Dropshipping Glossary: 74 Terms Explained

Find the common terms and abbreviations used in the dropshipping industry. Stay in the know.

Here is the complete terms list with explanations to keep you informed:

1. Business models & strategy

Affiliate Marketing. This is when a person earns money by promoting someone else's product. If the promotion leads to a sale, the person gets a commission or a share of the profit.

AliExpress. An online retail service based in China that is owned by the Alibaba Group.

Business to Business (B2B). Transactions that occur between businesses, such as a manufacturer and a wholesaler or retailer.

Business to Consumer (B2C). Transactions that occur between businesses and individual consumers, not companies.

Cross-Selling. The action or practice of selling an additional product or service to an existing customer.

Direct to Garment (DTG). A printing technique where a digital printer is used to print images directly onto garments.

Dropshipping. An online retail strategy where the retailer doesn't stock goods; instead, when a product is sold, it is purchased from a third party and shipped directly to the customer.

Ecommerce. The act of buying or selling products and services online.

Merchant. A person or company involved in wholesaling, especially one dealing with foreign countries or supplying goods to a particular trade.

Print on Demand (POD). A process where a custom-designed product, like a t-shirt or mug, is only manufactured once an order has been made. This means there's no need to print and store lots of products in advance.

Private Label. Products manufactured by one company for sale under another company's brand.

Reseller. A company or individual that purchases goods or services with the intention of selling them rather than consuming or using them.

Upselling. A sales strategy where the seller encourages the customer to spend more by upgrading their current product or buying a more expensive version.

White Label. Products produced by one company that other companies rebrand to make them appear as if they made them.

2. Sales and marketing

A/B Test. A method of comparing two versions of a webpage or other resource to see which one performs better.

Call to Action (CTA). A prompt on a website that tells the user to take some specified action, such as ‘Buy Now’ or ‘Sign Up.’

Conversion Rate. The percentage of visitors to a website who complete a desired goal (a conversion) out of the total number of visitors.

Google Trends. A tool provided by Google that shows how often a particular search term is entered relative to the total search volume across various regions of the world and in various languages.

Keyword. A word or phrase that people type into search engines. Websites will try to use these keywords in their content to show up in search results.

Meta Description. A brief summary of a webpage that shows up in search engine results. It helps people decide whether to click on your site.

Pop up. A type of ad that appears suddenly in a new window on top of the content you're viewing on a webpage.

Search Engine Optimization (SEO). The process of improving a website to increase its visibility in search engine results. The goal is to attract more traffic from people searching online.

Search Engine Results Page (SERP). The page that shows up when you search for something online. It lists websites, videos, images, and other results related to your search query.

Unique Selling Proposition (USP). What makes your product different and better than the competitors' product. It's the reason why customers should choose your product over others.

User-Generated Content (UGC). Any form of content, such as images, videos, text, and audio, that has been posted by users on online platforms like social media.

3. Product and order management

Third-Party Logistics (3PL). Companies that provide services to handle logistics operations like warehousing, transportation, and order fulfillment for another company.

Average Order Value (AOV). The average amount of money each customer spends per transaction with your store.

Backorder. A situation where customers can order and pay for goods that are temporarily out of stock, and they will receive the goods when they are back in stock.

Bulk. Buying goods in large quantities, often at a discount.

Bundling. Offering several products for sale as one combined product. This is usually done at a lower price than if the customer bought all of them separately.

Chargeback. A return of funds to a consumer, mainly used in credit card transactions, when a customer disputes a transaction.

Cost of Goods Sold (COGS). The total cost to make the products that a company sells. This includes things like the cost of materials and the cost of labor.

Inventory Management. How a company keeps track of all the goods it has. It involves knowing when to re-order products, how much to order, and how to store products.

Logistics. The management of the flow of goods, services, and information between the point of origin and the point of consumption.

Minimum Order Quantity (MOQ). The smallest quantity of a product that a supplier is willing to sell.

Manufacturer's Suggested Retail Price (MSRP). The price that the manufacturer recommends the retailer sell the product for.

