When you step into eCommerce, understanding industry terminology is key—not just for the sake of knowing it, but because it makes your logistics more effective. By having a firm grasp of these terms, you can streamline your work and improve communication, making collaborations smoother and more productive.
A 3PL or third-party logistics is another entity that helps companies with their supply chain and logistics operations. They can help store items, pack orders, and deliver them to customers.
A fourth-party logistics, or 4PL, oversees the entire logistics process for businesses. They partner with other companies like 3PLs, which handle storage, packing, shipping, and more to ensure the entire supply chain operates efficiently.
ABC analysis is used in inventory management. It is a method that categorizes based on importance, dividing products into three: A, B, and C. A items are the smallest in volume but the most valuable. B items are moderately important, and C items are the least valuable, often making up a large portion of inventory but contributing the least to revenue.
Automation is the implementation of machines or technology to perform tasks instead of relying on human operation. It saves time and effort, streamlines processes, and eliminates human error for a business.
A backorder is when a customer orders an item that’s temporarily not in stock, resulting in a wait time before shipping. Stores fulfill the order as soon as the item becomes available again.
Batch picking is an efficient warehouse method that collects and gathers all items needed for multiple orders in one go. It reduces the number of trips workers must make, speeding the process and saving time.
The bill of landing is a list of what’s being shipped, where it’s going, and who is receiving it. It serves as a tracker and receipt for shipped items.
A carrier is a company that transports goods from one place to another. FedEx, UPS, USPS, DHL, and more are examples of carriers operating globally and in a specific region.
A cold storage warehouse is a specialized facility with temperature-controlled environments, ensuring that perishable products last longer. This warehouse type is used for storing food, medicine, and other items requiring specific temperature conditions.
A consignee is a person or company intended to receive goods being shipped. The consignee is responsible for inspecting the items upon delivery and ensuring they are in good condition.
A consignor is the person or company that sends or ships goods. They are responsible for picking, packing, and dispatching the items for delivery. The consignor is also involved in the creation of necessary shipping documents.
Cross-docking is a logistics practice where goods received at a warehouse are immediately transferred to outgoing transportation. This method reduces storage time and speeds up the shipping process.
A distribution center is a warehouse where goods can be stored before shipping to retailers, customers, or other locations. They are used to organize, manage, and distribute products efficiently.
The dimensional weight is a pricing method shipping companies use to calculate shipping costs. Rather than its actual weight, the size of the package is measured, determining the space it may take up in a transport vehicle.
Dispatch is the process of sending out items from a warehouse or DC. It involves the preparation of orders, arrangement of transportation, and shipment to its destination.
Dropshipping is a retail fulfillment method where stores sell products to customers without holding any inventory.
Expediting is the process of speeding up the delivery or handling of goods faster than the standard shipping time. It involves prioritizing an order and managing logistics to meet deadlines.
Exporting is shipping goods or services from one country to another to sell. It involves navigating international trade regulations, customers, and shipping logistics.
The first in, first out method is where the oldest stock is sold or used before a newer stock. This process allows for better inventory management, which is specifically more useful for perishable goods.
Fixed order quantity is an inventory control method where businesses place orders with a predetermined amount. It simplifies inventory management, ensuring a steady supply.
A forecast predicts or estimates future demands, sales, or other business metrics based on historical data, market trends, and analysis. This information helps businesses strategize and assist in informed decision-making.
Freight refers to goods or cargo transported via truck, train, ship, or plane. It can also encompass the cost of shipping goods from point A to point B.
Fuel surcharge is the additional fee added to shipping costs to cover the fluctuation of fuel prices. It helps carriers manage fuel costs for shipping operations.
Fulfillment is the receiving, processing, and delivering of orders to customers. It’s a process that ensures orders are picked, packed, and handed off to their destination on time.
Handling costs are the expenses from the physical handling of goods. These charges come from moving, storing, and managing goods within a warehouse or during transportation.
