Everyone has had that moment in a meeting where someone throws out some industry jargon or acronym and you just have no idea what they’re talking about.
Sometimes, you can work it out by pulling from context; otherwise, short of asking for clarification (which, in most cases, I encourage), you’re most likely nodding your way through until you can look it up later, or quietly Googling off to the side. Whether you’re the least experienced person in the room or the highest-ranking, those moments can feel embarrassing, and worse, the information gap can result in mistakes and poor decision-making.
E-commerce is changing constantly and has a lot of moving parts and people throughout the supply chain you need to interface with. Especially for brands and companies that are new to, or have recently entered the space, there is a lot of terminologies to keep up with. From warehousing to channel planning to shipping and beyond, here’s a guide with some of the terms and phrases you definitely need to know.
This is short for third-party logistics (these are in alphabetical order; I’m not playing favorites just because I am the CEO of a 3PL provider). As the name would suggest, 3PLs are outside parties that manage the logistical operations between the stages of “add to cart” and “your shipment has been delivered,” as well as return logistics. Services typically include warehousing, picking and packing, kitting, and order shipments, though capabilities offered and scales at which they’re performed vary from one company to another.
No catchy acronyms here. This is a technique used to classify inventory in order of importance so you can make smart, profitable decisions about what, when, and where to order and place items in your warehouse. “A” inventory is reserved for your best-performing products–those that bring in the most revenue and should therefore be prioritized; “B” inventory is assigned to average performers; “C” inventory is designated to your slowest moving products, where you have the most freedom and least urgency.
An Application Programming Interface (API) is essentially a code that allows two applications to communicate with each other. It’s the piece of the puzzle programmers and developers use to mandate how different software components need to interact with other in order to work, adding tons of functionality and convenience to e-commerce websites and operations.
This is a funny one not just because of how it sounds, but there are two alternatives for both the acronym and pronunciation. Depending on who you ask, they may call it BOPIS or BOPUS, both of which stand for “Buy Online, Pick Up In Store.” And while most people pronounce it with a “long o” sound, as in “boat” or “road,” it’s sometimes said with a short o, as in “dot” or “nod.” Dealer’s choice. Regardless of how you spell or say it, its fundamental role in retailers’ omnichannel strategy has been cemented.
Buy Online, Return In Store. Enough said.
Often called DIM Weight or Volumetric Weight, this is the formula carriers use to calculate shipping costs. The formula, which measures the cubic square inches, is length times width times height divided by 139. This determines the amount of space a package occupies in relation to its actual weight. Shippers are charged based on either the dimensional weight or actual weight of a package–whichever is greater.
DTC–sometimes D2C–stands for direct-to-consumer, which is a distribution model whereby a business sells its products directly to its customers rather than relying on intermediaries such as wholesalers or retailers.
Part of the e-commerce fulfillment process, kitting entails pulling together multiple, complementary SKUs to create a new SKU. It’s essentially pre-assembling a kit so it’s ready to be packaged and shipped as a bundle rather than picking and packing each item individually. Kitting is commonly used to keep fulfillment costs low and limit the number of packages sent to a customer.
Sometimes called last-mile logistics, last-mile delivery refers to the final leg of a delivery, where goods are transported from a transportation hub to the final destination. From FedEx and UPS to Instacart and Postmates, the list of last-mile carriers is long and growing.
Reserve Online, Pick Up In Store is a click and collect option that allows customers to put an item on hold in any store where it’s in stock without being required to make payment in advance. Customers make the actual purchase upon pick-up, but may also choose not to buy the item after seeing it.
A warehouse management system is a software application that’s used to support, optimize, and simplify warehouse or distribution facility management. For example, it can provide real-time insight into inventory location and quantity or use data to forecast sales.
These are just some of the terms that come up most frequently and seem to cause the most confusion. Make sure you’re working with partners with whom you have a good comfort level and who encourage you to make any kind of inquiry about your business unabashedly. It’s tough enough out there when you do know what you’re talking about to waste any time playing catch-up.