Tools & improvements
November 22, 2021

The A - Z Glossary To Amazon FBA Terms

As a new eCommerce seller, there are a lot of Amazon FBA terms that you will come across. We’ve put together this comprehensive Amazon glossary so that you can understand the most important terminology. Reference this Amazon acronyms list as you build, launch, and scale your profitable FBA business.


A+ Content

A feature for brand registered sellers that enhances the product description to include additional images, video, and text placements. Using A+ content has been proven to improve conversions because shoppers can quickly learn more about the product without having to read a big block of text. It’s a great way to show off your brand within the Amazon marketplace. A+ content is also known as Enhanced Brand Content (EBC).

A9

An Amazon subsidiary that creates and manages Amazon’s search engine and advertising technology. This company is responsible for Amazon’s algorithm, and it determines which products are placed where. You want to understand the basics of the A9 algorithm so that you can use it to your advantage. For example, it’s important to know that the #1 factor to keyword ranking on Amazon is sales through a keyword.

A/B Testing

Also known as “split testing,” this is the act of comparing the results of two different elements. For example, you may test which main image results in the highest click through rate (CTR). A/B testing is a helpful way to gather data from real shoppers and make informed business decisions, as opposed to guessing which route is best to take. You may be surprised with your findings.

ACoS (Advertising Cost of Sale)

The percentage of a sale that was spent on advertising to make that sale. To get this number for your storefront, divide total advertising spend by total revenue. A high ACoS means you’re spending a lot of money to make the sale; if it’s higher than your profit margin, you’re actually losing money on that sale. A low ACoS, on the other hand, means you’re spending a small amount of money to make that sale.

Ad Impressions

The amount of Amazon shoppers who see an ASIN’s sponsored ad. The more impressions your ad has, the more opportunities it has to convert. Typically a high bid and a high budget in your ad campaigns will result in lots of impressions. And, it’s important to have an optimized listing so that these impressions will convert into sales.

Ad Orders

The amount of individual purchases made by shoppers who clicked on an ASIN’s sponsored ad. In other words, this means how many sales you made from that specific advertisement. This is dependent upon your targeted keywords, bid, budget, and listing.

Ad Sales

The total revenue generated by customers who purchased an ASIN within one week of clicking on its sponsored ad. Ad sales are always paid for through Amazon’s bidding system, so it’s important to understand how profitable your sales are… along with the goal of the campaign.

Ad Spend

The total amount of money paid to Amazon for clicks to an ASIN’s sponsored campaign within a selected period of time. It’s important to constantly monitor and optimize your ad campaigns so that your spend doesn’t get out of hand. You can set a daily budget to minimize how much money is being spent on ads.

Affiliate Marketing

The process by which a person or company earns a commission for promoting another person's or company's products. Amazon’s Affiliate Program is a popular choice for affiliate marketers. Oftentimes, this method is used to reach out to influencers on platforms like TikTok or Instagram so that a community of people are all made aware of the product from someone they trust. This can be an extremely effective driver of sales when the influencer is a good match and has a loyal following.

Alibaba

A Chinese company and platform that enables Amazon FBA sellers to easily find suppliers to create their private label products in bulk. This website also allows sellers to message and directly pay those global suppliers, wholesalers, and manufacturers.

Alibaba Trade Insurance

A service provided by Alibaba for free that protects orders for buyers and sellers to ensure payment and delivery are verified by both parties. Oftentimes new Amazon sellers will use this method of payment because it’s much more secure than a bank wire transfer and has less fees than a service like PayPal.

Amazon’s Choice

A badge awarded to specific product listings per keyword based on ratings, price, and availability to ship. This badge has been proven to increase sales because shoppers understand that this product has Amazon’s stamp of approval.


AMZ (Amazon)

The world's largest online retailer and a prominent cloud services provider. Amazon is the largest worldwide internet retailer measured by total revenue. This is the marketplace that many private label sellers choose to use because of its built-in, massive customer base and automated fulfillment options.

