Ecommerce glossary

Advertising Cost of Sale (ACOS)

Advertising cost of sale (ACOS) is ad spend divided by the revenue those ads produced, shown as a percentage. ACOS is the inverse of return on ad spend, so a 4× ROAS equals a 25% ACOS.

Also called: advertising cost of sales

Example: $1,000 of ad spend that brings $4,000 of revenue is a 25% ACOS.

Benchmark: Break-even ACOS equals your gross margin: at a 40% margin, ads stop paying off above a 40% ACOS.

Average Order Value (AOV)

Average order value (AOV) is the average amount a customer spends in a single order. It is total revenue divided by the number of orders in the same period. Together with traffic and conversion rate, AOV sets store revenue.

Also called: average basket value, average transaction value

Example: $27,000 of revenue from 600 orders is an AOV of $45.

Benchmark: Dynamic Yield (2026) reports $192 across industries and $417 for luxury and jewelry, mostly from larger brands, so small stores usually sit lower. Your own 12-month trend is the better benchmark.

Break-even ROAS

Break-even ROAS is the return on ad spend at which the margin from ad revenue exactly pays for the ads. Below it, advertising loses money. It equals 1 divided by gross margin.

Example: At a 40% margin, break-even ROAS is 1 ÷ 0.40 = 2.5×. A sensible target is 20% to 30% above that, about 3×.

Cart Abandonment Rate

Cart abandonment rate is the percentage of shopping carts that are created but never turned into a completed order. A high cart abandonment rate points to friction, surprise costs or weak trust between the cart and payment.

Also called: shopping cart abandonment rate, basket abandonment rate

Example: 1,000 carts and 300 orders give a cart abandonment rate of 70%.

Benchmark: Baymard Institute puts the average at 70.19%. Extra costs such as shipping and fees are the top reason (48% of shoppers), followed by a required account (26%) and a long or complicated checkout (21%).

Checkout Abandonment Rate

Checkout abandonment rate is the percentage of shoppers who start checkout but do not complete the order. It is lower than cart abandonment rate and points directly to problems in the checkout itself, such as surprise costs or forced registration.

Conversion Rate (CR)

Conversion rate (CR) is the percentage of visits to an online store that end in a purchase. It is orders divided by sessions, times 100. Conversion rate shows how well a store turns the traffic it already has into sales.

Also called: ecommerce conversion rate

Conversion Rate Optimization (CRO)

Conversion rate optimization (CRO) is the practice of increasing the share of store visitors who buy by finding and removing what stops them. It grows revenue from existing traffic instead of buying more visitors.

Also called: conversion optimization

Customer Acquisition Cost (CAC)

Customer acquisition cost (CAC) is the average amount an online store spends to win one new customer. It is total sales and marketing spend divided by the number of new customers in the same period.

Customer Lifetime Value (CLV)

Customer lifetime value (CLV or LTV) is the total revenue or gross profit an online store can expect from one customer over the whole relationship. It tells a store how much it can afford to spend to win a customer.

Also called: LTV, CLTV, lifetime value

Free Shipping Threshold

A free shipping threshold is the minimum order value at which a store ships for free. Set a little above the current average order value, it encourages shoppers to add items while the margin still covers shipping.

Example: With a $45 average order, a threshold of about $55 lifts the order value and stays reachable.

Benchmark: A threshold more than about 35% above the average order is risky, because fewer shoppers reach it.

Generative Engine Optimization (GEO)

Generative engine optimization (GEO) means making a store easy for AI tools such as ChatGPT, Google AI Overviews and Perplexity to find, trust and quote when they recommend products. It covers reviews, mentions on other sites and clear product data.

Also called: AI search optimization, answer engine optimization (AEO)

LTV:CAC Ratio

The LTV:CAC ratio compares customer lifetime value with customer acquisition cost. A ratio of about 3:1 is a common target, meaning a customer brings roughly three times more gross profit than it cost to win them.

Repeat Purchase Rate

Repeat purchase rate is the percentage of customers who placed two or more orders within a set period, usually the last 12 months. It shows how well a store turns first-time buyers into loyal ones.

Also called: repeat customer rate, returning customer rate

Example: 340 repeat customers out of 2,000 customers in the last 12 months is a 17% repeat purchase rate.

Benchmark: Bluecore reports a 16.5% average across more than 100 retailers, with health and beauty highest at 21.5%. Compare with your own category: products that run out reach higher rates than jewelry or furniture.

Return on Ad Spend (ROAS)

Return on ad spend (ROAS) is the revenue an online store earns for every dollar spent on advertising, written as a multiple such as 3×. ROAS measures the revenue efficiency of ads, not their profit.

Also called: return on advertising spend

Example: $2,000 of ad spend that brings $6,000 of revenue is a 3.0× ROAS. At a 40% margin that earns $400 after paying for the ads.

Benchmark: There is no universal good ROAS. The profitable level depends on margin, so compare your ROAS with your break-even ROAS (1 ÷ gross margin).

Social Proof

Social proof in ecommerce is evidence that other people have bought, used and approved a product or store, such as reviews, star ratings, customer photos and sales counts. It reduces doubt before a purchase.