Ecommerce Marketing Glossary

Definitions for ROAS, LTV, CAC, MER, AOV, and 40+ other ecommerce metrics. Each links to a free calculator.

A

ACoS

Advertising Cost of Sale. Amazon-specific metric — total ad spend ÷ ad-attributed sales × 100. Inverse of ROAS expressed as a percentage. ACoS of 25% = $0.25 spent on ads per $1 of sales.

→ Amazon ACOS

AOV

Average Order Value. Total revenue ÷ number of orders. Most leveraged single metric for revenue growth — a 10% AOV lift is often easier than a 10% conversion rate lift.

→ AOV Uplift Calculator

Attribution

The method of assigning credit for a conversion to specific marketing touchpoints. Common models: last-click, first-click, linear, time-decay, data-driven, multi-touch (MTA).

→ Attribution Model Comparison

B

BFCM

Black Friday / Cyber Monday — the 5-day shopping window from Thanksgiving Thursday through Cyber Monday. For typical DTC brands, contributes 12-22% of full-year revenue.

Breakeven ROAS

The ROAS at which ad spend exactly equals contribution margin. Below breakeven you lose money on each new customer; above it you profit. Calculated as 1 ÷ contribution margin %.

→ Breakeven ROAS

C

CAC

Customer Acquisition Cost. Total acquisition spend ÷ new customers acquired. Includes ad spend, agency fees, content costs, tooling, and team time. Often confused with CPA, which is a narrower per-conversion metric.

→ CPA / CAC Calculator

Cart Abandonment

Customers who add items to cart but don't complete checkout. Industry average: 70%+. Recoverable via 3-step email/SMS sequences typically returning 8-15% of abandoned carts to purchase.

→ Cart Abandonment Revenue

Churn Rate

Percentage of customers (or subscription revenue) lost in a given period. Subscription brands track monthly churn; non-subscription DTC tracks via cohort retention curves.

→ Churn Rate Calculator

Cohort Retention

The percentage of a customer cohort still purchasing N months after first order. Healthy DTC: month 1 at 30-50%, month 6 at 15-22%, month 12 at 10-15%.

→ Cohort Retention

Contribution Margin

Revenue minus all variable costs (COGS, shipping, payment processing, returns) per order. The amount available to cover advertising and fixed overhead. Different from gross margin, which excludes fulfillment costs.

→ Contribution Margin

Conversion Rate

Orders ÷ sessions × 100. Shopify all-store median: 1.4%. By vertical: apparel 1.8%, beauty 2.4%, electronics 1.1%. Top quartile runs 1.5-2× the median.

→ Conversion Rate Impact

CPA

Cost Per Acquisition. Ad spend ÷ conversions on a specific campaign or channel. Narrower than CAC — typically excludes overhead. Useful for in-platform optimization; CAC is the right metric for unit economics.

→ CPA / CAC Calculator

CPC

Cost Per Click. Ad spend ÷ clicks. The basic auction-cost input. Search CPC ranges $0.50-$25+; social CPC $0.20-$3 typical for DTC.

→ CPM / CPC / CTR Benchmarks

CPM

Cost Per Mille (per thousand impressions). Ad spend ÷ impressions × 1,000. The ad pricing primitive. Meta CPM averages $8-25 for DTC; TikTok $5-15; Reels generally cheapest.

→ CPM / CPC / CTR Benchmarks

CTR

Click-Through Rate. Clicks ÷ impressions × 100. Measures creative quality at the auction stage. Healthy paid social: 1-3%; search: 3-7%; below 0.8% on social signals creative fatigue.

→ CPM / CPC / CTR Benchmarks

D

DAU / MAU

Daily / Monthly Active Users — engagement metrics for apps and subscription products. DAU/MAU ratio (stickiness) above 0.20 suggests genuine habitual use.

Deliverability

Percentage of marketing emails reaching the inbox vs spam folder. Healthy: 85-92%. Below 85% signals sender reputation problems — invest in SPF/DKIM/DMARC and list hygiene.

→ Email Deliverability Cost

Dropshipping

Sales model where inventory is fulfilled by a third party (typically AliExpress or print-on-demand) rather than held by the seller. Lower margin and slower shipping than branded inventory, but no upfront capital.

→ AliExpress Margin

E

EMV

Earned Media Value — equivalent ad spend that would have produced the same impressions. Useful directional metric for influencer / PR programs; not actual revenue.

F

FBA

Fulfillment by Amazon. Amazon stores, picks, packs, and ships your inventory in exchange for fulfillment + storage fees totaling 15-30% of revenue typically.

FBM

Fulfillment by Merchant. You list on Amazon but ship the orders yourself. Lower platform fees than FBA but you handle storage, shipping, and customer service.

G

Gross Margin

Revenue minus cost of goods sold (COGS) ÷ revenue × 100. Excludes fulfillment, shipping, and payment processing. Gross margin is upstream of contribution margin.

→ Gross Margin Calculator

H

Hook Rate

Percentage of users who watch past the first 3 seconds of a video ad. The single most predictive metric for ad performance — strong hook rate (35%+) predicts strong CTR and conversion downstream.

→ Hook Rate Calculator

I

Incrementality

The portion of measured conversions that wouldn't have happened without the ad. Often less than reported attribution suggests — measured via geo-holdout or audience-holdout testing.

→ Incrementality Calculator

iOS14

Apple's 2021 privacy update (App Tracking Transparency) that broke pixel-based attribution for users opting out. Triggered the rise of MMM, post-purchase surveys, and server-side conversion APIs.

