optimize last mile logistics by using advanced routing algorithms, real-time tracking, alternative delivery methods (such as drones and autonomous vehicles), and partnerships with local couriers to ensure efficient and timely last mile delivery.
59. Visual Merchandising
Visual merchandising is a retail strategy that focuses on creating visually appealing and engaging displays within a physical store or online platform to attract customers and encourage purchases. It involves arranging products, signage, lighting, colors, and other elements in a way that tells a story, showcases products’ features, and creates an immersive shopping experience. The goal of visual merchandising is to capture customers’ attention, highlight the unique selling points of products, and guide them through the store or website in a coherent and visually pleasing manner.
60. Flash Sales
Flash sales are time-limited and often impromptu marketing events where products are offered at significantly discounted prices for a short period of time. These sales are designed to create a sense of urgency and excitement among customers, encouraging them to make quick purchasing decisions. Flash sales are typically promoted through various channels, and the limited availability and discounted prices can attract a surge of customers, drive website traffic, and boost sales within a short timeframe.
61. Durable Goods
Durable goods are consumer products that are designed to last for an extended period of time and retain their functionality over multiple uses. These goods are expected to provide value and utility over a longer period compared to nondurable goods, which are consumed quickly or have a shorter lifespan. Durable goods include items such as appliances, electronics, furniture, vehicles, and other products that are intended for regular use and are not consumed or depleted after a single use. Due to their longevity, consumers often make more considered purchasing decisions for durable goods, taking into account factors such as quality, features, and brand reputation.
EMV, which stands for Europay, Mastercard, and Visa, is a global standard for secure payment transactions using credit and debit cards. The name “EMV” represents the three companies that collaborated to create the standard: Europay, Mastercard, and Visa. It involves using embedded microprocessor chips in payment cards to enhance security by replacing traditional magnetic stripe cards. When a customer makes a payment using an EMV-enabled card, the chip generates a one-time-use code that is validated by the payment terminal, making it difficult for criminals to replicate the card data.
Premiumization is a strategy used by brands to motivate customers to pay more for their offering. As a market becomes more saturated, brands are more likely to pivot to premium products to differentiate themselves and achieve growth. Focusing on traits such as high-quality ingredients, specialized manufacturing, and exclusivity, brands can justify positioning products at a higher price point.
64. FIFO (First in First Out)
FIFO, or First In, First Out, is an inventory management and accounting principle that assumes the earliest acquired items are the first to be sold. It records older inventory as sold before newer inventory, determining the cost of goods sold (COGS) and remaining inventory value. Due to inflation, older goods are often lower cost than more recent shipments. Despite actual sales not always matching this pattern, FIFO’s calculation leads to higher reported profits compared to methods like LIFO (Last In, First Out). This method is effective for businesses with seasonal inventories but may not align well with those frequently introducing new products. As new products are introduced and gain popularity, they might become a significant portion of sales, and yet under the FIFO method, they would be calculated using the cost of older inventory. This could lead to a distortion in the accuracy of profit calculations and inventory valuations, which could impact financial reporting and business decision-making.
A doorbuster is a marketing and sales strategy frequently employed by retailers, particularly during high-traffic shopping periods such as the holiday season, to draw a significant influx of customers into their stores upon opening. During a doorbuster sale, a specific item or a curated selection of products is showcased at an exceptionally discounted price for a limited time. The primary objective is to attract customers to the store’s physical location or online platform by featuring these compelling deals, prompting not only the purchase of the promoted items but also encouraging shoppers to explore and potentially purchase other products at regular prices. Doorbuster events are strategically timed to create a sense of urgency and excitement, often employing the allure of limited quantities or time constraints. While these promotions can be effective revenue generators and inventory-clearing tactics, they also serve to reinforce brand visibility, competitiveness, and customer engagement. It’s essential to note that while doorbusters can significantly enhance foot traffic and sales, retailers must ensure ethical practices and avoid misleading marketing tactics, such as “bait and switch,” to maintain transparency and customer trust.
66. Joint Business Plan
Joint Business Planning (JBP) is a collaborative process between a retailer/distributor and a manufacturer supplier, aimed at aligning short and long-term financial goals for their shared business. Through JBP, both parties work together to develop initiatives that drive growth and profitability. It involves sharing shopper insights, marketplace data, and investing jointly in demand-driving or cost-cutting initiatives. “Cooperative Advertising” is one example of a joint business planning initiative. In this arrangement, the supplier and retailer collaborate to share the costs and benefits of advertising and promotional activities.
67. Pop-up Retail
Pop-up retail, often referred to as a “pop-up shop,” is a temporary and short-term retail space that is set up to engage with customers, promote products, or test new markets. The limited-time nature of pop-up shops creates a sense of urgency and exclusivity, driving customers to visit and make purchases. This strategy is particularly popular for seasonal events, product launches, or to capitalize on trends and emerging markets.
