Your Retail Dictionary: 72 Industry

Terms Every Small Retailer Should

Know
 by Lightspeed

If you’re new to retail, it can be hard to keep up with all the language used in
the industry. Knowing the terms used in shops and online is key to advancing
your business and having your operations run smoothly.

That’s why we put together our retail dictionary. This dictionary can help you
navigate the jargon you frequently hear and keep you up to date with the
latest trends in the world of retail.

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Anchor store

An anchor store is a big department store in a mall. Depending on the size of

a shopping center, there can be more than one, generally at either end of the
building. Their wide range of merchandise and massive advertising budgets
help attract customers to the mall. Those shoppers often spend money at the
anchor stores as well as at the surrounding smaller retailers. This role is
usually filled by large, well-known chain retailers such as Macy’s.

Augmented reality

Often shortened to AR, this principle is about supplementing the customer’s

physical world with virtual things, so they appear to be in the same
environment. In retail, AR can be used in shoppable catalogues, apps that let
you see in-store deals by using your phone’s camera and virtual fitting rooms.
While this is still relatively new technology, it is set to become more
widespread in coming years.

ATS

ATS stands for average transaction size, which is the average amount spent
on a single transaction or purchase. It’s calculated by dividing the value of
sales during a given time by the number of transactions in that same period.
This data is invaluable in measuring sales growth over time.

Big box store

A big box store is a store that provides a wide variety of products in a large
physical space. These stores focus on large sales volumes, allowing a lower
profit margin for items and competitive prices for customers. The stores are
usually very minimalist in design. Walmart, Ikea and Home Depot are
examples of big box stores.

Big data

For most retail businesses, profit margins are small and keeping a close eye
on overhead and delivery costs is a vital part of maintaining profitability.
Finding ways to attract new customers and build brand loyalty is a constant
challenge. Big data can help a business to understand a customer’s desires.
By collecting and combining data from sales, inventory, revenue and other
sources, big data analysts can help a retailer hone their operations and
reduce operating costs, boost customer satisfaction and increase the
likelihood that they will return, and generate more profits.

Brick and click

A brick-and-click business is a retail store with a brick-and-mortar

establishment, as well as an eCommerce website. In modern business, it’s
widely accepted that to achieve the highest lead conversion rate for your
business you should have a physical presence instead of being based solely
online. A store that has a traditional outlet and the opportunity to shop online
will enjoy more profit. The brick and click aspects of a business ensure that
customers from all around the world have access to your product or service.

Bulk

Bulk is buying goods in large quantities. A retailer buys wholesale products in

bulk and marks them up to sell to customers.
Bundled pricing

Bundled pricing is the sale of goods and services at a lower price than they
would be charged if they were all purchased separately. Popular examples
of bundled pricing include option packages on new cars, meal deals at
restaurants and cable TV channel plans. Implementing a bundled pricing
strategy can allow you to increase your profit by giving customers a discount
on items that aren’t selling well individually.

Cashwrap

The cashwrap is the main checkout area of your retail store, where
customers pay for their items. It’s also known as the point of sale or the point
of purchase. A cashwrap is sometimes staffed by sales personnel trained to
upsell customers, getting them to add anything from extended warranties, gift
wrapping or participation in a store loyalty card program to their purchase.
The approach to a cashwrap will frequently be flanked by shelves stocked
with items picked and priced to entice customers into making an impulse buy
on their way out.

Chargeback

A chargeback is a charge that’s returned to a payment card after a customer

successfully disputes a purchase on their account. A chargeback can occur
on bank accounts or credit cards. They are issued to the cardholder for a
variety of reasons such as when a customer decides to return an item, if a
merchant duplicates a charge in error, or if a technical issue occurs that
causes a card to be charged incorrectly. A chargeback is a refund as it
returns funds taken from an account to pay for a prior purchase.

Click and collect

Known by many other names like scheduled pickup, curbside pickup and
product pickup, click and collect refers to the act of ordering something online
and then collecting from the physical store. Customers are increasingly
choosing this over delivery service because it offers the immediate
gratification of receiving their item, while also saving money on delivery.

The COVID-19 pandemic made this feature absolutely essential, and

normalized the experience for reluctant shoppers. Retailers can benefit from
click and collect also, as it reduces the cost of operation and can influence
customers into making impulse purchases when they visit your store. The in-
store collection also offers an opportunity for retailers to connect with
customers on a personal level, improving the overall customer experience.
Clienteling

Clienteling is the set of processes that retailers can utilize to increase

customer value by delivering them a personalized, more intimate shopping
experience. The sophisticated technology and software necessary for
accurate clienteling is gradually becoming more affordable, making the
practice more widespread. Modern clienteling solutions can deliver in-depth
data to a business, allowing them to provide a personalized experience to
each customer and generate a rapid return on their investment in technology
and training.

Cross merchandising

When retailers display unrelated products from different categories together,

this is known as cross merchandising. Products are grouped in imaginative
ways, often connected by a common theme or event, to encourage
customers to see a relationship between them and purchase all of them.

