E-Commerce Glossary
Updated 31 May 2026 · 6 min read
This glossary defines the e-commerce terms India sellers meet most often, from SKU and payment gateway to conversion rate, AOV, COD, and fulfilment, in plain English so you can run and grow your store with confidence.
Key takeaways
- An SKU is a unique code for each product variant you sell.
- A payment gateway processes online payments, charging ~2% per sale.
- Conversion rate is the share of visitors who buy.
- AOV (average order value) measures how much each order is worth.
- Fulfilment covers picking, packing, and shipping orders to buyers.
Why learn the e-commerce vocabulary?
Running a store means dealing with platforms, payment providers, couriers, and marketers who all use shorthand. Knowing what these terms mean helps you make better decisions, read your own reports, and avoid paying for things you do not understand. The definitions below are practical and India-aware.
- SKU
- Stock keeping unit: a unique code for each product variant, used to track inventory accurately.
- Payment gateway
- A service like Razorpay or Cashfree that securely processes online payments, charging roughly 2% per transaction.
- COD
- Cash on delivery: the buyer pays when the order arrives. Still popular with many Indian shoppers.
- Conversion rate
- The percentage of visitors who complete a purchase. A core measure of store effectiveness.
- AOV
- Average order value: the average amount spent per order, a key lever for growing revenue.
- Cart abandonment
- When shoppers add items but leave without buying, often due to surprise costs or clunky checkout.
- Fulfilment
- The process of picking, packing, and shipping orders to customers after a sale.
- Dropshipping
- Selling products you do not stock; a supplier ships directly to your customer on each order.
- Inventory
- The stock of products you have available to sell, tracked to avoid overselling.
- GST
- Goods and Services Tax: India's sales tax, which most online sellers must register for and collect.
- GSTIN
- The unique GST identification number issued to a registered business for tax purposes.
- HSN code
- A code that classifies goods for GST, required on invoices for many product categories.
- Payment aggregator
- A provider that lets you accept multiple payment methods through one integration.
- Courier aggregator
- A service like Shiprocket that compares courier rates and prints shipping labels from one place.
- Checkout
- The final steps where a shopper enters details and pays. Friction here directly costs sales.
- Variant
- A version of a product, such as a size or colour, often tracked with its own SKU.
- Marketplace
- A platform like Amazon or Flipkart where you list products alongside other sellers.
- Catalog
- Your full set of products and their details as presented in the store.
- Return / RTO
- A returned order; RTO (return to origin) is a parcel sent back undelivered, a key COD cost.
- Wishlist
- A saved list of products a shopper wants but has not bought yet.
- Upsell
- Encouraging a buyer to choose a higher-value item or add-on to increase order value.
- Cross-sell
- Suggesting related products at checkout, like accessories, to lift the order total.
- Abandoned cart email
- An automated reminder sent to shoppers who left items in their cart, recovering some lost sales.
- Headless commerce
- Separating the storefront from the backend so each can be customized independently for speed and design.
- CLV / LTV
- Customer lifetime value: the total revenue a customer brings over their entire relationship with you.
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Frequently asked questions
What is an SKU and why does it matter?
An SKU is a unique code for each product variant, like a specific size and colour. It lets you track inventory accurately, avoid overselling, and report on what actually sells.
What is a payment gateway?
A payment gateway is a service like Razorpay or Cashfree that securely processes online payments, supporting UPI, cards, and netbanking. It typically charges around 2% per transaction.
What is a good conversion rate for an online store?
It varies by industry and traffic source, but many stores see 1 to 3%. Rather than chase a benchmark, focus on improving your own rate over time through better pages and checkout.
What does fulfilment mean in e-commerce?
Fulfilment is everything after the sale: picking the item, packing it, and shipping it to the customer. Reliable fulfilment drives repeat purchases and good reviews.
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