Retail Glossary: Keywords and Common Phrases
Updated: Jul 22
This guide shall serve as a reference for various terms we come across in today’s retail world. This guide will be helpful to anyone from a new sales hire just getting their feet wet in retail, marketing leaders who influence the industry, or to the executives of large retail brands that are helping to shape and mold the retail landscape as we know it today.
3PL (Third Party Logistics)
A third-party logistics service that is more than just a drop-shipping service provider. 3PL’s can receive your goods, assemble products, package, and more. The options vary from vendor to vendor. The team over at ChannelApe put together an impressive list on the “Top 100 US and Global 3PL Companies," check it out!
API (Application Programming Interface)
API’s are request-based; in the technology world, an API is a machine/computer/software interface communication protocol that dictates how software can communicate. API’s can be private or public. A software company would release an API to the public to allow other developers to build solutions that can access/use certain data. This has made integration and automation easily possible for many businesses, as many modern applications offer access to necessary data via API. If you are using a software that does not have a public API for the data you need, ask them if they are willing to create one for you or work with a developer to come up with another solution.
Many of us think of application as the convenient apps we download on our phones, tablets, and computers. In the business world, applications are similar, but more specialized, and they usually cost money 😭. Usually, when we talk about an application, we are talking about SaaS solutions. Unfortunately, there is not a convenient marketplace for business owners to shop around and download applications, unless they do it through a specific platform like Shopify, who offers an entire marketplace filled with apps.
The selling of goods from one business to another business.
A business model where a company sells the products of another retailer to their consumers. Some real-world examples of this are department stores like BestBuy, Macy’s, etc.
BFCM (Black Friday, Cyber Monday)
An acronym commonly used in the retail world to talk about the busiest holiday weekend of instore and online sales. Black Friday is the 4th Thursday of every November, known for door-buster deals and deep discounts in stores, and Cyber Monday is the Monday immediately following, mostly geared towards online shopping of electronics, but many other categories promote on Cyber Monday as well.
Usually when a retailer stores their goods in a warehouse, to make locating inventory more convenient inventory items are assigned a “bin location” allowing the warehouse pickers to easily locate and pack merchandise for faster shipping.
When it comes to business accounting, a business wants to be “in the black”. This means they have had more revenue than they’ve had expenses for a given time period. Being “in the black” indicates that a time period was profitable.
This is the Friday following the United States holiday of Thanksgiving. This day is huge both for retailers, and consumers kicking off the holiday shopping season. Typically, consumers will get up extra early (or never go to sleep) and wait in lines to get door-buster deals offered both by D2C and B2C retailers. It’s worth pointing out that this event peaks on the actual day of Black Friday, however, most retailers are offering promotions before and after Black Friday, and the event now spans multiple days for many retailers. Want to know more, check out this overview by Investopedia.
Blogs are not exclusive to retail, but it’s worth mentioning as many retailers are finding extreme value in connecting with the consumers via this medium. Blogs can be used to build credibility, brand awareness, and brand engagement by sharing value-rich content that connects with their target audience.
B+M (Brick + Mortar)
A retailer who sells their product in a physical location, a retail store.
BOGO (Buy one, Get one)
A popular promotion in retail is to offer an incentive for buying multiple items. Consumers can purchase of one item and get a second item at a discounted rate.
Special offerings for the customers to get multiple related items at a discounted rate.
The process of analyzing sales history, and planning the exact number of units a retailer wants to purchase from a vendor or manufacturer for each SKU that they carry. The goal of Buyplanning is to purchase just enough units to sell to consumers for a season (usually a season is a 3-month period, but some retailers only have 2 seasons per year so their seasons are 6 months) without buying too much that they’ll have leftovers that must be marked down, or not enough that they sell out before the season ends.
When a business ships their product (or requires a consumer to ship a product back to them) they lean on the services of a carrier. A carrier is typically a third party that handles the actual shipping of a product to and from anywhere. It’s worth mentioning that some retailers offer this service in house, without the use of a third party. Common carriers include:
When a consumer is shopping online, they add products to their cart. Think of this stage as pre-checkout. Here, the consumer has decided a product fits their needs/desires. Products are added to carts so that the consumer can continue shopping for other things.
When a consumer adds item to the cart, but doesn’t complete the purchase, this is considered cart abandonment.
Some retailers sell in one place, other sellers in many. Each place a retailer chooses to sell their products is considered a channel.
Ex: website, Marketplace, in-store (each are their own channel)
Once a customer has filled up their cart with everything they desire, they need to complete their order; the checkout is where this takes place. Here, the consumer will finalize their transaction by entering necessary shipping and billing information.
