Key Business Terms From A to Z
Knowing and understanding industry lingo is important to best managing your communication with your professional network. Keeping up with the language used in the manufacturing, wholesale and retail industries isn’t easy, however, especially when new buzzwords emerge regularly. This resource will help keep you up to date with the terms and concepts that are driving modern commerce.
Advance Ship Notice (ASN)
A notification that provides detailed information on pending deliveries of goods. For example, order info, physical characteristics, transportation method, carrier details, and more.
An organizational method focused on iteration and efficiency. Popularized in software development, but now applied in all places where moving fast is an advantage.
The process of monitoring inventory levels across a distribution network and strategically distributing inventory according to customer demand, store constraints, availability and more.
Analysis of data. A way of using statistics and math to discover patterns and answer questions using a volume of data.
Application Programming Interface (API)
A software interface designed to allow a computer program to easily communicate with one or more other programs without exposing irrelevant internal details.
Artificial Intelligence (AI)
Software that aims to mimic human intelligence. In the modern day, it is primarily powered by machine learning.
Unique characteristics that make up a feature or a product. For example: color, size, price, brand value, etc.
Augmented Reality (AR)
An emerging technology that seeks to overlay the virtual world onto the physical, allowing for real-time physical interaction with digital objects placed into the real world.
Available to Promise (ATP)
An metric that represents the predicted amount of inventory available to sell, not including inventory already spoken for.
B Corporation (B Corp)
A private certification that is bestowed on companies with high “social and environmental performance.” A private version of the “Benefit Corporation” designation.
An order of a product that is not currently in stock, to be delivered at a later date. Usually indicates an underestimation of demand or a supply chain challenge.
A technique for tracking proximity of users through mobile technologies, that allow retailers to receive notification of a customer arriving in the store and communicating through targeted messaging, or by modifying content on devices in close proximity to the consumer.
Big Box Store
A physically large retail establishment that is often part of a chain of stores that sells a wide variety of products. Typically focuses on sales volume and low margins to make profits.
A field that deals with datasets of enormous volume or complexity, requiring its own techniques and technologies as compared to traditional data analytics. Used to describe analytic capabilities against these large volumes, and often streaming nature of consuming data.
Buy Now, Pay Later (BNPL)
Short-term financing for ordinary retail items that allows customers to take home their purchase, but pay for it over time. Spreads the cost of a purchase over multiple weeks/months.
Buy Online, Pick-Up At Curbside (BOPAC)
Similar to BOPIS, but picking up at the curb instead of in-store. Popularized during COVID-19 to comply with social distancing guidelines.
Buy Online, Pick-Up In Store (BOPIS)
An omnichannel retail technique that allows customers to purchase an item online and pick it up at a brick-and-mortar location instead of having it shipped to them.
Buy Online, Ship to Store (BOSS)
An omnichannel retail technique that is enacted when BOPIS orders are out of stock. When the ordered item is not available, the BOSS system recovers it at another site.
A place where customers pay for products. Traditionally consisting of a wrap counter where items we folded, wrapped, and placed in the appropriate bag for delivery. Often consists of a Point of Sale (POS) and displays to encourage impulse buys (e.g. gum, batteries, etc.).
Click & Collect
A broader term for techniques like BOPIS/BOPAC. Allows customers to purchase online (“click”), and then pick up (“collect”) in a physical place, such as inside a store or a secured locker.
A sales technique that seeks to create a deeper relationship between a sales associates and their customers, in order to influence purchasing volume and frequency. While thought of as a client book, it involves techniques to support outreach from the store to the consumer through email, text, messaging apps, and more. Most current versions support tools for omnichannel engagement (omni engagement) that leverages online tools such as the e-Commerce, social media, and more.
A way of using cloud technology and large server infrastructure to handle commerce needs such as content management, inventory management, payment processing and data processing.
An integration and optimization of supply chains and distribution channels, such that organizations can collaborate to mutually improve their profitability.
An agreement between a shop and a third party vendor where the third party’s goods are available in the store for sale, and reconciled with the vendor when the item is purchased. Consignment items may represnt all inventory provided by a given vendor, or some portion of the inventory to minimize an upfront investment by the retailer.
A software application specifically designed for use by consumers, rather than enterprise/business customers.
Consumer Packaged Goods (CPGs)
Daily use items like health and beauty, cleaning products, snack foods, small toys and electronics, and other items that must be replaced on a regular basis. Most items carried in a drug store and many in a grocery store are CPG items.
A POS technology that allows customers to pay using their phone or creditcard using RFID or NFC technologies avoiding actual contact with the payment device. May speed up payment, and reduces risk of fraud and increases convenience at the point of sale.
Corporate Social Responsibility (CSR)
A form of self-regulation that that serves to integrate social, environmental and economic concerns into an organization’s business practices.
Cost of Goods Sold (COGs)
A total that describes the costs directly associated with the production of goods, such as materials and labor cost.
A type of data analytics that collects and processes customer data in order to improve retention, optimize pricing, create efficient promotions, etc.