ASIN (Amazon Standard Identification Number)

A unique 10-character string of letters and numbers for products specifically on Amazon. This is the product identifier that you will use on Seller Central to identify exactly which product you want to make changes to or import more of. Amazon warehouse workers also use this ID to understand which products to send out on your behalf through FBA.

Automatic Targeted Ads

Sponsored advertisements that are targeted to relevant keywords by Amazon. These ads do not require an Amazon seller to input their own specific search terms. Automatic targeted ads are often used to find relevant keywords that convert, which an Amazon seller may not have thought of on their own. Run an automatic campaign with a small daily budget and dive into the reporting to uncover hidden gem keywords that your shoppers are finding you for.

Bid+

A feature within Amazon advertising’s manual campaigns that allows a seller to raise their bid by up to 50% more than the default bid when ads are eligible to show at the top of search results. This feature can use up a lot of your daily budget, but it will also help you to have better conversion rates due to the premium placement of these ads.

Brand

Generally, this is the way a product, company, or individual is perceived by those who experience it. On Amazon, this is a collection of related products by one seller or storefront. Building a brand on and off of Amazon is really beneficial, especially if you want to sell your business one day.

Brand Registry

An Amazon program for those with registered trademarks that helps sellers protect their brand. Enrolling in this program via Seller Central gives verified sellers access to enhanced marketing features, brand development suites and brand protection services. If you want to sell more than one product and keep your listings safer from hijackers, we always recommend building your brand to future-proof your business.

BSR (Best Sellers Rank)

A number from Amazon’s algorithm that reflects a product’s sales in relation to other products in its category. For example, your travel pillow may have a BSR of 1200 in Travel, which means it’s the 1,200th best selling item in that category. This number can be used to estimate monthly sales because of its relation to other products.  


Buy Box

A widget on Amazon product listings where a shopper actually purchases a product. If there are multiple active sellers on a listing, one of them will “win” the Buy Box and get a customer’s purchase. It’s important to “own” the buy box for your own products in order to make sales. If you are having trouble with your buy box, it could be a price or fulfillment settings issue, and you should reach out to Amazon’s support.

Category

Departments of Amazon products based on similar characteristics and uses. Products have a main category such as “Home and Kitchen” as well as one or more sub-categories such as “Kitchen Utensils.” It’s important for Amazon sellers to correctly categorize their products so that there isn’t any shopper confusion or listing issues.

COGS (Cost of Goods Sold)

How much money it costs to create a product that is sold. This will include the cost of manufacturing, packaging, shipping, services, and taxes. Knowing your COGS is important when it comes time to price your product. It is recommended that your profit margin is at least 30% after accounting for your COGS and marketing expenses.

CTR (Click-through-rate)

The percentage of Amazon shoppers that see your ad and then click on it. Calculate this by dividing total clicks by total impressions. It’s important to optimize for a high click through rate so that your listing has ample opportunities to convert. To improve your CTR, consider split testing elements of your listing such as the main image and price. And as often as you can, seek reviews from happy customers.

DDP (Delivered Duty Paid)

A shipping arrangement where the manufacturer is responsible for arranging carriage and delivery of the goods to its final location along with all applicable tariffs and duties. This is the easiest way to get goods delivered because it does not require the Amazon seller to hire a freight forwarder. The downside here is that you will not get shipping updates as frequently because a Chinese company is handling the logistics.

Dropshipping

A method of fulfillment that does not require inventory on-hand. Instead, when a product is purchased, the seller buys the product from a third seller who then delivers the item. Most Amazon sellers opt for Fulfilled by Amazon over dropshipping, but it’s just as viable of a business model.

Duty

A tax from the government placed on goods and services that are imported or exported. Expect to pay duties when you import a product into the United States from overseas. The price of that duty will depend entirely on your product.

Early Reviewer Program

A discontinued program hosted by Amazon which helped sellers gather their first five reviews by encouraging shoppers who purchased the product to leave their authentic feedback. This program no longer exists.

