E-commerce Glossary

AOV shows how much customers spend per order on average. The global e-commerce average is around $150, ranging from $68 to $349 by industry.

COGS is the direct cost of products sold: purchase price + inbound shipping + duties. The landed cost is the number you actually need to know.

Cohort analysis groups customers by their first purchase date and tracks behavior over time. It is the gold standard for measuring LTV, retention, and campaign effectiveness.

Conversion rate is the percentage of visitors who become buyers. The global average is 2.5-3%, but industry, device, and traffic source dramatically affect it.

CPA shows the cost of acquiring a single purchase through advertising. CAC is broader: it includes all marketing costs.

CPC shows how much you pay on average for a single ad click. The e-commerce average is $1.16 on Google Ads and $0.45–1.72 on Meta Ads.

CTR shows what percentage of impressions resulted in clicks. Google Search average: 4-6%, Meta Feed: ~1.5%, Display: 0.5-1%.

FIFO is an inventory valuation method that costs the oldest purchased products first. Yet most e-commerce accountants recommend Weighted Average Cost (WAC) instead.

Gross margin is the difference between revenue and COGS, as a percentage. With the median e-commerce net profit at 3%, this number determines viability.

LTV shows the total value a customer generates over their entire relationship. A healthy LTV:CAC ratio is at least 3:1.

ROAS (Return on Ad Spend) measures how much revenue you earn for every unit of currency spent on ads. Important: this is revenue, not profit.