Examples of cross merchandising can be as simple as selling batteries next

to electronic goods or light bulbs next to lamps. They can also be more
elaborate, like selling grills together with all the food, utensils and dishes
needed for grilled cheese sandwiches.

Consignment merchandise

This is merchandise that isn’t owned or paid for by the retailer until it’s sold.
Consignment is a business deal whereby the retailer agrees to pay a seller
for goods after they have sold. Businesses that operate on consignment are
usually retail stores that specialize in a specific type of consumer product.
The business takes items from the seller and agrees to pay a percentage of
the funds generated if the goods are sold.

Consumer packaged goods

Consumer packaged goods, often abbreviated to CPG, are items that are
used daily by the average consumer. Goods in this category are ones
that don’t have a long shelf life and need to be replaced frequently, compared
to goods that are usable for prolonged periods of time.

The CPG market will always have consumers, but it’s competitive due to high
market saturation and extremely low consumer switching costs. The most
obvious examples of a CPG are consumables such as food, beverages,
tobacco, clothing and household products.
Conversion rates

Retail conversion rates measure the percentage of visitors that make

a purchase. For example, if 100 shoppers visit a store but only 20 make a
purchase, the conversion rate is 20 percent. To accurately measure retail
conversion, you must count the people who enter a store but also take into
consideration partners, children, and visitors, such as sales representatives
or maintenance staff, who do not represent potential shoppers.

Cooperative

A cooperative is a business that’s owned by a community of members rather

than by investors or corporate shareholders. They range from huge,
multibillion businesses to tiny community enterprises. Cooperatives are
present in many industries across the country, from housing to health care,
and retail to social care.

Depth of assortment

This is the amount of each item or different styles of a product that a retailer
stocks. For example, a store may want to keep inventory costs down and as
such have a shallow product depth, meaning that they may only have 3-5
different types of each product in stock.

Dropshipping

Dropshipping is a business model that allows a company to operate in a very

simplistic manner. This kind of business doesn’t need to maintain inventory
on-hand, own a warehouse to store products, or worry about shipping them to
customers directly. A retailer partners with a dropship supplier who takes care
of virtually the entire process for them. Once the product is ordered, the
dropship supplier will ship them directly to the retailer’s customer.

E-tailing

Short for electronic retailing and usually referred to by its more common
name, eCommerce, e-tailing refers to the sale of goods and services through
the internet. It can include business-to-business sales of products and
services as well as business-to-customer. This is achieved through
advertising and subscriptions to website content. This method of sales
requires detailed product and service displays and descriptions to give
shoppers an accurate idea of the look and quality of the products without
them needing to be in a physical store.
Electronic article surveillance

Electronic article surveillance, often abbreviated to EAS, is a technological

method for preventing shoplifting. Tags and labels are affixed to high-value or
frequently stolen goods and then are removed or deactivated by staff after
being purchased so that they don’t set off the alarm system. At the exits of
the store, a detection system sounds an alarm to alert the staff when it
senses active tags are passing through.

Europay, Mastercard, Visa

Almost always shortened to EMV, this technology is the global standard for
credit cards that utilize computer chips to secure and authenticate
transactions. This technology encrypts information from the banks and is
much more secure than older magstripe cards. EMV reduces the chance of
card information being cloned and used in fraudulent transactions.

Endless aisle

An endless aisle refers to a brick-and-mortar store that allows customers to

peruse the entire catalog with minimal effort. Instead of stocking up on every
item and expecting the client to spend their precious time browsing endless
shelves, the retailer provides the entire catalogue to browse on a touchscreen
or a tablet.

Flash sales

A flash sale is a promotion or discount offered by a store, either ecommerce

or brick-and-mortar, for a brief period. Because the quantity of the goods is
limited, higher discounts are offered in comparison to frequent promotions.
This encourages impulse buying as the time limit and limited availability
entices customers to make a purchase through fear of missing out on a
bargain.

Footfall

Footfall is the measurement of the number of people entering your business

premises. By counting how many people enter your retail space, other
important key metrics can be calculated, such as conversion rates and your
average transaction value (ATV).

Forecast
An estimate of the future demand for goods or services. Demand in the past
is used to calculate future demand, with adjustments for trends and seasonal
trends.

Franchise

Some businesses expand by distributing their products via a licensing

relationship. A franchisor issues a license to the franchisee to operate under
the business’ name. In most circumstances, the franchisor will specify the
products and services to be provided to customers by the franchisee, provide
an operating system and operational support. Subway and McDonald’s are
some of the most popular businesses that operate through franchising
systems.

Green retailing

Green retailing is an increasingly popular approach towards managing a retail

business by implementing environmentally friendly and sustainable practices
and processes. By implementing such processes, retail businesses can
become more efficient and save money in the process.

