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Sixty-five terms, defined the operator way.

The ecommerce metrics glossary. Every entry puts the definition up front, walks through a worked example, and gives the honest answer to what good looks like.

01

Margin and unit economics

13 terms

Contribution marginWhat each order leaves behind after every variable cost is paid→ CM1Revenue minus product cost, the first level of the contribution waterfall→ Gross marginRevenue minus cost of goods sold, as a dollar figure or a percentage→ Net marginWhat is left after every cost in the business, not just the variable ones→ Landed COGSThe true cost of a unit once freight, duties and handling are included→ Variable costsCosts that scale with every order, from shipping to payment fees→ Fixed costsCosts that stay the same whether you ship ten orders or ten thousand→ Unit economicsThe profit and loss of a single order or customer, viewed on its own→ Break-even pointThe volume or revenue where the business stops losing money→ Average order value (AOV)Total revenue divided by the number of orders that produced it→ CM2CM1 minus fulfilment, shipping and payment fees→ CM3CM2 minus variable marketing: what each order leaves after it was won→ Cost-volume-profit analysisHow profit moves with volume, price and costs→

02

Acquisition and attribution

14 terms

ROASRevenue returned per dollar of ad spend, as the ad platform reports it→ Break-even ROASThe ROAS below which an ad loses money once margin is counted→ MER (marketing efficiency ratio)Total revenue over total marketing spend, no attribution required→ POASProfit returned per dollar of ad spend, ROAS with margin built in→ Blended CACTotal marketing spend divided by all new customers, across every channel→ New-customer CAC (NCAC)Acquisition cost measured against genuinely new customers only→ CAC paybackHow long a new customer takes to earn back what they cost to acquire→ Attribution modelThe rulebook that decides which touchpoint gets credit for a sale→ IncrementalityThe sales that only happened because the ad ran→ Marginal CACWhat the next customer costs to acquire, not the average one→ Customer acquisition cost (CAC)Acquisition spend divided by the new customers it won→ Multi-touch attributionCredit for a sale split across every tracked touchpoint→ Last-click attributionAll the credit to the final click before purchase→ Lookalike audienceNew prospects a platform finds because they resemble your customers→

03

Customers and retention

13 terms

Customer lifetime value (LTV)The total value a customer brings across the whole relationship→ Margin LTVLifetime value measured in contribution margin, not revenue→ LTV:CAC ratioWhat a customer is worth against what they cost to acquire→ Retention rateThe share of customers who come back in a given period→ Repeat purchase rateThe share of customers who have ever bought more than once→ Cohort analysisFollowing groups of customers from first purchase to see how value builds→ RFM segmentationGrouping customers by recency, frequency and monetary value→ Customer lifecycleThe stages a customer moves through, from first order to lapsed→ Value concentrationHow much of your profit sits with a small share of customers→ Win-backBringing lapsed customers back before they are gone for good→ Churn prediction modelWhich customers are likely to stop buying, scored in advance→ Buyer personaAn evidence-based profile of customers who buy for similar reasons→ Customer equityThe expected future value of your whole customer base→

04

Products and inventory

11 terms

Return rateThe share of units or orders that come back after the sale→ Sell-through rateHow much of the stock you bought has actually sold→ Inventory turnoverHow many times your stock sells through and is replaced in a period→ Days of coverHow long current stock lasts at the current rate of sale→ Reorder pointThe stock level that should trigger the next purchase order→ ABC analysisRanking products by how much they actually contribute→ GMROIGross margin returned per dollar tied up in inventory→ StockoutRunning out of a product while people still want to buy it→ Dead stockInventory that has stopped selling and is quietly costing money→ Open-to-buyThe budget left to spend on new inventory in a period→ Days inventory outstanding (DIO)How many days stock is held before it sells→

05

Planning and finance

14 terms

P&L statementThe report that shows whether the business actually made money→ Ledger reconciliationChecking that reported numbers match what the bank actually saw→ Demand forecastingPredicting what will sell, so you can buy and plan for it→ Scenario analysisTesting a decision against best, base and worst cases before committing→ Price elasticityHow much demand moves when the price does→ Marketing mix modeling (MMM)Statistical measurement of what each channel really drives→ Geo-lift testMeasuring ad impact by switching spend on and off by region→ Holdout testWithholding marketing from a group to see what it truly adds→ Working capitalThe cash tied up in running the business day to day→ Cash conversion cycleHow long a dollar spent on stock takes to come back as cash→ Cross elasticity of demandHow one product's demand moves when another's price changes→ Demand planningTurning a forecast into an agreed plan for what to buy and when→ Budget vs actualWhat you planned against what happened, line by line→ Sales forecastAn estimate of the revenue a future period will bring in→

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