68. Acquiring Bank
An acquiring bank is a financial institution that facilitates payment transactions on behalf of merchants. It plays a crucial role in the payment processing ecosystem, enabling businesses to accept various forms of electronic payments, such as credit and debit card transactions, online payments, and mobile wallet payments. When a customer makes a payment using their card or other electronic means, the acquiring bank processes the transaction, verifies the payment details, and transfers the funds from the customer’s bank to the merchant’s account. Processing fees are levied by the acquiring bank on the merchant for its services in processing the payment transaction.
69. Co-branded Credit Card
A co-branded credit card is a collaboration between a credit card issuer or network and a partnering business such as a retailer. These cards prominently display the logos of both entities and offer rewards, discounts, or points when used with the sponsoring merchant. While co-branded cards can be used wherever cards from the network are accepted, their benefits are particularly tailored to the partnering business, encouraging customer loyalty and spending. Airlines were pioneers in co-branded cards with offers such as Air Miles, followed by hotels, nonprofits, and retailers. These cards not only incentivize spending but also help retailers gather valuable customer data and insights, enabling them to tailor their marketing efforts and product offerings more effectively.
70. Closed Loop Card
A closed-loop card, also known as a closed-loop payment card or stored-value card, is a type of payment card that is issued and only accepted by a specific retailer. Unlike open-loop cards like co-branded credit cards, closed-loop cards are limited to use within the specific ecosystem of the issuing company. These cards typically have a preloaded value and can be used to make purchases or transactions exclusively at the issuing company’s locations or online platform. Common examples of closed-loop cards include gift cards, store-specific loyalty cards, and prepaid cards for particular services or products. They offer convenience and potential rewards for customers while also promoting customer loyalty and driving sales within the business’s own network.
The Consumer Price Index (CPI) is a fundamental economic indicator used to measure the average change over time in the prices paid by consumers for a predetermined basket of goods and services. It serves as a key tool for assessing inflation or deflation trends within an economy. The CPI reflects the general price movements experienced by consumers and is calculated by considering the price changes of a diverse ‘basket’ of products and services, such as food, housing, transportation, healthcare, and more. Retailers rely on the Consumer Price Index (CPI) to understand how inflation or deflation will impact consumer spending behavior. By staying informed about changes in the CPI, retailers can adjust their pricing strategies, anticipate shifts in consumer demand, and make informed decisions about inventory management.
A kiosk refers to a small, temporary, stand-alone booth used in high-traffic areas such as malls or airports. Kiosks can often be manned by only one or two employees. These booths provide a cost-effective way for businesses, especially emerging ones, to engage customers, promote products, and raise brand awareness.
73. Amazon Effect
The Amazon effect refers to the impact of online and digital marketplaces on traditional brick-and-mortar retail models, leading to shifts in shopping habits, customer expectations, and industry competition. With the rise of e-commerce and online shopping, many conventional businesses have faced challenges as they strive to compete with the convenience and variety offered by the online marketplace. This phenomenon, often linked to Amazon.com Inc., has resulted in the decline of physical retail sales and closures of numerous stores. The effect extends beyond revenue impacts, causing changes in consumer behavior, such as increased demand for product variety and the expectation of seamless experiences both online and offline.
A hypermarket is a massive retail store that combines a supermarket and a department store. It offers a wide variety of products, including groceries, clothing, electronics, household items, and more, all under one roof. Hypermarkets are known for their extensive selection and large size, providing customers with a convenient one-stop shopping experience.
75. Comparable Store Sales
Comparable store sales, also known as same-store sales, refer to a retail performance metric that measures the revenue or sales growth of stores that have been open for a certain period, typically a year, and compares it to the corresponding period in the previous year. This metric helps assess a retailer’s organic growth by excluding the impact of newly opened or closed stores. It provides valuable insights into the company’s ability to increase sales from its existing store base and gauge its overall operational health and customer demand.
76. Rain Check
A rain check refers to a promise or voucher given to a customer when a product or item is temporarily out of stock or unavailable. This promise allows the customer to purchase the item at a later date at the current sale price, even if the sale or promotion has ended, to prevent customers from switching to the competition.
A vendor generally refers to anyone who buys and sells goods or services. A vendor makes a profit by purchasing products and services and then sells them to another company or individual. In retail, vendors may include wholesalers, manufacturers, and resellers. A retail merchant makes its profit by marking up and selling the items they acquire from its vendors on to customers. Retailers tend to depend on many different vendors to supply products. In situations where they need a substantial quantity of goods, they might engage directly with the manufacturer. However, for smaller orders, may deal with wholesale distributors instead.
