The Business Glossary · Commerce

1P (first party, vendor): a retailer buying a brand's goods on a purchase order and reselling them as the seller of record, as Amazon does for items it sells from its own inventory (Business Models & Unit Economics).
3P (third party): a seller listing its own goods on someone else's marketplace and paying fees on each sale; 61% of Amazon's paid units in the fourth quarter of 2025 (Business Models & Unit Economics).
Available (inventory): on hand less committed at a location, less safety stock and reservations; computed, never stored (The Commerce Business).
Brand: a name products are sold under; a merchant can own several (The Commerce Business).
Bundle component: an item inside a bundle or kit, with its quantity, so the bundle sells as one line and ships as its parts (The Commerce Business).
CAC (customer acquisition cost): marketing spend in a period over new customers acquired in it, blended or by attributed channel, measured by cohort (Business Models & Unit Economics).
Cart: a purchase being built, with lines at the prices shown, repriced at checkout and converted to an order (The Commerce Business).
Channel: where an order came from (the merchant's own site or app, a marketplace, a retailer's purchase order, the point of sale, a delivery app, the phone); a property of the order, never of the merchant (The Commerce Business).
Channel partner: the marketplace, retailer or service behind a channel, such as Amazon, Best Buy or DoorDash, whose order ID or PO number is unique per partner (The Commerce Business).
Committed (inventory): units sold at a location and not yet shipped (The Commerce Business).
Company: a business buyer (a retailer, a contractor, a school) with contacts who buy for it and, often, its own price list (The Commerce Business).
Composable commerce: joining a headless platform and separate best-of-breed services (search, content, promotions, tax) through APIs behind a storefront the merchant writes (The Commerce Landscape).
Connected system: an external platform, marketplace, POS, OMS, WMS, ERP or app account a merchant connects, which external IDs and system-of-record rules point at (The Commerce Landscape).
Contribution margin: what an order leaves after every cost that scales with it (goods, freight and duty, fulfillment, payments, marketplace fees, deductions, returns), kept before and after acquisition spend (Business Models & Unit Economics).
Document: an invoice, credit memo, packing slip, ship notice or EDI transaction, kept as exchanged and linked to its order, purchase order or fulfillment (The Commerce Business).
Drop-ship: selling goods a supplier ships directly to the customer, so the seller holds no inventory but remains the merchant of record (Business Models & Unit Economics).
DTC (direct to consumer): a brand selling its own products on its own site or app, keeping the full price and paying for traffic, payments, fulfillment and service (Business Models & Unit Economics).
External reference: a POS, ERP or partner ID stored on an item or order, keyed by connected system, so the same record can be matched across systems and duplicate injections caught (The Commerce Business).
Fulfillment: a decision to send some of an order's lines from one location by one provider (delivery, pickup, dine-in, shipping or digital), kept separate from the order so splits and providers can change (The Commerce Business).
GMV (gross merchandise value): the total value of goods sold through a platform or marketplace, each company on its own definition; Shopify reported $378.4 billion for 2025 (The Commerce Landscape).
Headless commerce: a platform that keeps catalog, cart, orders and checkout behind APIs, with the storefront a separate application the merchant writes (The Commerce Landscape).
Hosted SaaS platform: a commerce platform the vendor runs (servers, upgrades, checkout, PCI validation), configured in an admin and extended by apps (Choosing & Hosting a Store).
Inventory level: an item's on-hand and committed counts at one location (The Commerce Business).
Item: something sold and counted, defined once with its SKU, barcode and tax category: a variant, a dish, a modifier option, a bundle or a digital good (The Commerce Business).
Listing: an item offered on an external channel under that channel's ID (an ASIN, a Walmart item ID), with the channel's status (The Commerce Business).
Location: a place that sells, stocks or makes goods (a store, a warehouse, a 3PL's or marketplace's fulfillment center, an online store, a kitchen, a virtual brand, a dark store), where hours, stock, prices, fee caps and tax resolve (The Commerce Business).
Location item: an item as sold at one location, with its in-store price and availability (The Commerce Business).
LTV (lifetime value): the contribution a customer generates over the time they keep buying, measured by cohort rather than projected from an average (Business Models & Unit Economics).
Merchant: the business that sells (a brand, a retailer, a distributor, a restaurant group, a grocer, or a franchisee under it), distinct from its locations (The Commerce Business).
Merchant of record: the party that charges the buyer, refunds and absorbs chargebacks and, as a result, owes the tax: the brand on its own site, usually the marketplace on a 3P sale (The Commerce Business).
Modifier group: a choice attached to an item, such as "choose a cheese", with minimum and maximum selections; its options are items, so they have prices, stock and their own groups (The Commerce Business).