Export

To send goods or services out to another country for sale.

EXW (EX Works)

A shipping arrangement where the inventory purchaser (i.e. the Amazon seller) is responsible for shipment of the goods post-production. Essentially, when a product is done being manufactured, the supplier will leave it for pickup. It is then on the Amazon seller to figure out how to get those products into Amazon. This process is often managed by a hired freight forwarder, who specializes in the movement of goods overseas. Best practice here is to choose a forwarder based in the United States, such as Flexport.

FBA (Fulfillment by Amazon)

An Amazon service where third party sellers can store their inventory in Amazon’s warehouses, and Amazon will pick, pack, ship, and manage customer service on behalf of the seller. This service is a major reason that eCommerce sellers choose to sell on Amazon. Instead of packing up a box whenever an order comes in, Amazon handles every aspect of fulfillment and allows this business to be one that is 100% remote. FBA automatically makes a product eligible for a Prime badge.

FBM (Fulfillment by Merchant)

An order delivery method with less fees than FBA where sellers choose to store, pack, ship, and provide their own customer service for orders that come through Amazon. There are less fees with this option, but it does require manual fulfillment work on behalf of the Amazon seller. FBM products do not automatically get a Prime badge; it can be earned, but the seller must prove they can deliver quickly.

Fulfillment Center

A large warehouse owned by Amazon where products are stored, prepared, and shipped out on behalf of Amazon’s third party sellers. Amazon currently has over 100 active fulfillment centers in the United States alone. A batch of inventory will often be shipped into one fulfillment center, and then Amazon will disperse that inventory throughout other centers so that customers can get their products within 2 days of ordering.

First-Party Sellers (1P)

Brands that are invited to sell inventory to Amazon at wholesale prices that Amazon then sells to consumers under the Amazon brand. These sellers use Vendor Central to manage their business, not Seller Central. As of right now, being a Vendor for Amazon is invite-only.

FNSKU (Fulfillment Network Stock Keeping Unit)

A 10-character string of letters and numbers found on a barcode that Amazon uses to identify products in its fulfillment centers. Each product has a UPC code, but many Amazon sellers will convert that into an FNSKU because Amazon is the only warehouse they use, and Amazon prefers that products have an FNSKU barcode. Amazon sellers can either attach an FNSKU sticker to each product or have their supplier print it directly on each product’s packaging.

FOB (Free On Board)

A shipping arrangement where the manufacturer is responsible for moving finished goods from their factory to the port in the origin country. From that point, it is the purchaser’s responsibility. This method is a “meet halfway” agreement, where the factory will get the goods to the port overseas, and then the Amazon seller’s freight forwarder will take responsibility for the inventory arriving to Amazon’s warehouses.

Freight Forwarder

A third-party service that specializes in coordinating with a manufacturer on behalf of an Amazon seller to ship and deliver inventory to its final destination. These companies take the confusion and logistics out of product movement by handling the inventory all the way from the supplier’s factory into Amazon’s fulfillment centers. The use of a freight forwarder is optional; you will not need to hire one if you use DDP. A common freight forwarder based in the United States is Flexport.

Fulfillment Fee

A flat cost per unit, based on the size and weight of the product. These fees cover picking and packing, shipping and handling, customer service and product returns for FBA products. This is the cost of having automatic fulfillment. A small item has a $2.16 fee, while a larger product sees fees closer to $5. It all depends on the dimensions and weight of each item.

Gated Category

A department of products that is only open to sellers who have received authorization from Amazon. Examples of gated categories include jewelry, music, watches, and DVDs. In order to sell in one of these categories, a seller must submit an application to request approval from Amazon.

Gross Profit

Money earned after deducting any costs associated with manufacturing, shipping, and selling a product. Essentially, this is the money in your pocket after you’ve sold a product and accounted for any costs. It is recommended that gross profit remains above 30% in order to scale your business.