78. Gross Merchandise Value (GMV)
GMV stands for gross merchandise value (also known as gross merchandise volume). It is a metric used by online retailers to measure the total amount of products sold through an eCommerce website over a particular period of time. It serves as a high-level indicator of how effectively the business is generating revenue through its online platform. GMV is calculated by using the following formula: GMV = Sales price x number of units sold.
Disintermediation refers to the process of eliminating traditional intermediaries or middlemen from a supply chain or distribution network, often facilitated by technological advancements or changes in business models. This allows direct connections between producers or providers of goods and services and end consumers, bypassing the need for intermediaries like distributors, wholesalers, or retailers.
80. Merchant Discount Rate
The merchant discount rate (MDR) is a fee imposed on businesses by the company responsible for processing their debit and credit card transactions. Before merchants can accept such card payments, they must establish this service and agree upon the applicable rate. Generally falling within the range of 1% to 3%, the merchant discount rate serves as compensation for the payment processing services provided. A portion of this rate is allocated as an interchange fee paid to the credit card issuer. Merchants must factor these fees into their overall business expenses and pricing strategies. In some places, merchants have the option to levy a surcharge on customers using debit and credit cards, partially to help offset the associated costs.
81. Interchange Rate
The interchange rate, also known as the interchange fee, is a predetermined fee that a payment card network (such as Visa, MasterCard, or American Express) charges to a merchant’s acquiring bank (or payment processor) for processing a credit or debit card transaction. This fee is then typically passed on to the card issuer (the bank that issued the card used in the transaction). It’s an essential element in the complex fee structure associated with card payments and plays a role in determining a retailer’s transaction costs.
82. Units per Transaction (UPT)
Units per Transaction (UPT) is a retail metric that measures the average number of items or products sold in a single transaction. It’s used to assess the effectiveness of a store’s or a website’s strategy for upselling or cross-selling. A higher UPT indicates that customers are buying more items each time they make a purchase, which can contribute to increased revenue and profitability. Retailers often aim to increase UPT by encouraging customers to add complementary or related products to their purchase, such as offering bundle deals, suggesting additional items at checkout, or displaying products that go well together.
83. Inventory Financing
Inventory financing allows retailers to access funds to purchase additional inventory or cover operating expenses while using their existing inventory as a form of collateral for the lender. Inventory financing helps businesses manage cash flow by providing a way to unlock the value of their unsold inventory and convert it into working capital. Lenders evaluate the value and quality of the inventory to determine the amount of financing they can provide. This type of financing is particularly beneficial for businesses with seasonal fluctuations in sales or those looking to expand their inventory without tying up their cash reserves. If the borrower is unable to repay the loan, the lender may take possession of the inventory to recover the outstanding amount.
84. Social Commerce
Social commerce refers to the integration of social media platforms with e-commerce strategies, allowing businesses to sell products or services directly through social media channels. It involves leveraging the influence and reach of social networks to facilitate online shopping and transactions. Social commerce often includes features such as shoppable posts, where products are tagged and linked to purchase pages, and integrated payment options within social media platforms.
85. Affiliate Marketer
An affiliate marketer is an individual or entity that promotes products or services offered by other companies through various marketing channels, such as websites, blogs, social media, and email marketing. The affiliate marketer earns a commission or a share of the revenue for each sale, click, or action generated through their marketing efforts. This type of marketing operates on a performance-based model, where affiliates are rewarded based on their ability to drive desired actions from their audience.
86. ATC Rate
The ATC or “Add-to-Cart” Rate i’s a metric used in e-commerce to help retailers understand how effective their website is at converting visitors into shoppers who are interested in making a purchase. The ATC Rate is calculated as the percentage of visitors who add at least one item to their shopping cart while browsing the website. It’s an important indicator of user engagement and can provide insights into the effectiveness of product displays, pricing strategies, and the overall quality of user experience (UX).
87. Contract Logistics
Contract logistics refers to the comprehensive outsourcing of various supply chain management activities and processes to a third-party logistics provider (3PL) or a logistics company. In this arrangement, the logistics provider takes over the planning, execution, and management of logistics operations on behalf of the client company. These services can include transportation, warehousing, distribution, inventory management, order fulfillment, and other related activities. The goal of contract logistics is to streamline and optimize supply chain operations, reduce costs, improve efficiency, and allow the client company to focus on its core business activities while relying on the expertise and resources of the logistics partner.
