Understanding money is critical in eCommerce, but financial terminology can be confusing. This glossary provides clear, concise definitions of the key terms you need to know—no complicated details, just practical explanations to help you make informed business decisions. Whether you want to better manage cash flow, track profits, or plan for growth, this resource equips you with the financial knowledge necessary to run your online business effectively. Start using it today to strengthen your understanding and make smarter decisions for your business.
Table of Contents
Uses of an Ecommerce Finance Glossary
Ecommerce Finance Glossary can be useful in many ways, and different people or teams can use it for different purposes.
1. New E-commerce Founders
Learn key financial terms like COGS (Cost of Goods Sold), CAC (Customer Acquisition Cost), AOV (Average Order Value), and ROI (Return on Investment) to make better pricing and budget decisions.
2. Startup Teams & Interns
Help team members who aren’t finance experts (like marketing, operations, or content teams) understand important financial metrics when reading reports or dashboards.
3. Financial Literacy Content Creation
Use it to create blogs, LinkedIn posts, or short videos that explain finance terms simply. This helps build authority and improves SEO.
4. Internal Training & SOPs
Include it in onboarding guides, internal wikis, or training materials so everyone in the team speaks the same “financial language.”
5. Investor Pitch Deck Prep
Ensure founders use financial terms correctly when talking to investors, VCs, or strategic partners.
6. E-commerce Courses & Coaching Programs
Provide it as a downloadable resource in online courses about DTC, dropshipping, or marketplace selling to help students follow along easily.
7. Customer Support & Sales Teams
Help these teams understand product margins, discounts, refund processes, and revenue tracking when assisting customers or merchants.
8. Financial Audits or Tax Filing
Make year-end accounting easier by understanding terms like gross vs. net income, chargebacks, merchant fees, and more.
9. AI or Automation Integration
Use it to set up smarter automations (QuickBooks, Stripe, Shopify apps) so finance terms are correctly mapped for reporting and forecasting.
10. SEO-Optimized Blog Content & Pillar Pages
Create a long-form glossary that can rank for hundreds of finance-related search terms, driving traffic and authority to your site.
Ecommerce Finance Glossary List
Ecommerce Finance Glossary : A–C
- Accounts Payable (AP) – Money a business owes to suppliers.
- Accounts Receivable (AR) – Money owed to a business by customers.
- Acquisition Cost – Total cost to acquire a new customer.
- Affiliate Marketing – Paying third parties to generate sales through their promotions.
- Annual Recurring Revenue (ARR) – Yearly income from subscriptions or repeat payments.
- Average Order Value (AOV) – Average amount spent per order.
- Break-Even Point – When total revenue equals total expenses.
- Burn Rate – How quickly a business is spending its cash reserves.
- CAC (Customer Acquisition Cost) – Cost to gain one customer.
- Capital Expenditure (CapEx) – Money spent on long-term assets.
- Cash Conversion Cycle (CCC) – Time to convert inventory and receivables into cash.
- Cash Flow – Inflow and outflow of cash.
- Chargeback – When a customer disputes a transaction and gets a refund.
- Churn Rate – Percentage of customers lost over time.
- Click-Through Rate (CTR) – Ratio of clicks to views on an ad or link.
- COGS (Cost of Goods Sold) – Direct costs of producing goods sold.
- Conversion Rate – Percentage of users who complete a desired action.
- CPA (Cost Per Acquisition) – Amount spent to acquire a customer.
- CPC (Cost Per Click) – Amount paid per ad click.
Ecommerce Finance Glossary : D–F
- Debt Financing – Borrowing money to fund the business.
- Depreciation – Reduction in asset value over time.
- Discount Rate – Rate used to determine present value of future cash flows.
- Dropshipping – Fulfillment model where the retailer doesn’t hold inventory.
- DSO (Days Sales Outstanding) – Average number of days to collect payment.
- EBITDA – Earnings before interest, taxes, depreciation, and amortization.
- Equity Financing – Raising capital by selling company shares.
- Exit Rate – Rate at which visitors leave a website from a specific page.
