Top 25 E-commerce Abbreviations Every Handmade Seller Should Know

Decode the Top 25 E-commerce Abbreviations to Supercharge Your Handmade Business Success

If you’re diving into the world of e-commerce as a handmade seller, you’re bound to run into abbreviations that seem like a secret code. Understanding these terms isn’t just for seasoned pros—they can help you make smarter decisions, analyze your business, and grow your handmade brand.

Here’s a breakdown of the top 25 e-commerce abbreviations you’ll encounter, what they mean, and how they apply to your business.

1. CAC (Customer Acquisition Cost) This refers to the cost of acquiring a new customer, including all your marketing and sales expenses. Keeping this number low means higher profit margins.

2. AOV (Average Order Value) The average amount a customer spends when making a purchase from your store. Increasing your AOV can be achieved by offering upsells or product bundles. Tip: If you sell handmade soaps, offer a discount for purchasing multiple products to increase AOV.

3. LTV (Lifetime Value) This measures the total revenue a business can expect from a single customer throughout their relationship with the brand. Maximizing LTV means encouraging repeat purchases through email marketing or loyalty programs.

4. TACO (Total Advertising Cost of Sale) TACO measures the percentage of your total revenue spent on advertising. It's different from ACOS (Advertising Cost of Sale), as TACO includes organic sales in its calculation. A lower TACO means you're spending less on ads in relation to your overall sales.

5. COGS (Cost of Goods Sold) This refers to the direct costs of producing your products. Lowering COGS while maintaining quality can significantly boost profitability for your handmade business.

6. SEO (Search Engine Optimization) SEO involves optimizing your website to rank higher in search engine results. Handmade sellers can boost organic traffic by focusing on SEO-friendly product titles, descriptions, and blog posts.

7. PPC (Pay-Per-Click) A form of paid online advertising where you pay for each click on your ad. Facebook and Google ads are popular PPC platforms for handmade sellers looking to drive traffic quickly.

8. CRO (Conversion Rate Optimization) CRO is the process of improving your website to increase the percentage of visitors who make a purchase. Tweaking your product descriptions, improving your checkout process, or adding better images can help optimize your conversion rate.

9. SKU (Stock Keeping Unit) A unique identifier for each product you sell. It helps you track inventory and stay organized.

10. CTR (Click-Through Rate) CTR measures the percentage of people who click on your ad, email, or social media post compared to the number of people who saw it. A high CTR means your message is resonating with your audience.

11. ROAS (Return on Ad Spend) This calculates the revenue generated for every dollar spent on advertising. For example, if you spend $100 on ads and make $500 in sales, your ROAS is 5x.Pro Tip: A higher ROAS means you're running highly effective ad campaigns.

12. UGC (User-Generated Content) This is content created by your customers, such as photos or reviews, that promotes your products. UGC adds authenticity to your marketing and can drive new customers to your handmade brand.

13. CR (Conversion Rate) The percentage of visitors who complete a purchase. Improving your CR is crucial for boosting sales, especially for handmade sellers transitioning from Etsy to Shopify.

14. CTA (Call to Action) A phrase that encourages your audience to take a specific action, such as "Buy Now" or "Sign Up." Crafting strong CTAs can increase engagement and conversions.

15. RRP (Recommended Retail Price) This is the price suggested by manufacturers for retailers to sell a product. If you're wholesaling your handmade goods, you'll want to ensure your RRP aligns with the market.

16. CLV (Customer Lifetime Value) Similar to LTV, CLV calculates the total worth of a customer over time. Knowing your CLV can help you decide how much to invest in acquiring new customers versus retaining existing ones.

17. CRM (Customer Relationship Management) CRM tools help you manage customer interactions and improve relationships. Whether it’s email marketing, customer service, or sales, CRM software helps you stay on top of communications.

18. FOMO (Fear of Missing Out) A marketing tactic designed to create urgency and prompt immediate action. Phrases like "Limited stock available" or "Only a few left!" can trigger FOMO and increase sales.

19. SaaS (Software as a Service) Cloud-based software services accessed via subscription. Platforms like Shopify, Klaviyo, and Canva are common SaaS products used by handmade sellers.

20. CPC (Cost Per Click) This is the cost of each click on your online ad. Monitoring CPC helps ensure you're not overspending on ad campaigns without seeing a good return.

21. UTM (Urchin Tracking Module) A small snippet of code added to URLs to track campaign performance. You can use UTM codes to see where your website traffic is coming from, whether it's a Facebook post, email, or Instagram story.

22. ERP (Enterprise Resource Planning) Software used to manage core business processes like inventory, accounting, and shipping. Handmade sellers might use ERP systems to streamline production and keep everything organized.

23. POS (Point of Sale) A system used to process in-person transactions. Shopify’s POS system allows handmade sellers to sell both online and at in-person events like craft fairs.

24. UX (User Experience) The overall experience a customer has when navigating your website or app. Improving UX on your Shopify store can increase conversions by making it easy and enjoyable for customers to shop.

25. T&C (Terms and Conditions) The legal guidelines for your online store, including your return policy, shipping info, and customer responsibilities. Having clear T&Cs in place can protect your handmade business from potential disputes.

Real-World Example: When I moved from Etsy to Shopify, I quickly realized the importance of knowing key e-commerce terms like CAC, AOV, and TACO. Understanding these metrics helped me track where my money was going and how I could optimize my business for higher profits.