Ecommerce Seller Glossary

Plain-language definitions for every fee, ratio, and acronym our calculators reference. Bookmark this page — most of the terms appear across all four platforms, just under different names.

A C D E F G I L M N P R S T

A

ACoS (Advertising Cost of Sales)

The inverse of ROAS, common in Amazon advertising. Ad spend ÷ revenue from ads, as a percentage. 25% ACoS = $1 ad spend per $4 ad-driven revenue. Profitable ACoS depends on your gross margin; lower is better.

AOV (Average Order Value)

Total revenue ÷ number of orders over the same period. A diagnostic metric — rising AOV usually means bundling, upsells, or premium-tier mix is working; falling AOV at fixed traffic signals discount-driven sales.

C

CAC (Customer Acquisition Cost)

Marketing spend ÷ new customers acquired in the same period. Compare against LTV — if CAC > LTV you're losing money on each new buyer, even if individual orders look profitable.

Chargeback

A forced refund initiated by the buyer's card issuer (not the seller), usually for fraud or dispute. Most platforms charge a chargeback fee on top ($15-$25). High chargeback rates can suspend your payment processor account.

COGS (Cost of Goods Sold)

The direct unit cost of inventory you sold — wholesale price, manufacturing cost, or supplier cost for dropshipping. Excludes platform fees, marketing, fulfillment, or any indirect costs. Gross profit = revenue − COGS.

Conversion rate

Orders ÷ sessions, expressed as a percentage. Typical ranges: Etsy 1-3%, Shopify direct-to-consumer 1.5-3%, Amazon listings 10-15% (Amazon has higher intent traffic).

Cross-border fee

A surcharge most payment processors add when the buyer's card is issued in a different country than your selling account. Stripe and Shopify Payments both charge ~1-1.5% extra on cross-border transactions on top of the base processing rate.

Currency conversion fee

A fee charged when funds are converted from the buyer's currency to yours. On Shopify Payments it's ~1.5-2%; on Amazon's Currency Converter for Sellers (ACCS) it's ~1-1.5%. Distinct from the cross-border fee.

D

Dropshipping

A fulfillment model where you sell products without holding inventory — the supplier ships directly to the buyer when you take an order. Low capital requirement, low margins (10-25% typical), high competition.

E

Etsy Offsite Ads

Etsy's opt-in (mandatory above $10K annual revenue) advertising program. Etsy promotes your listings on Google, Facebook, and Instagram; if a sale comes through that channel, Etsy takes an additional 12-15% fee on top of the regular transaction fee.

F

FBA / FBM

FBA (Fulfillment by Amazon): you ship inventory to Amazon warehouses; Amazon handles pick-pack-ship, returns, and customer service in exchange for per-unit fulfillment fees + monthly storage. FBM (Fulfillment by Merchant): you handle fulfillment yourself, lower fees but no Prime badge on most listings.

G

GMV (Gross Merchandise Value)

Total sales volume processed through your store before any fees, refunds, or discounts. The headline number platforms report; not the same as revenue you actually keep.

Gross profit

Revenue minus COGS only. Doesn't include platform fees, marketing, fulfillment, or overhead. A useful intermediate metric — if gross profit is already thin, no amount of operational efficiency saves you.

I

Inventory turnover

COGS ÷ average inventory value (over a period). A measure of how fast you sell through stock. Higher is better — slow turnover ties up capital and triggers Amazon long-term storage fees.

L

Listing fee (Etsy)

Etsy charges $0.20 per listing, renewed every 4 months or upon sale. For a multi-quantity listing, the $0.20 fee is charged for each unit sold. Slow-moving inventory accumulates listing-fee drag over time.

LTV (Customer Lifetime Value)

The total gross profit a customer generates across all purchases. Compare against CAC — a healthy ratio is LTV ≥ 3× CAC. For categories with no repeat purchase (one-off gifts, weddings), LTV essentially equals first-order profit.

M

MAP (Minimum Advertised Price)

A pricing floor set by a brand or supplier — you may not advertise below this price. Common in branded reseller arrangements. Violations can get you cut off by the supplier.

Markup vs margin

Different denominators, commonly confused. Markup = (price − cost) ÷ cost. Margin = (price − cost) ÷ price. A 50% markup is only a 33% margin. A 100% markup is a 50% margin. Margin caps at 100%, markup doesn't.

MOQ (Minimum Order Quantity)

The smallest quantity a supplier will sell in a single order. Common with private-label manufacturing, often 500-1,000 units. High MOQs tie up working capital but reduce per-unit COGS.

N

Net profit

Revenue minus *all* costs: COGS, platform fees, payment processing, fulfillment, marketing, subscriptions, taxes, overhead. This is what actually lands in your bank account. Often called "the bottom line."

Net revenue

GMV minus refunds, returns, discounts, and platform fees — the revenue figure you actually take in before COGS and operating expenses.

P

Payment processing fee

The cut taken by the card network and payment processor (Stripe, Shopify Payments, PayPal, etc.) on each transaction. Typical: 2.9% + $0.30 for US-issued cards online. Higher for international, Amex, or manual key-entry.

POD (Print-on-Demand)

A fulfillment model where products are manufactured only after a sale — no upfront inventory. Common for apparel, mugs, posters. Trades higher per-unit COGS for zero inventory risk. Margins typically 15-30%.

Profit margin

Profit ÷ revenue, as a percentage. Usually quoted as net margin unless specified. Healthy ranges by model: dropshipping 5-15% net, Shopify DTC 10-25% net, Etsy handmade 20-40% net, Amazon FBA 15-30% net.

R

Referral fee (Amazon)

Amazon's commission per sale, taken before FBA fees. Typically 15% of the total sale price (including shipping), with category-specific variations (8% for personal computers, 17% for jewelry, etc.). Charged whether you use FBA or fulfill yourself.

Refund rate / return rate

Refunded orders ÷ total orders, as a percentage. Category-dependent — apparel sits around 20-30%, electronics 8-12%, custom/handmade under 5%. Above 15% sitewide signals product-market or sizing issues.

ROAS (Return on Ad Spend)

Revenue from ads ÷ ad spend. A 3x ROAS means $3 in revenue for every $1 of ad spend. Note: revenue, not profit — your break-even ROAS depends on your gross margin. At 30% gross margin, you break even at ~3.3x ROAS.

S

Seasonal storage fee (Amazon Q4)

Amazon roughly triples FBA storage rates from October through December as warehouse capacity tightens. Sellers minimize this by aging inventory out before September or paying for removal.

SKU (Stock-Keeping Unit)

A unique identifier for each distinct product or variant. A T-shirt design with 4 sizes × 3 colors = 12 SKUs. SKU count affects Etsy listing fees, Amazon storage volume, and inventory complexity.

T

Take rate

The total percentage of GMV the platform captures across all fees. Etsy ~10-12%, Shopify ~3-4% (excluding subscription), Amazon ~20-30% with FBA. Lower take rate ≠ better — Amazon's higher take rate buys distribution and fulfillment.

Transaction fee

A percentage cut on each sale, distinct from payment processing. Etsy: 6.5% transaction fee plus separate payment processing. Shopify: 0% if you use Shopify Payments, 2% (Basic) / 1% (Shopify) / 0.5% (Advanced) for third-party processors.