If you’re new to dropshipping, all the jargon can feel overwhelming. To help you get started, we’ve created a clear and easy-to-understand glossary. Here, we’ve grouped the key terms into sections like Sales, Marketing, and Logistics to make it easier to navigate. Let’s dive in!
Sales Terms
Conversion Rate
The percentage of visitors to your online store who complete a desired action, like making a purchase. For example, if 100 people visit your store and 3 buy something, your conversion rate is 3%.
Cart Abandonment
When a customer adds items to their cart but doesn’t complete the purchase. Reducing cart abandonment is key to increasing sales.
Average Order Value (AOV)
The average amount a customer spends per order. You can calculate this by dividing total revenue by the number of orders.
Upselling
Encouraging customers to purchase a more expensive version of a product or add additional items to their order. For example, offering a premium version of a product at checkout.
Cross-Selling
Recommending related products to customers. If someone buys a phone, you might suggest a case or charger.
ROAS (Return on Ad Spend)
A metric that measures the revenue generated for every pound spent on advertising. For example, a ROAS of 4 means you earn £4 for every £1 spent.
Margin
The difference between the cost of a product and its selling price. Higher margins mean more profit per sale.
Return on Investment (ROI)
A measure of the profitability of an investment, calculated as (Net Profit / Investment Cost) x 100.
Marketing Terms
Pay-Per-Click (PPC)
An advertising model where you pay every time someone clicks on your ad. Platforms like Google Ads and Facebook Ads use PPC.
Cost-Per-Click (CPC)
The amount you pay for each click on your ad. Lower CPC means you’re getting more clicks for your budget.
Search Engine Optimisation (SEO)
The process of improving your website to rank higher on search engines like Google. Good SEO helps more people find your store organically.
Meta Description
A short summary of a webpage that appears under the title in search engine results. It helps attract clicks by explaining the page’s content.
SEO Slug
The part of a URL that describes the page content. For example, in www.droplla.com/dropshipping-profit-margin-calculator, "dropshipping-profit-margin-calculator" is the slug.
Call to Action (CTA)
A prompt encouraging users to take a specific action, like “Buy Now” or “Sign Up.”
Email Marketing
Sending emails to your customers and subscribers to promote your products, share updates, or offer discounts.
A/B Test
Comparing two versions of a webpage, ad, or email to see which performs better. For example, testing two different headlines to maximise clicks.
Social Proof
Using customer reviews, testimonials, or user-generated content to build trust and encourage new customers to buy.
Influencer Marketing
Partnering with influencers to promote your products to their audience. This can help you reach a larger customer base.
Bounce Rate
The percentage of visitors who leave your site after viewing only one page. Lower bounce rates indicate better engagement.
Click-Through Rate (CTR)
The percentage of people who click on a link compared to the number who see it. Higher CTRs show more effective content.
Cost Per Acquisition (CPA)
The cost of acquiring a customer through advertising or marketing efforts.
Cost Per Thousand (CPM)
The cost of 1,000 ad impressions. It’s a common metric for measuring the reach of advertising campaigns.
Marketing Funnel
The journey customers take from first learning about your brand to making a purchase. It includes stages like awareness, consideration, and decision.
Conversion Rate Optimisation (CRO)
Improving your website to increase the percentage of visitors who take a desired action, like signing up or purchasing.
Backlink
A link from another website to yours. Backlinks improve SEO and signal credibility to search engines.
Keyword Stuffing
Overloading a webpage with keywords in an attempt to manipulate search engine rankings. It’s considered bad practice.
Long-Tail Keyword
A specific, less competitive search term, like "comfortable running shoes for beginners." These are easier to rank for in search engines.
AIDA Copy
A marketing technique focused on grabbing Attention, sparking Interest, creating Desire, and prompting Action. This method is commonly used in ads and product descriptions to drive conversions.
Market Saturation When a market has too many businesses selling similar products, making it harder to attract customers.
Product Saturation When a specific product is widely sold by many stores, reducing its demand and profit potential. Learn more about product saturation.
Logistics Terms
Fulfilment
The process of packing and shipping a customer’s order. In dropshipping, your supplier handles fulfilment.
Supplier
A third party that provides the products you sell. They are responsible for storing, packing, and shipping items directly to your customers.
Lead Time
The time it takes for your supplier to process and ship an order. Faster lead times mean happier customers.
Shipping Zones
Regions where your store delivers products. Different zones may have different shipping costs and delivery times.
Tracking Number
A unique code that allows customers to track their order’s shipping status.
Warehouse
A facility where goods are stored before being shipped to customers. In dropshipping, this is managed by your supplier.
Order Fulfilment
The entire process of receiving, processing, and delivering orders to customers.
Print on Demand (POD)
A business model where products, like clothing or mugs, are customised and printed only after a customer orders. POD reduces inventory risk and allows for personalised designs.
Product Terms
SKU (Stock Keeping Unit)
A unique code used to identify individual products. SKUs help you keep track of inventory and variations like size or colour.
Niche
A specific market or category you target with your store. For example, “pet accessories” or “fitness equipment.”
Private Label
Selling products manufactured by another company but branded with your own logo and packaging.
Product Variant
Different versions of a product, such as varying sizes, colours, or materials.
Minimum Order Quantity (MOQ)
The smallest amount of a product a supplier will sell. Lower MOQs are ideal for dropshipping.
Manufacturer’s Suggested Retail Price (MSRP)
The price a manufacturer recommends a product should be sold for. Retailers often adjust this based on demand.
Finance Terms
Profit Margin
The amount of profit you make on each sale. Use droplla's profit margin calculator to learn more
Chargeback
When a customer disputes a charge and their bank reverses the payment. High chargeback rates can hurt your business.
Cost of Goods Sold (COGS)
The total cost of producing or buying the products you sell. Knowing your COGS helps you price items effectively.
Cash Flow
The movement of money in and out of your business. Healthy cash flow ensures you can cover expenses and invest in growth.
Payment Gateway
The service that processes online payments for your store, like PayPal or Stripe.
Lifetime Value (LTV)
The total revenue a customer generates for your business over their lifetime. Increasing LTV boosts long-term profitability.
Monthly Recurring Revenue (MRR)
Predictable revenue you earn monthly, often from subscription services.
Quarterly Recurring Revenue (QRR)
Revenue you earn every quarter. Like MRR but tracked over three months.
Tech Terms
Ecommerce Platform
Software that lets you build and manage your online store. Shopify, WooCommerce, and BigCommerce are popular platforms.
Dropshipping App
A tool that connects your store to suppliers, helping you find products and automate order fulfilment. Examples include Oberlo and Spocket.
Responsive Design
A website design that adjusts to look great on any device, whether it’s a phone, tablet, or desktop.
Dashboard
An interface that provides an overview of your store’s performance, including sales, traffic, and other key metrics.
Plugin
An add-on feature you can install on your ecommerce platform to enhance functionality, like SEO tools or analytics trackers.
Omnichannel Retailing
Providing a seamless shopping experience across multiple channels, such as online, in-store, and mobile.
Domain Name
The web address of your store, like www.droplla.com.
User-Generated Content (UGC)
Content created by your customers, like reviews or photos of them using