A product that is no longer being sold at its original ticket price and has been permanently marked down. This often includes goods that are out of season or goods that did not sell well during season and the retailer takes a markdown to avoid having excess inventory. Oftentimes, retailers will consolidate their clearance goods to one section that is easily shopped.
CMS (Content Management System)
Contact management systems are designed to create and manage your digital content. For some retailers, the feature is built into their shopping cart, or they use platforms like Wordpress for managing their digital content.
COGS (Cost of Goods Sold)
How much a product costs to be produced &/or acquired. This cost often includes the sum of materials, construction, labor, freight, and packaging.
Not exclusive to retail, and not used by enough retailers, commission is a form of compensation that pays a sales employee a percentage of sales relative to their performance. Commission pay structures can constitute a portion of, or the entirety of an employee’s compensation package.
A potential buyer of products and/or services.
The percentage of traffic to a store or website that acts on a CTA; of the opportunities you had in front of you, how many of them did you convert into signups and/or purchases?
Conversion Rate = Total Traffic ÷ Number of Purchases
Ex: 100 people walk into your store and 23 of them buy something; this would be a 23% conversion rate.
A marketing tactic to influence your target audience to do something, “take action.”
Ex: a button on your website to click and “learn more,” or maybe an email, or social media post that poses a question to your target audience to solicit feedback, or purchase an item.
This is the Monday following the United States holiday of Thanksgiving. Much like Black Friday, this is an event where retailers are offering amazing deals to their consumers. As the name would imply, this event takes place online (think retail websites, and marketplaces).
The selling of manufactured goods directly to a consumer, versus selling them through a wholesale channel. Ex: a brand-owned eCommerce site or brick+mortar store.
Selling a product for less than the original retail value. Sometimes this is done through a temporary promotion, sometimes this offered as a customer service resolution, and sometimes it is done through a permanent discount (a.k.a. markdown).
The process by which a retailer ships products directly from a vendor or manufacturer, to the consumer. Drop shipping is often confused with 3PL; for a breakdown of the two, check out “Drop Shipping Versus 3PL” by Hollingsworth.
Any commercial transaction that is conducted over the internet, usually via a brand’s website, or other online channels.
ERP (Enterprise Resource Planning)
An ERP is a single system to help you manage multiple areas of your business. Various systems can be integrated from: inventory, orders, payroll, and more. Large retailers traditionally opted for large, resource-heavy ERP systems in the past. However, today, retailers are finding ways to create “virtual ERP’s” by integrating specialized disparate systems together, essentially automating their best of breed “tech stack.”
Some retailers offer the option for a consumer to borrow credit (either from the retailer directly, or an affiliated lending company) to acquire goods without cash upfront for smaller payments to be made over time. Sometimes this is a credit card, credit line, or an installment program.
Predicting the outcome of KPI’s. Typically, this is done by analyzing historical data, current market conditions, and other factors that could affect a business, and making estimates of KPIs (most notably retail sales volume, unit sales volume, GM$, GM%, COGS, Sell Thru %, and MD$). If there is no prior year data to reference, you’d use whatever information is available to make an educated guess, learn quickly, and adjust as needed.
Virtual or physical cards that hold cash value and can be used to make instore and/or online purchases with a retailer.
Connecting two different systems together. Typically, integrations happen between software systems that may not otherwise communicate with one another:
Prebuilt integrations: Either an iPaaS has the integration connections and logic prebuilt, or the systems you are using worked together to build a natural integration that fits your needs.
Custom integrations: Either you use a customizable iPaaS to create and manage your integrations, or you contract or build this system to be made exactly to your needs and specifications.
Any units of products that are owned by a retailer and are intended to be sold to consumers. Typically, inventory is discussed in inventory volume (the total number of units of an item we have on hand) and inventory cost (the total retail value of all the inventory we own).
The processes by which a retailer manages their inventory, analyzes inventory levels, and manages distribution channels. Good inventory management allows a retailer to identify which SKUs are most/least productive, helping to inform future assortment decisions, as well as identify any manufacturers or distributor relationships that don’t align with their inventory goals. Some retailers house their inventory with a 3PL, some own their own distribution facilities, and some have relationships with their product manufacturers that enable shipping direct from the factory.
IMS (Inventory Management System)
A system used by a retailer to manage their inventory. This system usually keeps all data regarding the location, quantities, and COGS of all your inventory.
iPaaS (Integration Platform as a Service)
Retailers use many applications, tools, or software to run their business. An iPaaS is a platform that can connect a retailer’s disparate systems together and automate the flow of data between them. This is especially effective at reducing unnecessary manual workflows.
A kit is for a product that requires assembly. Imagine a customer purchases a table. The table might use interchangeable parts also used for other products. When a consumer purchases a kit, they purchase it as a single SKU that then communicates to the retailers what parts and instructions to include in the packaging.
