Glossary

Return on ad spend (ROAS) is a marketing metric that measures the revenue earned per pound spent on advertising. It's used to evaluate the effectiveness of online advertising campaigns.

A returns provision is an accounting practice used by e-commerce businesses to enhance profitability estimation by accounting for the likelihood of product returns within a given period. It involves allocating a specific amount or creating a liability on the balance sheet to accommodate the estimated value of potential product returns. By implementing a returns provision, businesses ensure accurate reflection of profits, account for potential liabilities, and enable transparent financial reporting.

Revenue based finance is a financing model where a company receives capital in exchange for a percentage of its future revenue. Rather than traditional debt or equity financing, repayment is based on a predetermined percentage of the company's revenue, providing flexibility and aligning the investor's returns with the business's performance. It is often used by startups or small businesses looking for alternative funding options.

Reverse vesting is a mechanism that gradually transfers ownership of equity from a founder or employee back to the company over a specific period. It's often used to protect the company's interests in case of early departure or underperformance, ensuring that unvested equity is returned to the company.

The run rate is a forecasted annual earnings projection, based on financial results of shorter periods. It's often used to estimate future performance based on current data.

An SSL certificate is a digital certificate that authenticates a website's identity and enables an encrypted connection. It's essential for protecting sensitive data, such as credit card information, making it a must-have for e-commerce websites.

SaaS is a business model where software is provided on a subscription basis. Customers access the software using a browser, instead of installing and maintaining the software on individual computers.

SaaS metrics are quantitative measures that track a SaaS company's performance and inform strategic decision-making. Key SaaS metrics include MRR, ARR, churn rate, customer acquisition cost, and customer lifetime value.

A sales funnel represents the customer's journey from the initial awareness stage to the final purchasing stage. It's a visual metaphor for the path taken by potential customers as they move towards becoming customers.

Scaling up refers to the process of increasing the capacity of a business. It involves growing revenues significantly while increasing costs minimally.

Search engine optimisation (SEO) is the process of optimising a website or online content to improve its visibility and ranking in search engine results. By employing various techniques, businesses can increase organic traffic and enhance their online presence, leading to higher visibility and potential customer acquisition.

A secondary refers to the buying and selling of existing investor positions in a privately held company. It involves the transfer of ownership of shares from one investor to another, typically before an exit event such as an IPO or acquisition.

Seed funding is an initial investment in a start-up or small business, which supports early development. It's typically used for market research, product development, or preparing a business for operations.

These are successive rounds of funding after a start-up's Series B round. Each round serves a specific purpose, typically to achieve milestones, grow the company, or prepare it for an IPO or acquisition.

Social commerce is the use of social networks in the context of e-commerce transactions. It involves selling products directly through social media networks.

Stock keeping unit (SKU) is a unique identifier assigned to a specific product or item for inventory tracking and management purposes. It enables businesses to effectively monitor stock levels, manage inventory accuracy, and streamline order fulfilment processes by differentiating between various products or variants.

The subscription model is a business model where customers pay a recurring price at regular intervals to access a product or service. It's common in many digital industries and increasingly popular in e-commerce.

The supply chain encompasses all the activities involved in the production and distribution of a product from the supplier to the customer. In e-commerce, it includes processes like warehousing, inventory management, order fulfilment, and logistics.

Sweat equity is the value added to a business by its owners in the form of unpaid labour. It's often used by entrepreneurs who have more time than money to invest in their business.

A term sheet is a non-binding document outlining the proposed terms and conditions of a potential investment or business transaction, such as a funding round or acquisition. It serves as a preliminary agreement between parties involved, providing an overview of key terms, including the valuation, investment amount, ownership percentages, rights and obligations, and any special conditions. While the term sheet is not legally binding, it serves as a basis for negotiation and due diligence before finalising a legally binding agreement.

Third party logistics providers who handle warehousing, transportation, and distribution for businesses. They specialise in managing the supply chain and logistics operations, allowing brands to outsource these functions and focus on their core business activities.

Total Addressable Market (TAM) refers to the total market demand or revenue potential for a product or service within a specific market segment. It represents the maximum achievable market size and serves as a key metric for assessing the growth opportunities and market penetration potential for a business.

Traction is a sign that a business is taking off, typically characterised by a combination of factors such as user engagement, revenue, active users, and others. Investors often look for signs of traction before investing.

A Trademark is a legally registered symbol, name, or logo that represents and protects a company's brand identity. It provides exclusive rights to use and protect the registered mark, preventing others from using a similar mark in connection with similar goods or services, thereby safeguarding the brand's reputation and market presence.

In e-commerce, traffic refers to the visitors a website receives. Traffic can come from various sources, including organic search, paid ads, social media, or referrals from other websites.