Why Knowing E-Commerce Terms Matters
Yesterday, I was contemplating a post for Facebook and X (formerly Twitter). I wanted to reach out to people interested in starting their own brands. While many follow me on my personal Facebook page, I realized that my audience there isn’t my target group for e-commerce.

The post I had in mind was this: “If you know the stats of your favorite sports team and players but don’t understand these 19 e-commerce terms, maybe your priorities are in the wrong place.”

As I thought it through, I decided to focus on what truly matters crafting value for my students at The Ground Up Academy. These are the ones who are serious about building their e-commerce businesses.

Here’s the thing: You might not use all these terms immediately when starting out, but understanding them will set you up for success. When it’s time to build your team, review your numbers, or communicate with experts, you’ll have a solid foundation to work from.

The 19 Essential E-Commerce Terms
To help you grow as an entrepreneur, here are the e-commerce terms every brand builder should commit to memory:
    1.    AOV (Average Order Value)
Tracks the average amount customers spend per order.
Formula: Total Revenue ÷ Number of Orders
    2.    CRO (Conversion Rate Optimization)
The process of improving your website to turn visitors into paying customers.
    3.    ROI (Return on Investment)
Measures the profitability of your investments.
Formula: (Net Profit ÷ Investment Cost) × 100
    4.    CAC (Customer Acquisition Cost)
The cost of acquiring a new customer.
Formula: Total Marketing Costs ÷ New Customers Acquired
    5.    LTV (Lifetime Value)
The total revenue a customer brings over their lifetime relationship with your business.
    6.    CTR (Click-Through Rate)
Measures how many people click on your ads or links.
Formula: (Clicks ÷ Impressions) × 100
    7.    SEO (Search Engine Optimization)
The practice of optimizing your site to rank higher in search engine results.
    8.    PPC (Pay-Per-Click)
A paid advertising model where you’re charged each time someone clicks on your ad.
    9.    SKU (Stock Keeping Unit)
A unique identifier for each product in your inventory.
    10.    CPM (Cost Per Mille)
The cost of 1,000 ad impressions—a key metric in display advertising.
    11.    CR (Conversion Rate)
The percentage of visitors who complete a desired action, like making a purchase.
Formula: (Conversions ÷ Total Visitors) × 100
    12.    CPC (Cost Per Click)
Tracks how much you pay for each ad click in your campaigns.
    13.    RFM (Recency, Frequency, Monetary)
Analyzes customer behavior: how recently they purchased, how often, and how much they spend.
    14.    KPI (Key Performance Indicator)
Metrics that measure progress toward specific business goals.
    15.    ERP (Enterprise Resource Planning)
Software that integrates and manages business processes like inventory and accounting.
    16.    API (Application Programming Interface)
Tools that allow different software to connect and share data.
    17.    SSL (Secure Sockets Layer)
Ensures secure, encrypted data exchange on your website, building trust with customers.
    18.    RTM (Real-Time Marketing)
Responding instantly to current events or customer behavior with relevant marketing.
    19.    POS (Point of Sale)
The system or location where customers complete their purchases, whether online or in-store.

Why These Terms Matter for Your Business
These terms aren’t just buzzwords they’re essential tools to help you communicate effectively, strategize better, and understand your business metrics. The sooner you become familiar with them, the more prepared you’ll be to grow your brand and work with a team.

Final Thoughts
If you’ve got big dreams for your e-commerce business, make learning these terms part of your foundation. Don’t just focus on external distractions or irrelevant stats. Focus on what truly matters building a brand that lasts.

God Bless The Entrepreneur.