An omnichannel retail technique that is enacted when BOPIS orders are out of stock. When the ordered item is not available, the BOSS system recovers it at another site.
Customer Relationship Management (CRM)
The practices and solutions associated with managing a business’s customer relationships through effective outreach interactions. The aim of CRM systems is to improve customer experience by notifying customers of compelling content and value, and to enhance sales through managing process and engagement. CRM may be used for Business to Business (B2B) interactions or Business to Consumer (B2C) interactions used by retailers.
Customer Service Representative (CSR)
An employee who is responsible for handling customer complaints, inquiries and requests.
A graphical user interface that is used to display, track, evaluate and manipulate business data. Most often comprised of visual components such as charts (pie charts, bar charts, gauges, KPIs, etc.), tables, metrics, and other visual components. Most often providing drill-down capabilities that enable the user to see the supporting detail of the visual element.
Inventory that is considered unsellable or “dead.” Can be caused by overproduction, over-ordering, changes in demand or other factors.
The process of predicting consumer demand for a product or service, and then adjusting business operations (inventory levels, production, etc.) to match it.
Digital Asset Management (DAM)
A data management process for collecting and storing digital files in an asset library, such that they can be easily organized, distributed and worked on by employees.
The process of adopting new digital technologies and business models into a company to support business process, and to provide tools to engage more easily online.
Direct to Consumer (DTC)
A business method wherein brands skip distribution to retailers and sell and ship products directly to consumers themselves.
Distribution Center (DC)
A facility that serves to receive, store, and distribute goods to sales channels and customers. A DC offers value-added services including product mixing, order fulfillment, cross docking, packaging etc. Often used synonymously with Warehouse.
A retail technique where a seller is not responsible for the shipping, storage, or sourcing of a product. Instead, the seller transfers customer orders to a third party who fulfills the orders and ships them to a customer.
Commerce that takes place online. Includes sales, payment processing, shipping, etc.
Electronic Data Interchange (EDI)
An electronic framework designed to replace physical inter-company business communications with a standardized electronic document format and specific transaction codes. Used by many brand manufacturers and retailers to standardize communication through their ERP, merchandising solution, financial systems, and more.
A concept that describes the ability to buy from anywhere (online or physical location), and receive from anywhere (store, warehouse, marketplace, vendor). Acts as a virtual shelf that allows customers to shop a retailer’s entire catalog of products for purchase. The desired products are drop shipped to the consumer, or delivered to a store for pickup by the customer.
Enterprise Resource Planning (ERP)
A software system that manages and oversees the essential functions of a business, as well as providing insights.
Retail business conducted over the internet. Most notably retail eCommerce sites.
The process of using past and current data to predict future scenarios. Forecasting is used by manufacturers to identify likely sales by their retail customers, and by retailers to anticipate sales by channel (online and in-store).
A method of attempting to improve aspects of a business by introducing aspects of games such as point-scoring and extrinsic rewards.
An approach to business that incorporates environmental protection and waste reduction into all aspects of a company.
A process that assists consumers in finding the product that suits their needs through questionnaires and suggestion feedback, typically implemented in software on e-commerce platforms.
An e-tail architecture that allows the back-end and front-end systems to be decoupled, such that they can be updated independently.
A marketing technique that uses popular social media personalities, or Internet celebrities to advertise products and services.
Internet of Things (IOT)
A concept that describes a network of physical objects (watches, printers, fridges, etc.) connected via the Internet, which pass data to the network and each other.
The processes and techniques involved with ordering, storing, tracking and selling inventory with the goal of minimizing stockouts and maximizing inventory turnover.
A payment scheme which allows a customer to put a deposit down to reserve an item. The retailer then holds the item for that customer until all payments for it have been made.
A marketing strategy that rewards customers for continued purchases of a business’s products or use of a business’s services in order to foster “brand loyalty.”
Machine Learning (ML)
A branch of artificial intelligence research focused on building systems that leverage large amounts of data to “learn” how to do tasks, using computing architectures that loosely mimic the human brain.
A company or individual who produces finished goods out of raw materials.
A place or website where multiple third parties gather to sell goods and services. These third parties take advantage of the low overhead costs of the marketplace and high visibility of their goods to improve sales.
The difference between the sale price of a product and its cost. Can also describe the difference between the wholesale price and a retail price.
Master Data Management (MDM)
A discipline for creating and managing master data records for persons, products, or locations across all data sources and business operations. Can be enabled by specialized MDM software.
Material Resource Planning (MRP)
A production planning scheme that seeks to manage the manufacturing process by reducing overhead, planning activities ahead of time, and ensuring constant resource availability.
A way of organizing retail products into a pyramid-esque structure, to allow for detailed analytics and reporting that is organized by segment or product family.
The planning, presentation and promotion of goods for sale. Includes price-setting, advertising, changing store layout, and improving customer experience.
A concept for a highly immersive parallel virtual world where people gather to work, shop, and play.
A computer program designed to run on smartphones.
A payment service that runs on mobile devices, such as Alipay or Venmo.