Gross margin

A business’ gross margin is its total sales revenue minus the cost of goods
sold, divided by its total sales revenue and then expressed as a percentage.
The percent of total sales revenue that the company keeps after dealing with
the direct costs of producing and selling the products that it sells is the gross
margin. The higher the percentage, the more that the company makes from
each sale.

Hardlines and softlines

Also known as hard goods and soft goods, hardlines and softlines are two
major kinds of retail inventory. Soft goods are items that are literally soft, such
as clothing. Hard goods are non-personal items such as electronics,
appliances and sporting equipment.

High speed retail

In this fast-paced world, customers demand faster service and shorter waiting
times. High speed retail is all about optimizing the customer’s shopping
experience and ensuring that it goes as quickly and smoothly as possible.
Popular examples of high speed retail are drive-through grocery stores,
mobile businesses such as food trucks or any business that utilizes an urgent
promotion or limited-time sales.

Impulse purchases

An impulse purchase is a thing that a customer purchases with no prior plan,

often because of a sudden whim or impulse. A customer who makes this kind
of purchase is considered an impulse purchaser or buyer.

Integrated supply chain

Integrated supply chain management refers to a specific resource planning

approach to traditional supply chain management. Rather than having
multiple systems within the organization, a business manages and facilitates
relationships with all of its suppliers and distributors through a centralized
system.

Inventory management

Inventory management is important for businesses of any size. It is crucial for

knowing when to restock items, what amounts to purchase or produce, and
what price to pay to suppliers. Small businesses can automate day-to-day
stock management by adopting POS technology and basic inventory
management techniques.

Inventory turnover

The average amount of times that inventory that is in stock is sold or used
during a given period is known as inventory turnover. In most circumstances,
high stock turnover is good, as it’s a sign that you’re selling a lot without
overstocking. If a business wishes to calculate it, the cost of goods sold must
be divided by the average price in inventory.

Layaway

Layaway, also known as lay-by, works differently than shopping with

traditional means like credit cards or installment billing plans. When on a
layaway plan you make the payments over a prearranged period, but unlike
when you pay by credit card, your goods will stay in the store until you’ve
finished paying for them in full.

Leveraged buyout
A leveraged buyout (LBO) is a transaction whereby a company is bought with
a combination of equity and debt. The company’s cash flow is the collateral
used to secure and repay any money borrowed. Leveraged buyouts generally
occur because the return that will be generated on the acquisition will be
considerably more than the interest that’s paid on the debt. As such, it can be
a very good way to benefit from high returns while only risking a little capital.

Loss leader

Loss leaders are goods or services that are offered at significantly discounted
rates, sometimes even below cost, to attract customers into a store and to
promote sales. It is a tried and trusted method of enticing customers into
stores and has been met with much success, especially by larger discount
retailers. The idea behind this pricing strategy is that the customer will buy
the loss leader item and other products from within the store that are not
discounted.

Markdown and markup

Markdowns are the discounts that retailers make on merchandise from the
original marked price. Unlike sales or promotional events, a markdown is
when the list price is changed to a lower price permanently. Goods that aren’t
selling very well are usually marked down. Markup is the amount by which
the cost of a product is increased to derive the selling price.

Merchandising

Merchandising is any practice that helps to facilitate the sale of goods to a

customer. This term refers to a range of marketing strategies where retailers
present goods and services to potential customers in the most appealing and
convincing way possible, to entice them to part with their hard-earned money.
How products are merchandised determines how likely a retailer can sell
them. By following best practices, it’s more likely that customers will want to
spend money.

Minimum advertised price

This is a supplier’s pricing policy that doesn’t permit retailers to advertise

prices below a specific amount. While legally a retailer can’t advertise for less
than this price, they can, in fact, sell items in their store for less than this
price.

Mobile payments
Mobile payments are sent or received from a mobile device. Mobile payments
are an alternative to paying with cash, credit cards, or check. Some
merchants prefer to enable mobile payments in their business since it
simplifies the payment process for customers, making the checkout process a
more seamless experience.

Mobile shopping

This is the act of shopping on a mobile device, like a smartphone or tablet.

This has become increasingly popular in recent years due to many websites
being optimized for display on mobile devices and tablets. It’s virtually the
same as shopping on a desktop PC or a laptop, only with a smaller screen.

Monthly sales index

This is a measure of seasonal sales that can be calculated by dividing each

month’s sales by the average monthly sales and then multiplying that number
by 100. Any result higher than 100 means that there has been growth. If it’s
less than 100, then that month there has been a loss.

Mystery shopping

Mystery shopping is a research method that’s used to gather feedback. While

the most common means of conducting this research is in person, it can also
be conducted over the phone or by making online inquiries, depending on the
kind of feedback required. Though mystery shopping is commonly used for
market research, it’s also used to gather data about other factors that would
impact a customer’s experience. For example, friendliness of staff or quality
of food in a restaurant.

Niche retailing

A niche retailer only sells a single type of product within a specific category.
While niche retailers generally don’t appeal to large groups of consumers,
they can meet the specific needs of the small groups that they target. Niche
retail trends don’t correlate with trends in large, general retailers that sell a
variety of goods and as such try to reach as many customers as possible.