A hub is a central location in a logistics network used to manage and consolidate shipments. It is where goods are collected, sorted, and redistributed to their final destination.
Hub-and-spoke is when a hub connects with multiple smaller locations. It is a distribution model used to reduce costs and streamline transportation.
Importing is the process of bringing goods or services into one country from another. It is the opposite of exporting.
Inbound logistics is the management of transportation and receipt of goods coming into a business.
Inventory is a business's on-hand stock of goods, materials, or products. It can include items for sale, raw materials, or parts needed for manufacturing.
Inventory management refers to storing, ordering, and selling a company’s inventory. It is a process that oversees stocks, ensuring businesses meet customer demands without running out or overstocking on products.
An invoice is a document that lists the goods or services a seller provides to a buyer. It indicates the amount owed, payment terms, and due date, acting as a transaction record and request for payment.
Just-in-time is an inventory strategy where businesses receive goods as they are needed in production.
A key performance indicator is a measurable value or metric that allows a company to determine the effectiveness of efforts to achieve business objectives.
Kitting is the process of grouping items together in one single package and selling them as a unit.
Less than truckload is a cost-effective method that combines multiple shipments from different customers to share transportation costs.
Last-mile delivery is the final step in the delivery process. This is when goods are moved from a DC or hub to the customer’s location.
Lead time refers to the time needed for an order to be delivered to the customer from the moment it is placed.
Logistics is the detailed coordination of operations, ensuring products are moved efficiently from the point of origin to their final destination.
Order fulfillment is the process of receiving, processing, and delivering ordered goods to customers.
Outbound logistics is the distribution of finished products. This involves storing, packing, and transporting goods from a warehouse to the final customer.
A pallet is a wooden or plastic platform used to safely stack, store, and transport goods.
Pick and pack is a fulfillment process where orders are processed and packed in real time for shipment.
A purchase order is a document that indicates goods or services requested by a buyer to a supplier. It can state specific details such as quantity and prices and act as a contract when a supplier accepts it.
Quality control is the strict checking of products or processes to ensure they meet set standards and specifications.
Re-stocking is replenishing an inventory, ordering, or moving products into storage to meet demands.
Reverse logistics is the movement of goods from a customer back to the seller or manufacturer.
Radio frequency identification is a method used to track and identify items with radio waves. These are tags attached to products or pallets for fast, automated scanning.
Safety stock is extra inventory kept to prevent stockouts in case of a surge in demand or supply delays. It acts as a buffer for businesses.
A stock keeping unit helps track and manage inventory by assigning a unique identifier to products in inventory.
The supply chain is the entire network involved in producing, handling, and delivering a product to a customer.
A transportation management system is a software solution that helps manage transportation operations. It can help businesses select carriers, track shipments, and even analyze performance to improve efficiency and reduce costs.
Total cost analysis determines the actual expenses of ownership or production of products or services. It evaluates all costs, from shipping, storage, and operations.
Transit time is the time it takes for goods to be moved from one location to another.
Understock is when inventory levels are too low to meet customer demand. It’s the opposite of overstocking and can disrupt operations.
Unit cost is the total cost to produce, store, or purchase one product unit. It is used to determine pricing and profitability.
Upselling is a sales technique where a seller encourages a customer to add more items or purchase an upgraded version of a product. This aims to increase the total sale value.
A vendor is a person or company that supplies goods or services to a customer or another business.
A warehouse is a large facility businesses use to keep their goods, manage stock levels, and prepare for distribution.
A waybill is a document that provides details about a package's content, destination, and handling instructions.
A warehouse management system is a software solution that manages and optimizes warehouse operations. It can include tracking inventory, coordinating order picking, packing, shipping, and more.
Zone-batch picking is a strategy that divides the warehouse into zones and assigns workers to a designated zone, improving operation efficiency.
There are many more terms in the eCommerce fulfillment and shipping ecosystem, but the terms above make up some of the most used jargon in the industry.
For more information about shipping and fulfillment, check out our blogs and other resources!
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