A Point-of-Sale system that is portable (“mobile”). For example, an iPad with a Square reader attached.
Non Fungible Token (NFT)
A crypto asset that functions as a digital certificate of authenticity or proof of ownership. NFTs can be sold and traded, and thus often function as speculative assets.
A retail strategy that aims to coordinate all the contact channels of a business, to provide a seamless and consistent customer experience.
Order Fulfillment Optimization
The process of making order fulfillment faster, more accurate, leaner, and more efficient across the entire fulfillment chain.
Order Management System (OMS)
A software system designed to track and process orders, from entry to fulfillment.
Payment Card Industry compliance. A set of standards businesses must adhere to in order to keep customer data secure, defined by the PCI Security Standard Council.
A warehouse order picking group that is selected based on common factors, such as ship date, product type, risk factors, or sales volume.
The process of picking up an item, packaging it in the correct materials and box, and shipping it out to a customer.
A schematic tool for helping retailers plan out how to display their products in-store in an optimal way. Often used to help maximize space, communicate brand identity, maximize sales or ensure a satisfying customer experience.
Point of Sale (POS)
A place where sales are made. Can be physical (cash register or kiosk), or digital (Amazon checkout page).
An intentionally temporary shop set up to catch sales attached to an event or trend, that then closes down after the sales window has passed.
A brand owned by a company whose products are only sold by that company. Typically the manufacture of these products is outsourced to a third party. Private label brands include Kirkland Signature and Great Value.
The process of purchasing and acquiring goods or services that are essential to a business’ operations.
Product Information Management (PIM)
The management of all data related to a product, including UPCs, SKUs, names, media assets, sales information, and more.
The stages a product goes through during its time in the marketplace: Introduction, growth, maturity, and decline.
Product Lifecycle Management (PLM)
The management of all processes and information related to a product, from its inception to its eventual disposal.
A kind of marketing material that is used to showcase products, not unlike a portfolio.
Marketing communications and sales techniques that aim to persuade an audience to buy a product, through special offers, sales, and ad campaigns, among other things.
Purchase Order (PO)
A commercial document delivered to a seller by a buyer that contains detailed information on a desired purchase. Includes information such as type of product, quantity, and agreed-upon pricing.
Radio Frequency Identification (RFID)
Refers to technology that uses small radio frequency tags to identify and track people or objects.
The materials used to manufacture intermediate materials or finished goods. Things considered raw materials include iron, sulfur, latex, and similar.
The sale of pre-owned products. Thrift stores and used bookstores fit this model.
The downstream movement of inventory through the supply chain, for the purposes of restoring stock levels to cover demand.
Reserve Online, Pick-up In Store (ROPIS)
Allows a customer to reserve (but not purchase) an item online, and then complete the transaction in-store.
A data-driven strategy to ensure you have the right products at the right price and amounts to meet consumer demand and also optimize your ROI.
Return To Vendor (RTV)
The return of goods from a retailer or customer to a vendor. Can also include a repair or replacement process.
Logistics related to the movement of materials and products upstream through the supply chain, rather than downstream.
A detailed critical analysis of a business’s Point-of-Sale and Inventory Management System to ensure transaction accuracy. It seeks to find problem areas or things that need improvement.
The practice of allowing a customer to serve themselves when purchasing a product, such as at a gasoline pump or a self-checkout register.
The act of examining merchandise in a store, then purchasing it online for a lower cost, due to the online retailer’s lower overhead.
The difference between the recorded inventory on a balance sheet, and the actual inventory in a warehouse. Describes the loss of inventory.
An economic term describing the phenomenon where goods decrease in size or quality, while prices stay level or increase.
The process of optimizing how many of each size of a product (e.g. t-shirts) to order to reduce loss.
Commerce that takes place on social media sites, like Facebook or TikTok.
Software as a Service (SaaS)
A business model that licenses and delivers software to a customer on a subscription basis, from a central hub or cloud.
The process of selecting, vetting, and organizing suppliers for the eventual production and/or sale of products.
The process of making sure the right products are in the right place at the right time, with no waste, shortages or bloat.
A method of sourcing that aims to produce supply channels at the lowest possible total cost by using data analytics and market research among other techniques.
The network of people, places, and things that are involved in the production and distribution of a product or service.
A set of social goals consisting of care for the environment and future generations while maintaining our current way of life.
A retail business strategy to target a very specific group of consumers (a “tribe”) and capture that market, often at the expense of a wider general audience.
The centralization of business data and sales channels onto a single platform in order to simplify business operations and improve customer experiences.
A software portal that allows vendors to manage products, orders, inventory, and other data at a glance without having to search records individually.
The act of managing the equipment, people, technology, and processes within a warehouse to optimize operations and improve quality control.
Warehouse Management System (WMS)
A software solution that assists with warehouse operations such as inventory tracking, picking, receiving, and analytics.
Any type of technology that goes on a person’s body, such as a smartwatch.
The opposite of showrooming. When a customer browses for products online, then purchases them in-store instead.
The sale of goods in large quantities to retailers, businesses, or industrial customers for bulk pricing.