Ecommerce Glossary

Whether you are a brand new business getting started, or a veteran brand continuing to expand, the world of eCommerce never stops changing. We've compiled a list of terms, definitions, acronyms, and whatever else to help you better understand what these systems are and how all they interact with Returnly.

eCommerce Systems & Processes

• Third-Party Logistics Provider (3PL/TPL)
  A firm that provides outsourced supply chain management and logistics services to its customers. 3PLs target particular functions within supply chain management, such as warehousing, transportation, or raw material provision.
  
  More specifically: these firms specialize in integrated operations of warehousing and transportation services that can be scaled and customized to customers' needs, based on market conditions, to meet the demands and delivery service requirements for their products.
  
  Services often extend beyond logistics to include value-added services related to the production or procurement of goods, such as services that integrate parts of the supply chain. A provider of such integrated services is referenced as a third-party supply chain management provider (3PSCM), or as a supply chain management service provider (SCMSP). 
  
  
  • Standard 3PL Provider
    This is the most basic form of a 3PL provider. They would perform activities such as: pick and pack, warehousing, and distribution (business) – the most basic functions of logistics. For a majority of these firms, the 3PL function is not quite their main activity.
    
    
  • Service Developer
    This type of 3PL provider will offer their customers advanced value-added services such as: tracking and tracing, cross-docking, specific packaging, or providing a unique security system. A solid IT foundation and a focus on economies of scale and scope will enable this type of 3PL provider to perform these types of tasks.
    
    
  • The Customer Adapter
    This type of 3PL provider comes in at the request of the customer and essentially takes over complete control of the company's logistics activities. The 3PL provider improves the logistics dramatically, but does not develop a new service. The customer base for this type of 3PL provider is typically quite small.
    
    
  • The Customer Developer
    This is the highest level that a 3PL provider can attain with respect to its processes and activities. This occurs when the 3PL provider integrates itself with the customer and takes over their entire logistics function. These providers will have few customers, but will perform extensive and detailed tasks for them.
    
    
• Warehouse Management System (WMS)
  A software application designed to support and optimize warehouse functionality and distribution center management. These systems facilitate management in their daily planning, organizing, staffing, directing, and controlling the utilization of available resources, to move and store materials into, within, and out of a warehouse, while supporting staff in the performance of material movement and storage in and around a warehouse.
  
  The WMS receives orders from the overlying host system, typically an Enterprise Resource Planning (ERP, defined below) system, manages these in a database and, after appropriate optimization, supplies them to the connected conveyor control systems. This becomes clear when you look at the processes necessary for e-commerce: as soon as a customer places an order on a website the information is passed along via the business host computer (mostly an ERP system) to the WMS. All necessary steps to manage this order, pick the ordered items, etc., are then processed within the WMS. Afterward, information is sent back to the business host computer to support financial transactions, advance shipping notifications to customers, inventory management, etc. Warehouse management systems can be standalone systems, part of supply chain execution suites, or modules of an ERP system. 
  
  
• Enterprise Resource Planning (ERP) System
  
  Systems that track business resources—cash, raw materials, production capacity—and the status of business commitments: orders, purchase orders, and payroll. The applications that make up the system share data across various departments (manufacturing, purchasing, sales, accounting, etc.) that provide the data. ERP facilitates information flow between all business functions and manages connections to outside stakeholders. 
  
  
• Infrastructure
  
  A collection of hardware and software systems that support your eCommerce ecosystem. This can include your servers, what you’re running on your hardware, the configuration and security of those elements and ensuring its availability and access online.
  
  
• Logistics
  
  The management of products or other resources as they travel between a point of origin and a destination. In eCommerce, logistics might describe the process of transporting inventory to a merchant or the act of shipping orders to customers.
  
  
• Merchant Account
  
  Essentially a bank account used to hold funds obtained from a credit card purchase. Store owners have to apply for a merchant account.
  
  
• Manual Payment Systems
  
  Allow merchants to accept manual forms of payment e.g. Mail Order, Direct Deposit, and Cash on Delivery (COD).
  