Off-price

Off-price retailers are retailers who provide high-quality items at extremely

cheap prices. They usually sell second-hand goods or items that are out of
season. These retailers offer brand name soft goods at low prices. They can
afford to do this by purchasing irregular pieces straight from the
manufacturer, canceled orders, goods purchased by other retailers and end-
of-season clearance items.

Omnichannel retail

Omnichannel retailing, also known as omnichannel commerce, is an

approach to sales that aims to give customers a fluid shopping experience
whatever the means they are using to shop. Whether they’re buying from an
ecommerce store, over the phone or in a traditional brick-and-mortar store.
This approach utilizes multiple means of promoting and distributing goods.
For example, websites and apps, phone calls, emails and social media.

Order lead time

The order lead time is the period between when the retailer places an order
with a supplier and when the product is delivered to their store.

PCI compliance

The set of guidelines known as the Payment Card Industry Data Security
Standard (PCI DSS) applies to companies that accept payments by credit
card, regardless of the size of the business. Any company that accepts card
payments and stores, processes and transmits cardholder data, must host
that data securely with a hosting provider that is PCI compliant.

Planogram

A planogram is a diagram that demonstrates how and where products should

be displayed in a retail store to increase the number of purchases that a
customer makes. Planograms are a vital part of merchandising and retail
space planning. Planograms are sometimes used by manufacturers to
suggest the most effective displays for their merchandise at stores.

Price look up

Known as a PLU, price look up codes are 4 or 5-digit numbers which have
been used by supermarkets since 1990 to make checkout and inventory
control easier, more efficient and more accurate. It’s an effective system that
displays the description and price of an item when the item number is entered
or scanned at the point of sale. They ensure that the correct price is paid by
consumers by removing the need for cashiers to attempt to identify the
product.
Prestige pricing

A marketing strategy where prices are set higher than usual because lower
prices would hurt the brand identity instead of helping with sales. For
example, with high-end perfume and clothing. There are a certain set of
consumers who believe that if the price is set high then it denotes the quality
and prestige of said item. Luxury products meet the expectations of this niche
group of customers who seek to satisfy their desire for a higher social status
by owning the product.

Product life cycle

This describes the stages that a product goes through from when it was
simply an idea until it’s removed from the market. Not all products reach the
final stage, some will continue to grow from strength to strength while others
rise and fall. Businesses try to extend the life cycle of their products by
launching advertising campaigns or reducing the price.

Point of sale (POS) system

In its simplest form, a point of sale system is a cash register that allows
retailers to ring up sales and keep track of their transactions. More modern
setups feature a computer and monitor, a cash drawer, a receipt printer,
customer display and a barcode scanner. Most POS systems also feature a
credit and debit card reader.

Private label

A product is considered part of a private label when it is manufactured by a

third party but sold under the brand name of the retailer. A benefit to this is
that the retailer gets to specify everything about the product from the
ingredients and packaging to the label. This contrasts with buying products
manufactured by other companies that come adorned with their brand
names.

Quantity on hand or on order

If merchandise is on hand, it means that the retailer has it in their possession.

If something is on order, this is stock that retailers have on open purchase
orders or manufacturing orders.

Quantity discount
This is an incentive that’s offered to the buyer whereby purchasing an item in
bulk will result in a reduced price per unit. Sometimes it’s only a minuscule
difference, but a difference nonetheless. Seeking out quantity discounts can
make a world of difference to small and up-and-coming businesses.

Relationship retailing

When a business seeks to establish and maintain long-term bonds with

customers, rather than treat each sales transaction as a completely new
encounter with them, this is known as relationship retailing. This often
manifests itself in the form of loyalty programs and fantastic customer
service.

Radio-frequency identification

Usually shortened to RFID, radio-frequency identification is the use of radio

waves to read and capture information stored on a tag. A tag can be read
from several feet away and doesn’t need to be directly in front of the reader to
be tracked. Retailers can use RFID tags to help record information, including
stock quantity and precise locations of items.

Showrooming

Showrooming is when a customer will visit a store to see a product in the

flesh but then goes on to purchase it from an online retailer. This happens
because many people prefer seeing first-hand what they are going to buy, but
things are often available cheaper from online vendors. Because of this, their
local retailer essentially becomes a showroom for them.

Shrinkage

Shrinkage is the loss of goods that can be chalked up to reasons such as

theft by employees, shoplifting, admin errors, vendor fraud, damage in store
or in transit and cashier errors. Inventory shrinkage is the difference between
recorded inventory and actual inventory. The resulting loss of money is a
huge problem for retailers.

Social commerce

Social commerce is defined as the ability to make a purchase from a third-

party company within the social media experience. An example of this would
be browsing and comparing products on a business’ Facebook page and
then making the purchase directly through Facebook, as opposed to being
redirected to the company’s website to complete the transaction. Similarly, a
potential customer may see a Tweet about a product and then be able to
purchase it directly via Twitter instead of being redirected to the retailer’s own
website.