GTIN (Global Trade Item Number)

Identifiers that are recognized worldwide and used to look up product information. When you see a barcode on a product at Walmart or Target, it has an associated GTIN that comes up when it is scanned. A GTIN is the world’s method of communicating a product or brand.

Import

To bring goods or services into a country for sale.

Incoterms

Standard phrases and acronyms used in international shipping agreements that denote which party is responsible for the carriage of goods. Examples of the most common incoterms are DDP, EXQ, and FOB. DDP is when the supplier is wholly responsible for delivering the product to Amazon. EXQ is when the Amazon seller is responsible for carriage of the goods from the manufacturer to Amazon. And FOB is a hybrid where ownership transfers at the port of origin.

Inventory

The amount of products an Amazon seller has listed and available for sale. You can find this in Seller Central by navigating to the Inventory tab and then Manage Inventory. This will give you options such as Edit Listing, Replenish Inventory, and Close Listing.

tInventory Performance Index (IPI)

A score that measures a seller’s inventory management over time, including how well they balance inventory and sales, fix problems as they arise, and stay in stock. If your IPI falls below 450, Amazon will set storage limits on the account until inventory health is improved. Anything above 450 is considered “good,” so make sure to keep some inventory in stock without running out too often.

Landed Cost

The cost to manufacture one item plus shipping and custom charges. This is essentially how much money you will spend for one full product, and it’s important to understand this number because you’ll want to price your product so that you’re making at least 30% profit. Landed cost can be reduced by finding ways to manufacture cheaper, ordering in bigger bulk, or finding cheaper shipping alternatives.

Landing Page

An individual web page developed for the purpose of directing and converting traffic, often used as part of a marketing campaign. Selling on Amazon does not require you to make your own landing pages because Amazon gives you a product listing. However, when running promotions with Facebook ads, some sellers choose to build landing pages to build a list by collecting email addresses or offering an incentive.

Lightning Deals

A promotion run by an Amazon seller where their product is offered at a discount on the Amazon Deals page for several hours. To be eligible for deals, you must be a Professional Seller with at least five Seller Feedback Ratings per month and an overall rating of at least 3.5-stars. To set up a lightning deal, head to the Deals Dashboard within Seller Central. Schedule the deal, enter a discount price, and submit the deal.

Long Tail Keyword

Phrases containing two or more words to describe a specific niche. For example, “dog bowls for large dogs” is a long tail keyword, whereas “dog bowls” is the main keyword. Long tail keywords are important to include in your listing and track rank for because they can directly address what a customer is looking for. It can be just as beneficial to rank for three long tail keywords as it is to rank for one long tail keyword, plus it can be easier because most sellers focus on the obvious short keywords. There are keyword tools available to help you find the right long tail keywords, like Viral Launch or Helium 10. Plus you can find these in your advertising reports.

Long Term Storage Fees (LTSF)

Charges accrued from Amazon by a seller holding units that have been stored for more than a full calendar year (or over 365 days in a row). It’s best to not order too much inventory so that you don’t get charged with long term storage fees. If you have a lot of inventory sitting for a long time, you can create a Removal Order to send inventory to your home or another warehouse, but this will charge a per-item fee as well.

Manually Targeted Ads

Sponsored advertisements that are specifically targeted to relevant keywords with bids, chosen by the Amazon seller. You will determine how much you want to spend per day (budget), how much you are willing to pay per click (bid) and which keywords you want your product showing up for. To choose which keywords to target, you can use a keyword tool from Viral Launch or Helium 10, or you can find keywords from your Automatic Ad Campaign report.

Marketing Funnel

The theoretical flow of a customer from awareness to conversion, which an eCommerce seller can visualize for the purpose of optimization. This is also known as a sales funnel. For Amazon sellers, the marketing funnel is pretty automated because of Amazon’s massive built-in shopper base. The top of the funnel is awareness, which Amazon provides through search terms, ads, and things like lightning deals. The bottom of the funnel is conversion, which is when a customer actually purchases the product. You want as many people moving through that funnel as possible with a high conversion rate.