Omnichannel brand: a brand selling through several models at once (its own site, marketplaces, wholesale to retailers and carriers, stores), with margin computed per channel (Business Models & Unit Economics).
Order charge: any non-goods line on an order (shipping, a fee, tax, duty, tip, discount, commission, referral fee or retailer deduction) with its payer, payee and the rule that produced it (The Commerce Business).
Order line: an item ordered, with its name, SKU and unit price snapshotted as sold and modifiers as child lines (The Commerce Business).
Payback: the months until a cohort's cumulative contribution repays its acquisition cost (Business Models & Unit Economics).
Price list: prices for a market, currency, customer group, company or channel, with quantity breaks and a validity range (The Commerce Business).
Print on demand: drop-ship in which the supplier prints the seller's design on a blank product after each order, at a base cost per order (Business Models & Unit Economics).
Product: what a shopper picks before choosing options, with its title and handle; its variants are items (The Commerce Business).
Purchase order (outbound): what a merchant ordered from its supplier; a retailer's PO received by a brand is, to the brand, an order (The Commerce Business).
Referral fee: a marketplace's percentage of each sale charged to the seller, such as Amazon's and Walmart's 15% in most categories (The Commerce Business).
Return: goods coming back on an order, with lines, reasons, a method (mail, drop-off, in store or returnless) and each unit's disposition (The Commerce Business).
SAQ A, A-EP and D: the PCI DSS self-assessments an e-commerce merchant validates against, decided by whether its payment page is fully the provider's (A), built on its own page with the provider's script or direct post (A-EP), or receives card data (D) (Choosing & Hosting a Store).
Shipment: a parcel or load in a carrier's hands with its tracking number; one fulfillment can be several shipments (The Commerce Business).
Subscription: a promise to place orders on a schedule against a stored payment method, the same shape as a membership or a service agreement (The Commerce Business).
Supplier: a manufacturer, distributor, drop-ship or print-on-demand partner the merchant buys from (The Commerce Business).
System of record: the one system whose copy of an object (items, costs, orders) wins when systems disagree, recorded per connected system (The Commerce Landscape).
Virtual brand: a delivery-only menu cooked in another restaurant's kitchen, modeled as a location of its own merchant at the kitchen's address (The Commerce Business).
Wholesale: selling cases or pallets to retailers, distributors or carriers at a wholesale price on payment terms, net of deductions (Business Models & Unit Economics).

1P (first party, vendor): a retailer buying a brand's goods on a purchase order and reselling them as the seller of record, as Amazon does for items it sells from its own inventory (Business Models & Unit Economics).
3P (third party): a seller listing its own goods on someone else's marketplace and paying fees on each sale; 61% of Amazon's paid units in the fourth quarter of 2025 (Business Models & Unit Economics).
Available (inventory): on hand less committed at a location, less safety stock and reservations; computed, never stored (The Commerce Business).
Brand: a name products are sold under; a merchant can own several (The Commerce Business).
Bundle component: an item inside a bundle or kit, with its quantity, so the bundle sells as one line and ships as its parts (The Commerce Business).
CAC (customer acquisition cost): marketing spend in a period over new customers acquired in it, blended or by attributed channel, measured by cohort (Business Models & Unit Economics).
Cart: a purchase being built, with lines at the prices shown, repriced at checkout and converted to an order (The Commerce Business).
Channel: where an order came from (the merchant's own site or app, a marketplace, a retailer's purchase order, the point of sale, a delivery app, the phone); a property of the order, never of the merchant (The Commerce Business).
Channel partner: the marketplace, retailer or service behind a channel, such as Amazon, Best Buy or DoorDash, whose order ID or PO number is unique per partner (The Commerce Business).
Committed (inventory): units sold at a location and not yet shipped (The Commerce Business).
Company: a business buyer (a retailer, a contractor, a school) with contacts who buy for it and, often, its own price list (The Commerce Business).
Composable commerce: joining a headless platform and separate best-of-breed services (search, content, promotions, tax) through APIs behind a storefront the merchant writes (The Commerce Landscape).
Connected system: an external platform, marketplace, POS, OMS, WMS, ERP or app account a merchant connects, which external IDs and system-of-record rules point at (The Commerce Landscape).
Contribution margin: what an order leaves after every cost that scales with it (goods, freight and duty, fulfillment, payments, marketplace fees, deductions, returns), kept before and after acquisition spend (Business Models & Unit Economics).
Document: an invoice, credit memo, packing slip, ship notice or EDI transaction, kept as exchanged and linked to its order, purchase order or fulfillment (The Commerce Business).
Drop-ship: selling goods a supplier ships directly to the customer, so the seller holds no inventory but remains the merchant of record (Business Models & Unit Economics).