Stock keeping unit

A stock-keeping unit (SKU) is an identification code that’s often displayed as

a machine-readable barcode that allows retailers to keep track of items in
their inventory. An SKU doesn’t need to be assigned to physical products that
are in the retailer’s inventory and can be assigned to intangible products such
as repairs or warranties.

Store loyalty

When a customer likes and trusts a store, and continually makes purchases
there without being swayed by advertising or special offers, this is known as
store loyalty. Retailers can encourage this by offering rewards programs or
special discounts for regular customers. A good example of this would be the
Starbucks loyalty card, where customers are offered free drinks.

Supply chain management

Supply chain management is the range of activities necessary to plan,

control, and deliver a product. It encompasses the acquisition of raw
materials and producing the item to the distribution of the goods to the final
customer. All this must be done in the most efficient way possible.

Triple net lease

When a property owner leases a building to a retailer with a triple net lease,
the renter is responsible for paying all the associated property taxes, building
insurance and the cost of any repairs that the building needs during the entire
term of the lease. Properties under a triple net lease generally have lower
rent due to the other charges.

Units per transaction

Shortened to UPT, units per transaction is the metric that measures how
many items a customer purchases in any given transaction. It can be
calculated daily or over a longer period. This is an important metric that helps
measure the growth of a business, as well as employee effectiveness in
certain retail environments.
Visual merchandising

Visual merchandising is the act of creating appealing displays that will cause
the customer to purchase goods. This is proven to be an effective means of
driving foot traffic and sales. Effective visual merchandising will bring
customers into the store and encourage them to make purchases. Visual
merchandising begins on the outside of the store, often with attractive window
displays, to entice the customer to come inside.

Warehouse management system

A warehouse management system (WMS) refers to software and general

processes that let organizations manage and administer warehouse
operations from the time goods or materials enter a warehouse until they
move out.

Webrooming

The opposite of showrooming, webrooming refers to the act of looking at a

product online before venturing out to a physical store and purchasing it from
there. Customers sometimes choose to do this as it allows them to see goods
in the flesh before deciding to make the purchase.

Wholesale

Selling wholesale means that you generally sell your product in bulk
quantities to a “middleman” who then goes on to sell it to the consumer or in
some instances other retailers. Due to high-volume purchase orders,
wholesalers are typically able to buy products from manufacturers at a lower
price and add their margins.
Dialog 1: Customer and Sales Associate (Product Display)

Customer: Hi, can you tell me more about this new smartwatch you have on display?

Sales Associate: Absolutely! This is the latest model from XYZ brand. It features a high-resolution display,
built-in GPS, and a heart rate monitor. It also has a battery life of up to 7 days.

Customer: That sounds great. Do you have any in stock, or is this the last one?

Sales Associate: We have more in stock. Would you like to try it on, or should I grab a new one from the
back for you?

Customer: I’d love to try it on first.

Sales Associate: Sure, let me get it for you. Here you go. How does it feel?

Customer: It’s very comfortable. I think I’ll take it.

Sales Associate: Wonderful! I’ll get a new one from the stockroom and meet you at the checkout.

Dialog 2: Employee and Manager (Shelving Organization)

Employee: Hi, Sarah. I noticed that the cereal aisle is getting a bit disorganized. Some products are out of
place, and the shelves need restocking.

Manager: Thanks for bringing that to my attention, Mike. Can you start by organizing the products and
filling in any gaps?

Employee: Sure thing. Should I also rotate the stock to ensure older products are at the front?

Manager: Yes, please. That’s important to keep the products fresh. After you’re done, let me know so we
can check the stockroom for any additional inventory that needs to be brought out.

Employee: Will do. I’ll get started on it right away.

Manager: Great. Thanks for taking care of this.

Dialog 3: Customer and Stockroom Associate (Stockroom Check)

Customer: Excuse me, I’m looking for this particular brand of olive oil, but I don’t see it on the shelf. Do
you have any in the back?

Stockroom Associate: Let me check our inventory system. Just a moment. Yes, we do have some in the
stockroom. I’ll go get it for you.

Customer: Thank you so much.

Stockroom Associate: You’re welcome. I’ll be right back. Here it is. Is this the one you were looking for?

Customer: Yes, that’s perfect. Thanks for your help!

Stockroom Associate: No problem at all. Have a great day!

Dialog 4: Employee and Manager (Display Setup)

Employee: Hi, Laura. I’ve finished setting up the new display for the summer collection. Can you take a
look and let me know if it’s okay?

Manager: Sure, let’s go check it out. Wow, it looks great! I love the way you arranged the accessories to
match the outfits. Just make sure the price tags are clearly visible.

Employee: Thanks! I’ll double-check the price tags now. Is there anything else you’d like me to adjust?

Manager: Everything else looks perfect. After you’re done with the price tags, can you start working on the
endcap display for the back-to-school items?

