Ecommerce & Inventory Glossary
Quick reference for the metrics, inventory concepts, and operations terms sellers use every day. Jump to a section or browse A–Z by topic.
Financial & profitability metrics
- COGS (Cost of Goods Sold)
- Direct costs of producing or purchasing sold products, including manufacturing, supplier pricing, and inbound shipping to warehouse. COGS is a core component of profit calculation and directly impacts margins.
- Landed cost
- Total product cost including purchase price, shipping, duties, taxes, and additional fees. Landed cost is used together with COGS to calculate accurate product margins and pricing.
- Profit and Loss (P&L)
- Financial report summarizing revenue, expenses, and net profit over a specific period. It provides a clear view of business performance and profitability drivers.
- Cash flow
- Movement of money in and out of a business. Strong cash flow management is critical for maintaining liquidity, paying suppliers, and avoiding stock shortages.
- Unit economics
- Profitability of a single product unit after all variable costs, including COGS, fees, and fulfillment expenses. It helps evaluate whether a product is scalable.
- Margin analysis
- Evaluation of profit after all costs, used to identify high- and low-performing products, sales channels, or pricing strategies.
- SKU profitability
- Profit generated by a specific SKU after accounting for COGS, marketplace fees, fulfillment, and other direct costs. Helps identify which products drive or reduce profit.
- Profitability analysis
- Assessment of profit across products, channels, or time periods to uncover growth opportunities and eliminate inefficiencies.
- Contribution margin
- Revenue remaining after variable costs are deducted. This margin contributes to covering fixed costs and generating net profit.
- Break-even point
- The level of sales at which total revenue equals total costs, meaning the business operates without profit or loss.
Inventory management
- Inventory management
- Process of tracking, controlling, and optimizing stock levels, including replenishment and demand balancing to reduce costs and avoid stock issues.
- Inventory tracking
- Monitoring the movement of products across purchasing, storage, sales, and returns using real-time data or system updates.
- Inventory valuation
- Calculating the total value of inventory using accounting methods such as FIFO or weighted average, which impacts financial reporting and taxes.
- Stockout
- Situation when a product is unavailable for sale, leading to lost revenue, reduced customer satisfaction, and potential ranking drops on marketplaces.
- Overstock
- Excess inventory beyond demand, tying up cash, increasing storage costs, and often requiring discounts to clear.
- FIFO (First In, First Out)
- Inventory method where the oldest stock is sold first, commonly used to reflect actual inventory flow and ensure accurate cost tracking.
- Inventory turnover
- Ratio showing how frequently inventory is sold and replaced over a given period, used to measure efficiency and demand alignment.
- Safety stock
- Extra inventory kept to prevent stockouts caused by demand fluctuations or supply chain delays.
Forecasting & planning
- Forecasting
- Predicting future sales based on historical data, trends, and seasonality to support better inventory and financial planning.
- Demand planning
- Estimating future demand to maintain optimal inventory levels and avoid both stockouts and overstock.
- Inventory forecasting
- SKU-level prediction of future inventory needs using data models, improving replenishment accuracy and reducing risk.
- Replenishment planning
- Process of determining when and how much inventory to reorder based on forecasts, lead times, and current stock levels.
Data, integrations & automation
- Single source of truth
- Centralized system that provides consistent, accurate, and up-to-date business data across all tools, eliminating discrepancies and manual errors.
- Inventory & accounting integration
- Automatic synchronization between inventory movements and financial records, ensuring accurate COGS, stock valuation, and reporting.
- Marketplace integration
- Connection between software and ecommerce platforms such as Amazon or Shopify, enabling automatic syncing of orders, inventory, and financial data.
- Multi-channel sales
- Selling products across multiple platforms simultaneously while managing inventory, pricing, and orders from a single system.
- Data synchronization
- Real-time updating of data across systems to maintain consistency and reduce manual reconciliation.
- Financial reconciliation
- Process of matching internal financial records with actual transactions from marketplaces and payment providers to ensure accuracy.
Analytics & performance tracking
- KPI dashboard
- Interface displaying key business metrics such as revenue, profit, inventory performance, and cash flow in real time.
- Business performance tracking
- Continuous monitoring of financial and operational metrics to evaluate overall business health and support decision-making.
- Revenue tracking
- Monitoring income from all sales channels, including adjustments for marketplace fees, discounts, and returns.
- Expense tracking
- Recording and categorizing business expenses to control costs and improve overall profitability.
Operations & ecommerce processes
- Order management
- Process of receiving, processing, and tracking customer orders across multiple sales channels.
- Fulfillment
- Storage, packing, and delivery of products, either in-house or through third-party logistics providers (3PL).
- Returns & refunds
- Handling returned products and issuing refunds, including updating inventory and adjusting financial records.