→ Tracking Gap Estimator

L

Landed Cost

Total cost to get a product to your warehouse: unit cost + freight + duties + customs broker + insurance. Used for accurate margin math and pricing decisions.

→ Landed Cost Calculator

LTV

Lifetime Value. Total revenue (or contribution) a customer produces over their entire relationship. Calculated from cohort retention × AOV × purchase frequency × margin.

→ Subscriber LTV

LTV:CAC Ratio

Customer lifetime value divided by acquisition cost. Healthy DTC: 3:1 or higher. Below 1.5:1 is unsustainable — every new customer loses contribution.

→ LTV:CAC Ratio

M

MER

Marketing Efficiency Ratio (also called Blended ROAS). Total revenue ÷ total marketing spend. Captures full-funnel efficiency including organic, email, and brand impact that platform ROAS misses.

→ MER / Blended ROAS

MMM

Marketing Mix Modeling. Regression-based attribution using aggregate spend + revenue across channels. Post-iOS14 alternative to pixel-based attribution. Real MMM uses 2-3 years of weekly data.

→ Channel Mix Modeler

MOQ

Minimum Order Quantity — the smallest unit count a supplier will manufacture. Typically the largest single inventory commitment a brand makes; cash-flow planning is critical.

→ MOQ vs Cash Flow

MRR

Monthly Recurring Revenue. Sum of all subscription customers × their monthly price. Headline metric for subscription brands; growth = new MRR + expansion - churn - contraction.

→ Subscription MRR

N

Net Margin

Net profit ÷ revenue × 100. After all costs including overhead, taxes, and interest. Healthy DTC operates at 8-20% net margin; under 5% leaves no buffer for surprises.

NRR

Net Revenue Retention. (Starting MRR + expansion - churn - contraction) ÷ starting MRR. Above 100% means existing customers grow despite churn — the holy grail for subscription.

→ Net Revenue Retention

P

Payback Period

Months to recover CAC through customer revenue. Healthy DTC: under 6 months. Above 18 months requires strong retention math and cash to fund the wait.

→ CAC Payback by Channel

PMAX

Performance Max — Google's automated cross-channel campaign type spanning Search, Display, YouTube, Discover, and Gmail. Requires 10× target CPA daily budget minimum to optimize.

→ Google PMAX Budget

POD

Print on Demand. Items manufactured per order via Printful, Printify, or Gelato. Zero inventory risk, lower margin (25-40%) than bulk inventory.

→ Print-on-Demand Margin

R

RBF

Revenue-Based Financing. Capital with payback as a % of revenue rather than fixed schedule. Common providers: Clearco, Wayflyer, Capchase. More expensive than bank debt but faster and unsecured.

→ Revenue-Based Financing

Repeat Purchase Rate

Percentage of customers who buy a second time. The most compounding metric in DTC — small lifts produce outsized LTV gains. Healthy DTC: 25-40%.

ROAS

Return on Ad Spend. Revenue from ads ÷ ad spend. The headline paid-marketing metric. Different from MER (which is blended) and from ROI (which nets out COGS).

→ ROAS Calculator

S

Saturation

When marginal ad spend in a channel produces diminishing returns. Hits at 50-200K monthly spend on a single channel for typical DTC. Visible as rising CAC despite stable creative.

→ Niche Saturation Score

Shop Pay

Shopify's one-tap checkout. Enabled buyers convert at roughly 1.7× the rate of standard checkout. The single highest-leverage Shopify CRO improvement available.

Shrinkage

Inventory loss from damage, theft, admin errors, and supplier short-ships. Industry average: 1.5-2.5% of inventory value annually. Above 5% signals systemic operational issues.

→ Inventory Shrinkage Cost

Subscription Box

Recurring shipment of curated products (e.g., FabFitFun, BoxyCharm). Generally lower margin than single-product subscription due to product variety and curation cost.

→ Subscription Box Margin

T

TOFU / MOFU / BOFU

Top / Middle / Bottom of Funnel. Marketing terminology for awareness (TOFU), consideration (MOFU), and decision (BOFU) stages. Different creative formats and bid strategies fit each stage.

U

UGC

User-Generated Content. Creator-style ads (real customers using product) that outperform studio creative on Meta and TikTok by 30-60% on CTR. Cheaper to produce; scales via platforms like Billo and JoinBrands.

→ UGC vs Studio Production

V

VAT

Value Added Tax. Consumption tax in EU, UK, and many other countries. US sellers above €10K cross-border B2C sales must register for EU VAT (via OSS scheme).

→ VAT Registration Thresholds

W

Whitelisting

Running paid ads from a creator's handle (TikTok Spark Ads, Meta Partnership Ads) instead of your brand handle. Inherits the creator's social proof; typically 30-60% better CTR than brand-handle ads.

→ Creator Whitelisting ROI

About this glossary

Performance marketing has dense jargon and overlapping metrics that often mean different things in different contexts. ROAS in Google Ads is calculated differently than blended MER. CAC and CPA get used interchangeably but measure different things. LTV varies depending on whether you include returns, refunds, and subscription churn.

This glossary defines 48 ecommerce marketing terms with the precision needed to actually use them. Each definition includes the formula or methodology where applicable, typical industry benchmarks, and links to a relevant free calculator on the site.

The terms span paid media (ROAS, MER, CPA, CPC, CTR, CPM, hook rate), unit economics (contribution margin, gross margin, net margin, LTV, CAC, payback period), retention (cohort retention, repeat purchase rate, churn, NRR, MRR), platform (FBA, FBM, ACoS, PMAX, Shop Pay), and operations (MOQ, landed cost, shrinkage, RBF, deliverability).