MOQ (Minimum Order Quantity)

The lowest number of products that an Amazon seller can purchase from a manufacturer at one time, set by the manufacturer. This number is set because a manufacturer makes a small margin on each product, so in order for their effort to be worthwhile, they need to make lots of individual products. Sometimes the Minimum Order Quantity is flexible, but it is best to understand if you’re willing to purchase a manufacturer’s MOQ before getting too far in the ordering process with them.

Net Profit

The total amount of money made after deducting all business expenses. It’s best that an Amazon seller keeps this number above 30%. This means, for every $10 you sell, you actually put $3 of that in your pocket. The other $7 goes towards your landed cost, marketing fees, and operating expenses.

Private Label

A method of selling products that involves manufacturing products in bulk and then selling them under the retailer’s brand name. Many Amazon sellers opt for this because it doesn’t require a ton of startup capital (typically $3,000 minimum) and allows someone with no audience to build their own brand.

PPC (Pay-per-click)

A type of advertising that charges the seller every time one of their advertisements is clicked on by a shopper. This is also known as cost per click (CPC). Pay per click advertising is a popular method of driving sales on Amazon and can be used to gather data on why people are purchasing a specific product. When getting started with PPC advertising, we recommend at least setting up an Automatic campaign, where Amazon will choose which keywords to show your product for. This will kick start sales for your product as long as your listing is optimized for conversions.

Price

The set amount of money required to purchase a product on it’s listing. Amazon sellers should aim to keep their price competitive with others in their market, especially at first. There are products that can be priced at a premium with the right competitive advantage, but Amazon shoppers are accustomed to finding quality products at competitive prices, so take advantage of split testing and find a realistic price point that optimizes for both margin and volume.

Promotions

A method of driving sales that involves discounts and/or giveaways with the purpose of improving awareness and social proof. Promotions can range from White Hat (like Lightning Deals), to Grey Hat (like two-step URLs through Facebook messenger bots), to Black Hat (tactics not permitted by Amazon). A product on its own may sit on page 20 for most major keywords and will not see many organic sales. So, it’s best that an Amazon seller runs some type of promotion to improve their product’s visibility and chance at success.

Rank & Bank

A method of improving an Amazon product’s visibility in search results by running Facebook ads, a Facebook messenger bot, and promotions. Use a tool called Sellerise to set up Rank & Bank campaigns with just a few steps and improve the number of people who are seeing your product in Amazon’s search results.

Retail Arbitrage

A method of selling products that requires a minimum investment. Sellers find underpriced products in retail stores or online and sell them at a higher price on an eCommerce platform. Many eCommerce sellers get started with Retail Arbitrage because it requires virtually no money to get started, and it’s a great way to learn the Amazon platform and process. However, it is often not a scalable business model because it requires constantly finding deals at retail stores, whereas Private Label can be run directly from a laptop with most of the heavy lifting coming with the source and launch stages.

Return on Ad Spend (RoAS)

A marketing metric that measures the amount of revenue earned for every dollar spent on advertising. You want your RoAS to be a high number, which means you’re making a lot of money on the money you’re spending.

Referral Fee

The cost required for selling products on Amazon.com, paid to Amazon as a percentage of the product’s purchase price. Amazon has set up massive infrastructure that makes it relatively easy to get a product in front of millions of shoppers, and the referral fee is the cost of using that infrastructure. It’s no wonder Amazon is one of the first trillion dollar companies.

Revenue

The total amount of money generated from the sale of goods or services. This does not include any fees or costs; it is simply the product’s price multiplied by the number of products sold. High revenue is great and needs to be balanced by low costs so that profit margin remains above 30%.

ROI (Return on Investment)

The total gain (or loss) of investment relative to the amount of money invested. Get this number by subtracting cost minus gain, and dividing that number by the cost. It’s best that ROI is a high number, meaning lots of money has been made for the level of investment. To optimize ROI, figure out how to raise revenue or lower costs without sacrificing too much quality.