Order Fulfillment. The complete process from point of sales inquiry to delivery of a product to the customer.

Order Management System. A system that tracks sales, orders, inventory, and fulfillment to streamline the ordering and delivery process.

Shipping. The process of transporting goods from a source location to a predefined destination.

Stock Keeping Unit (SKU). A unique identifier for each distinct product and service that can be purchased.

Tracking Number. A unique number that shows you the progress of your package delivery.

Wholesale Price. The price that businesses charge when selling to other businesses, typically in large quantities.

Wholesaler. A person or company that sells goods in large quantities at low prices, typically to retailers.

4. Payment and checkout

Abandoned Cart. This is when a customer adds items to their online shopping cart but leaves before completing the purchase.

Accessibility. The design of products, devices, services, or environments to ensure that all users, including those with disabilities, can use them.

Cash On Delivery (COD). A type of transaction where the recipient makes the payment for a product at the time of delivery.

Checkout Process. The steps a customer goes through when purchasing a product online, including entering shipping information and making payment.

Filtering. The process of narrowing down a list of items based on certain criteria, such as price range or color.

Payment Gateway. A technology used by merchants to accept payments from customers online.

Point of Sale (POS). The place where a customer pays for goods or services.

Payment Card Industry (PCI). Refers to the technical and operational standards that businesses must follow to ensure that credit card data provided by cardholders are protected.

User Interface (UI). The part of a software application or website that users interact with, like buttons, menus, and forms.

User Experience (UX). The overall experience a person has while using a product such as a website or software application, including its ease of use and how pleasing it is to use.

Value-Added Tax (VAT). A type of tax that you pay when you buy goods or services. The more you buy, the more tax you pay.

5. Analytics and advertising metrics

Bounce Rate. The percentage of visitors to a website who navigate away from the site after viewing only one page.

Click Through Rate (CTR). The percentage of people who click on a specific link out of the total number of people who view a page, email, or advertisement.

Cost Per Acquisition (CPA). The total cost of a specific marketing campaign divided by the number of customers acquired through that campaign.

Cost Per Click (CPC). The amount you pay each time a user clicks on your online advertisement.

Cost Per Thousand (CPM). The cost an advertiser pays for one thousand views or clicks of an advertisement.

Customer Relationship Management (CRM). Technology for managing all your company's relationships and interactions with customers and potential customers.

Key Performance Indicator (KPI). A measurable value that demonstrates how effectively a company is achieving key business objectives.

Lifetime Value (LTV). The prediction of the net profit attributed to the entire future relationship with a customer.

Margin. The difference between the selling price of a product or service and its cost of production. Often expressed as a percentage of the selling price.

Return on Investment (ROI). A measure used to evaluate the efficiency or profitability of an investment, calculated by dividing net profit by the cost of the investment.

Pay Per Click (PPC). A type of online advertising where the advertiser pays the publisher each time a potential customer clicks on the ad.

6. Technology and compliance

Application Programming Interface (API). APIs allow different software programs to communicate with each other.

Content Delivery Network (CDN). A network of servers distributed geographically to provide fast delivery of Internet content like websites, videos, and images.

Content Management System (CMS). A software that helps users create, manage, and modify content on a website without needing specialized technical knowledge.

Comma Separated Values (CSV). A simple file format used to store tabular data, such as a spreadsheet or database, where commas are used to separate the values.

Domain Name System (DNS). The system on the internet that translates domain names into IP addresses.

General Data Protection Regulation (GDPR). A regulation in EU law on data protection and privacy for all individual citizens of the European Union and the European Economic Area.

Really Simple Syndication (RSS). A web feed that allows users to access updates to online content in a standardized, computer-readable format.

Software as a Service (SaaS). A software licensing model in which access to the software is provided on a subscription basis, with the software being located on external servers rather than on servers located in-house.

Secure Sockets Layer (SSL). A protocol for establishing authenticated and encrypted links between networked computers. It's typically used to secure communications between web browsers and servers.

Get in touch

Email: contact@dodropshipping.com


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