Employee: Absolutely. I’ll get on that next.

Manager: Great job with the summer collection display. Keep up the good work!

These dialogs reflect typical scenarios in a retail environment, focusing on product displays, shelving
organization, and stockroom management.

Here are three dialogs using the provided retail store-based terms:

Dialog 1: Inventory and Restocking

Employee: Hi, Maria. I noticed that some of the best-selling items are low in stock. Should we place an
order to restock them?
Manager: Definitely. Let’s first check our inventory levels and see how many units we need to order. Can
you pull up the SKUs for those items?

Employee: Sure, I’ll get the SKU numbers and check the current inventory. I also noticed that some products
have been marked down recently. Should we consider adjusting the markup on those?

Manager: Good point. We should review the markdown items and ensure our markup is still reasonable.
Also, keep an eye on any shrinkage when you're doing the inventory check.

Employee: Will do. I’ll also look out for any items that might be on backorder.

Manager: Great. Let’s aim to complete this by the end of the day so we can place the restock order
tomorrow.

Dialog 2: Customer Service and Returns

Customer: Hi, I bought this jacket last week, but it doesn't fit. What is your return policy?

Sales Associate: Our return policy allows for exchanges or refunds within 30 days of purchase with a
receipt. Would you like to exchange it for a different size or get a refund?

Customer: I’d like to exchange it for a different size.

Sales Associate: Sure, I can help with that. Do you have the receipt with you?

Customer: Yes, here it is.

Sales Associate: Great, let me process the exchange for you. I’ll check our inventory to see if we have the
size you need.

Customer: Thank you.

Sales Associate: We have the size you need in stock. I’ll get it for you right away. Would you like a gift
receipt for this exchange?

Customer: No, that's okay. Thanks for your help!

Dialog 3: Sales Strategy and Promotions

Manager: Team, our goal this week is to increase our turnover by focusing on upselling and cross-selling.
Make sure you’re recommending complementary products to customers.

Employee 1: Got it. I'll focus on cross-selling items that go well together, like suggesting matching
accessories with clothing.

Employee 2: And I’ll work on upselling higher-end products. Should we also highlight any promotions or
markdowns?

Manager: Yes, definitely. Use the POS system to check for any active promotions and inform customers
about them. Also, remind our loyal customers about our loyalty program benefits.
Employee 1: What about BOPIS orders? Should we mention any special offers to those customers as well?

Manager: Yes, for sure. When they pick up their online orders, let them know about any current promotions.
It’s a great opportunity to engage with them and encourage additional purchases.

Employee 2: Understood. I’ll make sure to highlight the MSRP and any discounts to show customers the
value they’re getting.

Manager: Perfect. Let’s aim to maximize sales this week by leveraging all these strategies.

1. Inventory –
2. SKU
3. POS
4. UPC
5. MSRP
6. Markdown –

7. Markup –
8. Shrinkage –
9. Backorder –
10. Restock -.
.
11. Turnover –
12. Return Policy –
13. Exchange –

14. Refund –
15. Loyalty Program –
16. Upselling

17. Cross-Selling –
18. BOPIS
.
.
19. Gift Receipt -
Warehouse Terminology, Initialisms, and Acronyms
Words and acronyms can have different meanings. “ETD,” for instance, may stand for estimated
time of delivery or estimated time of departure— two very different things. So don’t assume your
coworker is using the same definition you are, even if yours is correct. If you have any doubts, ask.
It’s also a good idea to use full terms rather than initialisms or acronyms when you’re
communicating with vendors or clients to avoid any misunderstandings.

And now, here they are—the most common warehouse terms, acronyms, and phrases you’re likely
to hear on the job:

3PL: Third-party logistics (see third-party logistics for definition).

Backhaul: The process of moving goods from what was originally their final destination back to
their origin point. In warehousing, backhauls can also be truckloads of goods that customers have
returned or for which they have requested an exchange. An incoming backhaul will typically need
to be inspected for damage and then, once approved for quality, restocked. Learn more about
backhauling and reverse logistics.

Back order: A purchase order for an item that is currently out of stock. When a particularly popular
item sells quickly, sometimes the warehouse runs out of stock before they get more from the
supplier or manufacturer. Retailers will often continue to sell these items to consumers with a note
that they are “on backorder” and will be delivered later than normal. When this happens,
warehouse teams need to fulfil existing orders as soon as new stock arrives rather than first
moving that inventory to storage.

Bar coding: The machine-readable identification system used to track, scan, and process
inventory.

Batch picking: A picking process in which a batch of multiple customer orders containing similar
items is gathered from warehouse shelves at the same time. For instance, three separate customer
orders including a box of pencils could be batched so the picker needs to walk to the pencil-box
storage location only one time rather than three. Learn more about warehouse picking processes.

Bill of lading(BOL): An official document detailing items contained in a shipment. The bill of
lading moves with a shipment from the sender to the shipper and then to the consignee (final
recipient). When a warehouse receives a shipment from a supplier, it comes with a bill of lading
that processing clerks use to verify that the delivered goods match the purchase order.

