Commerce terms, clearly explained.

A

Commerce

Average Order Value (AOV)

The average monetary value of orders over a defined period, usually calculated as revenue divided by order count.

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B

Commerce

Backorder

An order for an item that is temporarily unavailable and will be fulfilled when inventory becomes available.

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Commerce

Basket Analysis

The study of products purchased together to identify cross-sell, merchandising, and assortment opportunities.

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Commerce

Bill of Materials (BOM)

A structured list of components, materials, or subassemblies required to make or package a product.

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Commerce

Bill-to Address

The address associated with the party responsible for paying an order or invoice.

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Commerce

BOPIS (Buy Online, Pick Up In Store)

An order fulfillment option where a customer places an order online and collects it at a physical location.

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C

Commerce

Call-Off Order

A release against an existing contract or blanket purchase order that schedules delivery of agreed goods over time.

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Commerce

Cloud Commerce

Commerce software and infrastructure delivered as hosted services rather than operated entirely on a customer’s own servers.

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Commerce

Commerce Platform

Software that supports online product discovery, pricing, ordering, payment, and related commerce experiences.

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Commerce

Company Account

A business customer record that can represent an organization, its locations, buyers, permissions, and commercial terms.

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Commerce

Cost of Goods Sold (COGS)

The direct costs attributable to producing or acquiring the goods a company sells.

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Commerce

Customer-Specific Pricing

Pricing configured for an individual customer or account based on negotiated terms, agreements, or commercial rules.

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D

Commerce

Dead Stock

Inventory that is unlikely to sell or be used and may require discounting, disposal, or write-off.

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Commerce

Discount Management

The rules, approvals, and controls used to set and apply discounts across customers, products, and transactions.

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Commerce

Distribution

The movement and availability of products through channels, warehouses, partners, or other routes to market.

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Commerce

Distributor

A business that purchases products from suppliers and resells or supplies them to retailers, resellers, or end customers.

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Commerce

Drop Shipping

A fulfillment model in which a seller accepts an order and a supplier ships the product directly to the buyer.

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E

Commerce

Electronic Data Interchange (EDI)

The structured computer-to-computer exchange of standard business documents such as purchase orders and invoices.

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CommerceERP

Enterprise Resource Planning (ERP)

Business software that integrates core operations such as finance, purchasing, inventory, manufacturing, and order processing.

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F

Commerce

Fulfillment

The process of receiving, picking, packing, shipping, and confirming an order.

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G

Commerce

Gross Merchandise Value (GMV)

The total value of merchandise sold through a commerce channel before deductions such as returns or fees, according to the chosen definition.

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H

Commerce

Headless Commerce

An architecture that separates the customer-facing presentation layer from commerce services delivered through APIs.

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I

Commerce

Inventory Management

The planning and control of stock levels, movements, replenishment, and availability across locations.

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Commerce

Invoice

A commercial document requesting payment for goods or services and describing amounts, terms, and transaction details.

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L

Commerce

Lead Time

The elapsed time between initiating a process, such as placing an order, and its completion or delivery.

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M

Commerce

Made-to-Order

A production or procurement approach in which a product is made or sourced after a customer places an order.

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Commerce

Marketplace

A digital or physical platform that brings multiple sellers together to offer products or services to buyers.

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Commerce

Minimum Advertised Price (MAP)

A supplier’s policy setting the lowest price at which a reseller may publicly advertise a product.

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Commerce

Minimum Order Quantity (MOQ)

The smallest quantity a supplier will accept for a product, order, or production run.

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Commerce

Multi-Channel Commerce

Selling through more than one channel, such as a web store, marketplace, sales team, or physical location.

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N

Commerce

Net 30

A payment term requiring the invoice balance to be paid within 30 days, subject to the contract’s stated start date and conditions.

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Commerce

Net 60

A payment term requiring the invoice balance to be paid within 60 days, subject to the contract’s stated start date and conditions.