- Expense Ratio – Operating costs divided by net sales.
- Fulfillment Cost – Expenses related to storing, packing, and shipping orders.
Ecommerce Finance Glossary : G–I
- Gross Margin – Revenue minus COGS, as a percentage of revenue.
- Gross Merchandise Volume (GMV) – Total value of merchandise sold.
- Growth Rate – Percentage increase in revenue or other metrics over time.
- Inventory Turnover – How many times inventory is sold and replaced.
- IPO (Initial Public Offering) – First time a company offers shares publicly.
- Installment Payments – Spreading payments over time.
- Interest Expense – Cost of borrowing money.
- Insolvency – Inability to pay debts when due.
- Inventory Financing – Loan secured by inventory.
Ecommerce Finance Glossary : J–L
- Just-in-Time Inventory – Inventory system to minimize holding costs.
- Liquidity Ratio – Measure of a company’s ability to cover short-term obligations.
- Lead Time → Loan Term – Duration of a loan agreement.
- LTV (Customer Lifetime Value) – Total profit expected from a customer.
- Logistics Costs – Expenses related to warehousing, transportation, and delivery.
- Loss Leader – Product sold at a loss to attract customers.
Ecommerce Finance Glossary : M–O
- Markup – Difference between cost and selling price.
- Merchant Fee – Fee charged by payment processors.
- Minimum Order Quantity (MOQ) – Smallest quantity a supplier allows per order.
- Monthly Recurring Revenue (MRR) – Monthly income from subscriptions.
- Net Income – Revenue minus all expenses.
- Net Profit Margin – Net income as a percentage of revenue.
- Net Terms – Credit terms extended to customers (e.g., Net 30).
- Operating Expenses (OPEX) – Day-to-day business running costs.
Ecommerce Finance Glossary : P–R
- Profit Margin – Revenue minus costs, expressed as a percentage.
- Refund Rate – Percentage of orders that are refunded.
- Recurring Revenue – Ongoing income from subscriptions or repeat purchases.
- Retention Rate – Percentage of customers retained over time.
- Return on Investment (ROI) – Profit made relative to investment cost.
Ecommerce Finance Glossary : S–U
- Sales Revenue – Income generated from sales.
- Sales Tax – Tax collected on sales of goods or services.
- Seasonal Cash Flow – Variations in cash flow due to seasonal sales changes.
- Shipping Fee Recovery Rate – Percentage of shipping fees recovered from customers.
- Sales Discount Rate – Percentage reduction in price to boost sales.
- Subscription Revenue – Income from ongoing product/service access.
- Supply Chain Finance – Financing solutions to optimize cash flow in supply chains.
- Sunk Cost – Irrecoverable past expense.
- Tax Liability – Amount of tax owed.
- Trade Credit – Credit extended by suppliers to buyers.
- Top Line – Gross revenue at the top of the income statement.
- User Acquisition – Gaining new users or customers.
Ecommerce Finance Glossary : V–Z
- Variable Cost – Costs that change with production volume.
- VC (Venture Capital) – Investment from venture capital firms.
- Vendor Financing – Supplier-provided financing for goods.
- Volume Discount – Price reduction for bulk purchases.
- Warehouse Costs – Expenses for storing inventory.
- Wholesale Price – Cost at which goods are bought from suppliers.
- Working Capital – Current assets minus current liabilities.
- Write-Off – Accounting for uncollectible debts or assets.
- Yield – Earnings generated on an investment.
- Zero-Based Budgeting – Budgeting from scratch with no carryover assumptions.
The Bottom Line
Now that you have a clear understanding of your ecommerce finance glossary, it’s time to apply these concepts in real business decisions. Mastering financial terminology enables you to make informed choices, identify opportunities, and prevent costly errors. Keep this glossary accessible—it is an essential tool for managing the financial aspects of your business with precision and confidence. Strong business outcomes begin with a solid grasp of the fundamentals. Stay informed, continue learning, and strategically use this knowledge to grow and optimize your ecommerce venture.
Related Posts