BOL: Bill of lading (see bill of lading for definition).

Cantilever rack: Storage device with prongs rather than shelves that are used to store long and/or
oddly shaped items. Cantilever racks may be free-standing or mounted to a wall.

Cold storage: A section of a warehouse in which refrigerated or frozen products are stored. Cold
storage is most commonly found in food-grade warehouses.

Cross-docking: A distribution process in which goods are received from a supplier and
immediately sorted, packed, and shipped to a customer rather than being moved to a warehouse
shelf for storage. Cross-docking is often used in warehouses to fulfill customer orders for items that
were on back order.

(Image source)
Cycle count: An auditing process in which inventory is counted on a cyclical basis. Inventory is
counted in sections on a regular basis to make auditing more manageable and ensure that
inventory records are accurate. To learn more, check out our guide to warehouse auditing.

Dimensional weight (DIM): A measurement used by couriers and shipping carriers to determine
the cost of sending goods. To calculate the dimensional weight of a package, you multiply the
length times the width times the height.
Dispatching: The process of organizing, scheduling, and managing vehicles and drivers.
Warehouses that have an in-house local delivery team often have a fleet dispatcher who
coordinates packing, vehicle loading, and delivery scheduling. Learn more about fleet dispatching.

Distribution center: A facility where goods are sorted, packed, and processed for shipping to their
final destination (the customers). Many warehouses are also distribution centers, meaning they not
only store or warehouse goods but also offer picking, packing, and even delivery services.

Drop tailer: A truck trailer that is dropped off for loading and then picked up at a later time.
Sometimes couriers will have a driver drop off an empty trailer and pick up a full one to maximize
efficiency.

Dry storage: A section of a warehouse in which products are stored in a nonrefrigerated

environment that is at or around 50 degrees Fahrenheit. Dry storage may still be temperature-
controlled to combat extreme outdoor weather conditions.

Estimated time of arrival (ETA): The expected time a vehicle or vessel will get to its final
destination. Warehouses typically receive an ETA for trucks carrying incoming stock. Warehouses
may also need to provide an ETA for delivery of outgoing stock. Learn more about delivery
estimates.

Estimated time of departure (ETD): The expected time a vehicle or vessel will leave its point of
origin. Warehouses often use this to note when a delivery truck or courier vehicle will be completely
loaded and depart a loading bay. Learn more about delivery estimates.

Estimated time of delivery (ETD): The expected time goods will be delivered. Suppliers and
manufacturers may supply receiving clerks with an estimated time of delivery instead of an
estimated time of arrival for incoming inventory. Learn more about delivery estimates.
ETA: Estimated time of arrival (see estimated time of arrival for definition).

ETD: May indicate “estimated time of departure” or “estimated time of delivery” (see estimated time
of departure or estimated time of delivery for definition).

FIFO: First in, first out (see first in, first out for definition).

First in, first out (FIFO): An inventory management strategy based on the principle that the first
items into the warehouse should be the first ones to leave. Food warehouses often employ this
strategy to ensure that products expiring the soonest are the first to be shipped out.

Forward-pick location: An easily accessible storage area in which small quantities of frequently
purchased items are placed. Forward pick locations are used to make picking faster when orders
come in. Pickers can quickly access items in the forward pick location and then replenish that
supply from a secondary location when it won’t impact customer turnaround times.

Gaylord box: A bulk shipping and storage box sized to fit on top of a pallet. Gaylord boxes are
frequently used in the logistics industry to transport and easily store goods of many shapes and
sizes.

JIT: Just in time (see just in time for definition).

Just in time (JIT): In warehousing, “just in time” is a supply-chain management method with which
products are ordered, stored, assembled, or manufactured to fulfill an order just in time. No matter
how skilled you are at calculating demand, you will run into incidents where demand exceeds your
supply. Many companies store safety stock, or more stock than their predicted demand requires, to
cover them when these demand surges occur. The JIT method of inventory management doesn’t
use safety stock to cut down on storage costs.

Last mile delivery: The process of transporting goods from a warehouse or distribution center to
their final destination (the customer). Last mile delivery refers exclusively to the final stage of the
logistics supply chain (and happens after packing and vehicle loading).

Lead time: The time it takes to complete a logistics process. Lead time for final delivery, for
instance, would include the time it takes for picking, packing, vehicle loading, and last mile delivery.
The lead time for inventory replenishment includes the time required to fulfill a purchase order,
transport goods from supplier to warehouse, inspect the shipment, and then restock that inventory.

Less than truckload (LTL): A type of freight shipping in which goods that weigh more than 150
pounds but take up less than a full truckload are transported. Shipping carriers use LTL shipping to
move goods for multiple retailers in the same truckload. Each retailer pays only for the cargo space
their items take up.

Lights-out warehouse: A warehouse that employs machines and automated systems to manage
and move products rather than human labor.

LTL: Less than truckload (see less than truckload for definition).