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Commerce

Net 90

A payment term requiring the invoice balance to be paid within 90 days, subject to the contract’s stated start date and conditions.

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O

Commerce

Omnichannel Commerce

A coordinated commerce approach that connects customer experiences, information, and operations across channels.

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Commerce

Open-to-Buy (OTB)

A budgeting method that tracks how much purchasing capacity remains for planned inventory during a period.

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CommerceOMS

Order Management System (OMS)

Software that coordinates order capture, routing, inventory availability, fulfillment, and order status.

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Commerce

Order-to-Cash (O2C)

The end-to-end business process from receiving a customer order through fulfillment, invoicing, and payment collection.

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Commerce

Overstock

Inventory held in quantities beyond expected near-term demand or operational requirements.

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P

Commerce

Pallet

A portable platform used to unitize, store, and move goods during warehouse and freight operations.

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Commerce

Payment Gateway

A service that securely transmits payment information between a commerce experience, payment processor, and financial institutions.

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Commerce

Payment Terms

The agreed conditions for when and how a buyer must pay, including due dates, methods, and possible discounts or fees.

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Commerce

Price List

A defined set of product prices that can be applied to a customer, customer group, channel, region, or time period.

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Commerce

Procure-to-Pay (P2P)

The process through which an organization requests, approves, purchases, receives, and pays for goods or services.

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Commerce

Procurement

The business function and process for sourcing, evaluating, purchasing, and managing external goods and services.

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Commerce

Product Information Management (PIM)

A system for managing and distributing product attributes, descriptions, media, and related catalog information.

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Commerce

Purchase Order (PO)

A buyer-issued document authorizing the purchase of specified goods or services under stated terms.

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Commerce

Purchase Requisition

An internal request for approval to purchase goods or services before a purchase order is issued.

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R

Commerce

Reorder

A subsequent purchase of a product or service previously purchased by the same customer.

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Commerce

Reorder Point

The inventory level at which replenishment should be initiated to reduce the risk of running out of stock.

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Commerce

Return Merchandise Authorization (RMA)

An approval or reference process used to manage the return of a product to a seller or supplier.

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S

Commerce

Safety Stock

Extra inventory held to help absorb demand variability, supply delays, or other uncertainty.

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Commerce

Sell-Through Rate

The share of available inventory sold during a defined period.

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Commerce

Ship-to Address

The destination address where the products in an order should be delivered.

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Commerce

Shipping Terms

The agreed conditions that describe shipping responsibilities, costs, risk, and delivery arrangements.

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Commerce

SKU (Stock Keeping Unit)

A unique identifier used by a business to distinguish and manage a product or product variant in inventory.

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Commerce

Subscription Commerce

A commerce model in which customers receive products or services through recurring orders or access plans.

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Commerce

Supplier

A person or organization that provides goods, materials, or services to another business.

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Commerce

Supply Chain

The network and processes involved in sourcing materials, making products, and moving them to customers.

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T

Commerce

Tiered Pricing

A pricing structure in which the unit price or discount changes at defined quantity, spend, or usage thresholds.

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Commerce

Trade Credit

An arrangement that allows a business buyer to receive goods or services before paying the supplier.

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U

Commerce

Unified Commerce

An operating model that connects commerce channels and back-office processes through shared data and coordinated systems.

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V

Commerce

Vendor-Managed Inventory (VMI)

An arrangement in which a supplier monitors a customer’s inventory and manages replenishment under agreed rules.

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Commerce

Volume Discount

A price reduction offered when a customer purchases a specified quantity or spend level.

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W

Commerce

Warehouse Management System (WMS)

Software that supports warehouse activities such as receiving, putaway, picking, packing, and inventory control.

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Commerce

Wholesale

The sale of goods in larger quantities, typically to businesses that resell, distribute, or use them commercially.

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Commerce

Wholesale Ecommerce

Online buying and selling of products between businesses, often with account-specific pricing, bulk quantities, and payment terms.

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