  
• Order Management System (OMS)
  
  
  An operating system/platform for e-commerce, similar to iOS for phones or Salesforce.com for technology sales, which offers many integrations so you can custom build your processes as you like. In the majority of Returnly customers' cases, the OMS system would be Shopify.
  
  
• Reverse Logistics Process
  Operations related to the reuse of products and materials; It is the process of moving goods from their typical final destination for the purpose of capturing value, or proper disposal.  Reverse logistics is a part of the process of returning a product to receive a refund, replacement, or repair during the product's warranty period. Both parties can decide how to deal with it, which could be refund, replacement or repair.
  
  The reverse logistics process includes the management and the sale of surplus as well as returned equipment and machines from the hardware leasing business. Normally, logistics deals with events that bring the product towards the customer. In the case of reverse logistics, the resource goes at least one step back in the supply chain. For instance, goods move from the customer to the distributor or to the manufacturer.

• Return Merchandise Authorization (RMA) / Return Goods Authorization (RGA)
  The gatekeeping moment in the reverse logistics cycle providing the vendor with a final opportunity to diagnose and correct the customer's problem with the product (such as improper installation or configuration) before the customer permanently relinquishes ownership of the product to the manufacturer, commonly referred to as a return. As returns are costly for the vendor and inconvenient for the customer, any return that can be prevented benefits both parties.

• Cross Selling
  Selling a related or complementary product to a customer to entice a larger order value.
  
  
• Customer Lifetime Value (CLV) or Lifetime Value of a Customer (LTV)
  
  The prediction of future revenue, net profit and value that a customer will generate during the entire relationship with a merchant.
  
  
• Customer Ratings and Reviews
  
  A summary of a customer’s liking or disliking of their buying experience with a merchant. This can relate to the company itself, the products purchased and/or their overall experience. These are usually listed underneath products with a rating system, found on forums, or social media. They can be critical in convincing other customers to buy, and conversely also quite powerful in they can deter potential customers from completing their transaction. A popular indication of customer sentiment is CSAT (customer satisfaction) score, which is something Returnly can track in regards to the returns experience.
  
  
• Gross Merchandise Value
  
  The total value of merchandise sold over a given period of time through a customer-to-customer (C2C) exchange site. It is a measure of the growth of the business, or use of the site to sell merchandise owned by others.
  
  
• Customer Retention
  
  Strategies that encourage customers to keep coming back to your store to purchase more goods by creating positive, personalized and fun buying experiences.
  
  
• Drop Shipping
  
  A fulfillment strategy wherein the retailer does not actually inventory the drop shipped product, but instead passes the shipping address to either the manufacturer or a distributor that actually ships the purchased items directly to the customer.
  
  
• Flat Rate Shipping
  
  Charging a set amount for shipping an order. Merchants can offer standard flat rates for every kind of package or it can vary along ranges of weight, purchase order amounts, or delivery regions.
  
  
• Fulfillment
  
  In eCommerce, fulfillment is the process of completing an order. The term may also be applied to third-party companies that inventory products and ship orders on behalf of an online store.
  
  
• Fraud
  
  Intentional deception for the purpose of gain.
  
  
• Inventory
  
  The value or quantity of a retailer’s current stock of products.
  
  
• Margins
  
  The difference between what a retailer pays for a product and what the retailer’s customer pays for the product. Margin calculations may consider only the cost of the goods sold or may take into account overhead and other variable costs.
  
  
• Merchandising
  
  The process of displaying and promoting goods for sale either physically in a store, or virtually online.
  
  
• Merchandising Optimization
  
  The ability to sort and group together products on a category page.
  
  
• Net Profit
  
  The difference between a business’ revenue and its costs – all of its costs. Net profit may be thought of as the money left over after every bill is paid.
  
  
• Payment Gateway
  
  The online equivalent of a cash register connecting websites to credit card carriers so that online credit card transactions can be completed in real time.
  
  
• Payment Processor
  
  A third party company appointed by a merchant to handle credit card transactions for merchant acquiring banks.

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