88. Average Selling Price (ASP)
Average Selling Price (ASP) refers to the typical price at which a specific product or category of products is sold. This metric is influenced by the nature of the product and its stage in the product life cycle. ASP can pertain to the average price of a product across multiple distribution channels, within a product category of a company, or even across the entire market. ASP serves as a benchmark for entities seeking to establish pricing for their products or services. Retailers commonly use ASP, with products such as computers, cameras, televisions, and jewelry having higher ASPs, while items like books and DVDs exhibit lower ASPs. The calculation of ASP involves dividing the total revenue generated from a product by the total units sold, and it is often reported in quarterly financial results.
89. Brand Equity
Brand equity refers to the value and perception that a brand holds in the eyes of consumers. It represents the intangible assets and qualities that contribute to a brand’s overall worth and influence over consumer behavior. Brand equity is built over time through various factors such as brand awareness, customer loyalty, perceived quality, associations with positive attributes, and overall reputation. Brands with strong equity are often able to command higher prices, maintain customer loyalty, and attract new customers more easily. It’s a measure of how well a brand can leverage its reputation and recognition to generate sales and create long-term value.
Micromarketing, also known as micro-targeting, is a marketing strategy that focuses on reaching a very specific and narrow segment of the market with tailored messages and offerings. Instead of targeting a broad audience, micromarketing aims to identify and cater to the unique needs, preferences, and behaviors of small and specialized groups of customers. This approach leverages data analytics and advanced targeting techniques to customize marketing campaigns, products, and services for these specific segments. Micromarketing recognizes that not all customers are the same and aims to create a more personalized and relevant experience, which can lead to higher engagement, conversion rates, and customer satisfaction.
91. Private Label
Private labels, also known as private brands or store brands, are products developed and offered by retailers under their own brand name. These products are intended to compete with well-known brand-name goods and are typically manufactured by third-party or contract manufacturers. Private label products often have a lower price point compared to established brand-name products, allowing retailers to offer more affordable options to customers. This strategy also enables retailers to achieve higher profit margins since they can bypass the costs associated with marketing and advertising national brands.
92. Goods and Services Tax (GST)
Goods and Services Tax (GST) is a consumption-based tax applied to the supply of goods and services in many countries. It replaces various indirect taxes and aims to simplify the tax structure while ensuring that tax is collected at each stage of the supply chain. Businesses and individuals must register for GST, charging it on their sales and reclaiming it on their purchases.
93. Fast Moving Consumer Goods (FMGC)
Fast Moving Consumer Goods (FMCG) are everyday consumer products that have a short shelf life and are typically sold at a relatively low cost. These goods are in high demand and are consumed rapidly by the general public. FMCG includes a wide range of items such as food and beverages, personal care products, cleaning supplies, and over-the-counter medicines. Due to their frequent turnover and consistent demand, FMCG are an important category in the retail industry and often require efficient distribution and supply chain management to ensure availability to consumers.
94. Churn Rate
A churn rate is the percentage of your existing customers who do not reorder. Churn rate is particularly relevant for subscription-based e-commerce businesses, where customers are expected to make recurring purchases. For these businesses, churn rate is calculated as follows: Churn Rate = (Customers at the start of the period – Customers at the end of the period + New Customers Acquired in the Period) / Customers at the start of the period.
ACOS (Advertising Cost of Sales): ACOS is a metric used in digital advertising, particularly on platforms such as Amazon. It represents the ratio of advertising spend to the revenue generated from the sales of the advertised product. It helps assess the efficiency and profitability of advertising campaigns.
96. A to Z Guarantee
A service provided by Amazon to ensure customer satisfaction and confidence when shopping on their platform. It guarantees that customers will receive products as described and in a timely manner. If customers encounter issues with their orders, Amazon steps in to help resolve the situation.
97. Amazon API
Amazon provides APIs (Application Programming Interfaces) that allow developers to integrate their applications and services with Amazon’s systems and data. These APIs enable various functionalities such as accessing product information, managing orders, and automating tasks on the Amazon platform.
A cookie is a data snippet stored within a web browser by a website, allowing the site to recognize returning users and display personalized settings and content. It retains information like shopping cart contents, login credentials, and preferences, making it easier to retrieve these details for future visits. While cookies help enhance user experiences and enable targeted advertising, concerns over privacy arise due to their tracking capabilities across websites.
99. Lost Buy Box (LBB)
The “Lost Buy Box” (LBB) refers to a situation where an Amazon seller loses the opportunity to be the featured seller for a specific product listing. The Buy Box is the prominent section on a product page where customers can directly add an item to their cart. When a seller loses the Buy Box, it means they are not the default seller in the Buy Box’ for that product. Factors like pricing, shipping, seller rating, and customer service influence who wins or loses the Buy Box.
100. OOS Rate
The OOS (Out of Stock) rate is the percentage of time that a particular product is out of stock or unavailable for purchase. It’s an important metric for e-commerce businesses to monitor, as high OOS rates can lead to missed sales opportunities and customer dissatisfaction.