KPI (Key Performance Indicator)
Most business use certain data points to paint a picture of how the business is doing. Some commonly used KPI’s are:
Retail Sales Revenue ($): The sum of retail revenue
$ to LY: A percent that indicates how a retail business is doing relative to last year
Unit Sales (U Sls): The total number of units sold
Regular (“Reg”) Sales: The percent of total retail sales made by full price goods
Markdown Sales: The percent of total retail sales made by markdown goods
Blended Sales: The sum of both Reg Sales $ and Markdown Sales $
Sell-through %: The percentage of units sold of an item relative to the total number of units owned or purchased
Gross Margin $: (Retail Sales) - (COGS)
Gross Margin % = (Total Revenue – Cost of Goods Sold)/Total Revenue x 100
An event that usually takes place when a company is going out of business or closing a store. Oftentimes, a liquidation specialist or company is hired to get rid of the company’s products. This is usually a tough process for a business to go through as employees are aware there is a finite clock on their current employment status. Sometimes in these situations, employees are offered special packages to stay on and help as the company goes through liquidation.
many retailers offer their consumers the option to join a rewards program to promote loyalty, that offer points, special discounts, etc for making purchases or meeting certain milestones. Starbucks is a wonderful example of how to run a successful loyalty program.
A permanent discount to the retail ticket pricec that is taken on a product. This is typically done with products that are no longer in season, only have a few fringe sizes left, or a product that did not sell well
A convenient place where consumers go to find products from many retailers.
The act of using learnings from analyzing sales history and market trends to make decisions around what products, styles, and colors to include in an assortment, as well as how many units of each product a retailer may want to purchase from their vendor or manufacturer.
Retail merchandising encompasses all the activities associated with sourcing, buying, and presenting products to sell to consumers (hindsighting, assortment planning, buyplanning, sourcing, production, product development, visual display, pricing, promotions, inventory control, etc).
Another word for retailer. A merchant is an entity that solicits customers for the purchase goods and services.
MSRP (Manufacturers Suggested Retail Price)
The original ticket price that is intended to cover the cost of producing a product and achieve a target gross margin percent.
MVP (Minimum Viable Product)
An MVP is the minimum you are willing to accept as a viable option reagrding features, qualities, attributes of a product in discussion. This could be in your own product development, or could be regarding the final product of a website development project. Regardless, when considering product development, you always want to have an MVP in mind.
A time period, usually expressed in days, that a purchaser is granted to complete payment of ordered goods.
Ex: net-30 (30-day period), net-60 (60-days,), etc.
Alerts sent to you or your audience based on certain triggers (ideally, these are automated).
Ex: automated emails sent to customers who abandon their carts, or order confirmation emails.
A term used to encompass all of the various channels that a retailer uses to sell their goods and/or services.
Ex: Brick+Mortar, eCommerce Site, Amazon, Etsy, etc.
OMS (Order Management System)
A system to manage all of a retailer’s orders. Ideally, this system can manage orders from every channel you sell in.
Open Box Product/Discount
An item that has been removed from its original packaging that the retailer wishes to sell to the consumer. Oftentimes, the retailer will mark the price down on this item in order to incentivize consumers to purchase a product. Sometimes, this is an item that was on display in the store, sometimes this is an item that was returned in reasonable condition by another customer.
Customers want a way to track their order. Many retailers provide their customers with a tracking link provided by the carrier as a method of order tracking. If you’re an eCommerce retailer, it’s worth considering a real-time order tracking page to put right on your website.
An outlet is a discount version of a brand’s brick+mortar store. Some retailers choose to stock their outlet stores with special cost-engineered assortments made specifically for a lower price point, while others choose to send all of their out-of-season goods to their outlets to be sold at marked down prices.
Overselling is the act of selling more goods than you have in inventory. This can get particularly troublesome for retailers who sell their goods in multiple channels. This is definitely a bad thing and can lead to some very poor customer experiences.
Retailers need a way to collect money from consumers who wish to pay for goods and/or services with a credit card, debit card, EFT (electronic funds transfer), or check, so they may pay for access or license to use a payment processor. The processor takes the money from the customer’s account and deposits it in a merchant’s account or an account managed by a third-party.
PDP (Product Display Page)
eCommerce retailers list their products on their website (and on other sales channels). When referring to the PDP, most people are talking about their website and the page that displays all the details of an individual product.
A diagram of how to setup an in-store display. Typically used to showcase products in a certain way, or call special attention to something.
A system that businesses use to sell their products in person, usually either a register system or an online payment gateway.
The measure of how productive a product is in the assortment. Usually reflected in terms of dollars.
Productivity = Total Revenue generated by one product ÷ Total Number of Products
A salable item designed for use by a consumer and/or business.