Packing: Preparing purchase goods for last mile delivery. Packers put purchased items into boxes
and prepare them to be loaded onto delivery vehicles.

Pallet: A flat structure, typically made out of wood, used to move goods. Pallets make is easier to
move and store large items (or large quantities of items). They can be easily maneuvered with a
forklift, pallet jack, or other machinery.

Pick and pack: A common way to refer to the processes of picking and packing within a
warehouse (see picking and packing for definitions).

Pick list: The list of items pickers need to retrieve from warehouse shelves or storage. Customer
orders are broken down into lists of purchased items or “pick lists,” which are given to pickers to
retrieve.

Picking: The process of gathering or picking purchased items from warehouse shelves. When a
customer makes a purchase, pickers gather those purchased items from their storage location and
bring them to packers. Learn more about warehouse processes.

PO: Purchase order (see purchase order for definition).

Purchase order (PO): A request for goods sent from a buyer to a seller. Warehouses place
purchase orders with suppliers and manufacturers for replenishment when stock runs low.

Put-away: The process of taking inventory from receiving and “putting it away” on shelves or
storage racks. Workers may use this term to direct you to put return items on shelves as well.

Radio-frequency identification (RFID): A wireless tracking and data-transfer system. In

warehousing, RFID tracking is used to monitor inventory. RFID tracking tags are placed on
inventory as it comes in, and sensors throughout the warehouse are able to then track those goods
as they are moved throughout the facility.

RFID: Radio-frequency identification (see radio-frequency identification for definition).

Receiving: The warehouse intake process. When goods arrive at a warehouse, they first go
through receiving, where they are scanned and inspected by a receiving clerk. Learn more about
warehouse processes.

Replenishment: The restocking of inventory. “Restocking” is used differently depending on which

warehouse department you work in. Receiving clerks, for example, may refer to goods arriving
from a supplier to fulfill a back order as replenishment. Pickers, on the other hand, often use
replenishment to refer to stock that needs to be moved from a secondary location to a forward pick
location.

Reverse logistics: The process of moving goods backward from what was originally their
destination (typically the customer) to their origin point. Reverse logistics is used when a customer
returns or exchanges an item. The process of retrieving that returned item from the customer,
bringing it back to the warehouse, inspecting it for quality, and then restocking it is reverse
logistics. Learn more about reverse logistics.

Route optimization software: Dispatch software used to simplify last mile delivery. Route
optimization software, such as OptimoRoute, automatically calculates the most efficient routes for
delivery teams. Many warehouses and 3PLs integrate route optimization software with the
warehouse management system to give management teams end-to-end visibility across their
supply chain. Learn more about route optimization software.

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Safety stock: Extra inventory kept on hand (or stored in a secondary storage location within a
warehouse) to mitigate stockouts if demand rises unexpectedly or a supplier experiences delays.
Safety stock is most commonly used for popular products that do not expire.

SKU: Stock-keeping unit (see stock-keeping unit for definition).

Supply chain: All of the processes used to produce and move products. A warehouse supply
chain may consist of receiving, put-away, picking, packing, and vehicle loading. The full logistics
supply chain includes manufacturing, warehousing, and last mile delivery. Learn more about the
warehouse supply chain and material movement within your facility.

Stock-keeping unit (SKU): A barcode and/or unique identification number assigned to products
by a retailer. SKUs typically consist of a scannable barcode as well as a unique numeric or alpha-
numeric number. SKUs are different from UPCs because they are managed and assigned by the
company selling the product, not by the Global Standards Organization. Because of this, it is
possible for products from two different retailers to wind up with the same SKU. It is common for
products to have both a SKU and a UPC.

Stockout: A stockout typically indicates that a warehouse has run out of inventory for a certain
product, and a new purchase order has not been placed yet. Stockouts can also happen when
retailers decide to stop carrying a certain product. Learn how to reduce stockouts using logistics
scheduling.

Third-party logistics (3PL): A type of logistics provider that offers product transportation,
management, and organizational services in addition to warehousing. A traditional warehouse is
simply a space for retailers to store goods until they are purchased, but a 3PL often handles
inventory management, picking, packing, and even last mile delivery. The growth of ecommerce
has created more demand for 3PL’s. Learn more about third-party logistics.

Universal Product Code (UPC): The unique barcode and 12-digit number assigned to products
and managed by the Global Standards Organization. Learn more about the Universal Product
Code.

UPC: Universal Product Code (see Universal Product Code for definition).

WMS: Warehouse management system (see warehouse management system for definition).

Warehouse management system (WMS): Management software used by warehouse teams to

track inventory and manage warehouse operations. This is the interface you’re likely to access
from a scanner, an iPad, or another device while working in a warehouse. Learn more
about warehouse management systems.

Zone picking: A picking process in which a team of pickers each picks products from a particular
zone and then combines picked items before packing. Zone picking is often used in larger
warehouses and those with clearly designated storage areas, such as cold and dry storage. Learn
more about warehouse picking processes.