DTC (direct to consumer): a brand selling its own products on its own site or app, keeping the full price and paying for traffic, payments, fulfillment and service (Business Models & Unit Economics).
External reference: a POS, ERP or partner ID stored on an item or order, keyed by connected system, so the same record can be matched across systems and duplicate injections caught (The Commerce Business).
Fulfillment: a decision to send some of an order's lines from one location by one provider (delivery, pickup, dine-in, shipping or digital), kept separate from the order so splits and providers can change (The Commerce Business).
GMV (gross merchandise value): the total value of goods sold through a platform or marketplace, each company on its own definition; Shopify reported $378.4 billion for 2025 (The Commerce Landscape).
Headless commerce: a platform that keeps catalog, cart, orders and checkout behind APIs, with the storefront a separate application the merchant writes (The Commerce Landscape).
Hosted SaaS platform: a commerce platform the vendor runs (servers, upgrades, checkout, PCI validation), configured in an admin and extended by apps (Choosing & Hosting a Store).
Inventory level: an item's on-hand and committed counts at one location (The Commerce Business).
Item: something sold and counted, defined once with its SKU, barcode and tax category: a variant, a dish, a modifier option, a bundle or a digital good (The Commerce Business).
Listing: an item offered on an external channel under that channel's ID (an ASIN, a Walmart item ID), with the channel's status (The Commerce Business).
Location: a place that sells, stocks or makes goods (a store, a warehouse, a 3PL's or marketplace's fulfillment center, an online store, a kitchen, a virtual brand, a dark store), where hours, stock, prices, fee caps and tax resolve (The Commerce Business).
Location item: an item as sold at one location, with its in-store price and availability (The Commerce Business).
LTV (lifetime value): the contribution a customer generates over the time they keep buying, measured by cohort rather than projected from an average (Business Models & Unit Economics).
Merchant: the business that sells (a brand, a retailer, a distributor, a restaurant group, a grocer, or a franchisee under it), distinct from its locations (The Commerce Business).
Merchant of record: the party that charges the buyer, refunds and absorbs chargebacks and, as a result, owes the tax: the brand on its own site, usually the marketplace on a 3P sale (The Commerce Business).
Modifier group: a choice attached to an item, such as "choose a cheese", with minimum and maximum selections; its options are items, so they have prices, stock and their own groups (The Commerce Business).
Omnichannel brand: a brand selling through several models at once (its own site, marketplaces, wholesale to retailers and carriers, stores), with margin computed per channel (Business Models & Unit Economics).
Order charge: any non-goods line on an order (shipping, a fee, tax, duty, tip, discount, commission, referral fee or retailer deduction) with its payer, payee and the rule that produced it (The Commerce Business).
Order line: an item ordered, with its name, SKU and unit price snapshotted as sold and modifiers as child lines (The Commerce Business).
Payback: the months until a cohort's cumulative contribution repays its acquisition cost (Business Models & Unit Economics).
Price list: prices for a market, currency, customer group, company or channel, with quantity breaks and a validity range (The Commerce Business).
Print on demand: drop-ship in which the supplier prints the seller's design on a blank product after each order, at a base cost per order (Business Models & Unit Economics).
Product: what a shopper picks before choosing options, with its title and handle; its variants are items (The Commerce Business).
Purchase order (outbound): what a merchant ordered from its supplier; a retailer's PO received by a brand is, to the brand, an order (The Commerce Business).
Referral fee: a marketplace's percentage of each sale charged to the seller, such as Amazon's and Walmart's 15% in most categories (The Commerce Business).
Return: goods coming back on an order, with lines, reasons, a method (mail, drop-off, in store or returnless) and each unit's disposition (The Commerce Business).
SAQ A, A-EP and D: the PCI DSS self-assessments an e-commerce merchant validates against, decided by whether its payment page is fully the provider's (A), built on its own page with the provider's script or direct post (A-EP), or receives card data (D) (Choosing & Hosting a Store).
Shipment: a parcel or load in a carrier's hands with its tracking number; one fulfillment can be several shipments (The Commerce Business).
Subscription: a promise to place orders on a schedule against a stored payment method, the same shape as a membership or a service agreement (The Commerce Business).
Supplier: a manufacturer, distributor, drop-ship or print-on-demand partner the merchant buys from (The Commerce Business).
System of record: the one system whose copy of an object (items, costs, orders) wins when systems disagree, recorded per connected system (The Commerce Landscape).
Virtual brand: a delivery-only menu cooked in another restaurant's kitchen, modeled as a location of its own merchant at the kitchen's address (The Commerce Business).
Wholesale: selling cases or pallets to retailers, distributors or carriers at a wholesale price on payment terms, net of deductions (Business Models & Unit Economics).