When a business incurs revenue in excess of its expenditures.
A temporary discount, either a specific dollar amount or percentage off, that is applied to a product or group of products, that is intended to generate an increase in transactions and stimulate retail revenue. Oftentimes, promotions are centered around various holidays like Black Friday, Easter, President’s Day, Memorial Day, etc.
PO (Purchase Order)
When a retailer places an order for goods from a vendor, manufacturer, or wholesaler, a PO is generated. The PO dictates things like price, quantities, discounts, etc and are usually done on net terms.
Popups, in online terms, are engaging CTA’s that businesses place on their websites to offer promotions, collect email addresses, gain social media followers, etc. Here are a few examples from the Beeketing team, with some helpful no, no’s.
A temporary Brick+Mortar store, often seen in a small footprint like a kiosk or other temporary structure, that is intended to generate in-person buzz around a brand or product. Sometimes a popup is only intended to create brand awareness, while others are actually selling goods.
A quota is a revenue target/goal for a company, region, district, store, sales team/member to hit in sales.
When it comes to business accounting, a business does not want to be “in the red”. This means that their expenses have exceeded their revenues, and they have not generated any profits.
A business operation where goods are marketed and sold to consumers.
ex: a business selling animal care products directly to pet owners (online, in-store, on social, over the phone, etc.).
Retargeting / Remarketing
When a customer exits your store, the journey is not over, or at least, it shouldn’t be. Retargeting is the process of a business targeting potential customers that did not complete a purchase on their website. For some great stats and tips, check out this piece by OptinMonster.
Return / Refund
The process by which a consumer chooses for a number of reasons to give you back the product you sold them in exchange for their money back, or a replacement product. There are many policies out there for returns.
Return Shipping Label
A prepaid shipping label addressed to wherever returns are processed. Many retailers include these shipping labels in their original shipment to the consumer in the event they need to return something. Some business email these case-by-case, others have a process for printing them from their website after initiating a return process.
SaaS (Software as a Service)
In the tech industry, SaaS is commonly used to describe a third-party hosted software that is licensed to the consumer. Think CRM, or a hosted shopping cart platform, there are MANY software solutions in the SaaS category. Want to learn more about the pros and cons, check out TechRadars post, “What is SaaS?”
Often expressed as a percent, this refelcts the percentage of a unit buy, or on-hand inventory, that has sold over a season.
Sell Through = Total Units Sold ÷ Total Unit Buy/Beginning Units
Non-product intangible consumer offerings, which arise from the output of one or more individuals.
Ex: installation, delivery, assembly, consulting, etc.
The process by which a business sends goods to a consumer.
A label placed on a box containing the product for shipment, that helps communicate to the carrier where the package is coming from, and where it needs to be delivered.
In the eCommerce world, this is the platform retailers choose to host their website on for the sale of their goods.
SKU (Stock-Keeping Unit)
The SKU is an internal barcode system unique to a specific retailer that is usually seen on a product tag in a store or listed on a PDP of an eCommerce site. The SKU holds valuable information about a product like price, size, color, description, manufacturer, etc. In many modern retail environments, an employee can use a scanner on the floor to check the stock of a certain item on the fly.
Subscriptions are recurring expenses taken on by a consumer for a scheduled delivery of goods. These are getting more, and more popular as companies seek ways to build consistent, repeat, predictable revenue.
Ex: a new head for your toothbrush every three months, or deodorant once a month.
Refers to the list of technologies a business uses to run their business.
TY/LY (This year / Last year)
Oftentimes, various KPIs will be expressed twice, so that at a glance you can see where a business is performing relative to the previous year.
UPC (Universal Product Code)
An external product tracking barcode system not unique to a specific retailer, but is unique to a product.
Refers to the process of creating a visual display, whether online or instore, to capture the attention of consumers.
A place where retailers store their inventory. Some retailers have multiple warehouses, some retailers do not have a warehouse.
Webhooks are user defined callbacks. Webhooks allow you to trigger an automated, immediate response to an action that was take. For example, maybe
A business operation where goods are sold to another business (usually in large quantities, at a discounted rate) for the purpose of resale.
ex: a business selling its animal care products in bulk to another retailer for the purpose of resale.
WMS (Warehouse Management System)
a system designed to help retailers manage warehouse stored inventory.
WOH (Weeks On Hand) or WOS (Weeks of Supply)
WOH/WOS is a figure that notates at the current rate of sale, how many weeks it would take to completely sell out of a product. Usually expressed as a number of weeks with one decimal place.
WOH/WOS = Number of Units Sold Last Week ÷ Total Number of Units Remaining
YoY (Year over year)
Comparing KPI’s from any given point in time to the same point in time from the previous year.