Sample

One product shipped from a manufacturer to an Amazon seller with the purpose of showing quality, service, and competence before a larger inventory purchase is made. Samples should be inspected by the Amazon seller and compared to top competing products to make sure customers will be satisfied and set up for a positive review. Oftentimes a product sample can cost $50-$200. A best practice is to ask the manufacturer if they can subtract the cost of the sample from an inventory order, if placed.

Seller Central

The platform used by Amazon sellers to manage their Amazon products, offers, listings, advertisements, inventory, and reports. This is your Amazon business home base, and it’s important to understand how to use and read the platform. Most commonly used tabs include Inventory, Advertising, and Reports.

Seller Feedback

A rating given from a customer to an Amazon seller on a scale of 1 to 5 stars along with commentary to explain the star rating. Seller Feedback is important for creating social proof. Think about it… as a shopper, you like to see reviews and feedback that validate the quality of a product. From the product research stage through scaling, you should always be thinking about how you can set yourself up for good Seller Feedback. Best practices include a high quality product, product inserts, and email follow-up sequences.

SEO (Search Engine Optimization)

The process of increasing the number of visitors or shoppers that ensures the website or product appears at the top of search results within a search engine. Amazon serves as a product search engine, and the algorithm prioritizes products with a strong search history. To improve your Amazon SEO, ensure every single relevant keyword is present in your listing and drive sales through your listing. The goal should be resulting on page one for your product’s most popular and relevant keywords.

SKU (Stock Keeping Unit)

Custom product identifiers that are used to identify a specific product. These vary from brand to brand and are used for inventory tracking purposes. When a product has variations, each different variation is a different SKU. For example, you may have three SKUs of one dog bowl ASIN: DogBowl-Black, DogBowl-Red, and DogBowl-Blue.

Sponsored Ad

Pay-per-click advertisements that allow an Amazon seller to promote their products through specific keywords in highly-visible placements on Amazon’s marketplace. It is essential that new Amazon sellers run sponsored ads, especially after gathering your first five reviews. Sponsored ads are a great way to get a new product in front of shoppers. They allow you to get some initial sales, drive some keyword ranking power, and gain momentum with Amazon’s algorithm. Start with an Automatic sponsored ad campaign and add a manual campaign with the product’s main keywords. From there, optimize for sales.

Sponsored Products

Amazon ads that promote the sales and visibility of a desired product listing in Amazon search results. Sponsored Product Ads are the most popular type of ad for Amazon Pay Per Click. It is important to run Sponsored Product ads as a part of your overall sales strategy. Set a bid and budget that you are comfortable with to see if you can drive some additional, profitable sales through your listing.

Third-Party Sellers (3P)

Brands that sell products on a marketplace that they do not own. On Amazon, FBA and FBM sellers are considered third parties and use Seller Central, as opposed to First-Party Sellers who use Vendor Central. If you’re just getting started on Amazon as an individual, it is likely that you will be considered a Third-Party Seller.

UPC (Universal Product Code)

A barcode that is used to identify a specific product which does not change from company to company. A UPC from GS1, the supplier, is required in order to list a product on Amazon. Some Amazon sellers purchase UPCs second-hand from a reseller, but we recommend against this as Amazon has been cracking down in recent years. Head to GS1 to purchase a new UPC code for your product to set yourself up for long-term success.

VA (Virtual Assistant)

A person who provides administrative help to an eCommerce seller remotely. They are typically contracted workers who may also provide research, data entry, or bookkeeping services. Amazon sellers can find VAs on sites like Fiverr or Upwork.

Variable Closing Fee

A fixed charge from Amazon on media products, such as books or DVDs. This fee is a flat fee of between $1.35 and $1.80 on products which Amazon deems 'media'. This fee is in addition to the referral or minimum referral fees you need to pay.

Vendor Central

The platform used by first party sellers (1P) who sell their products in bulk to Amazon. This is used instead of Seller Central. If you’re just getting started on Amazon as an individual, it is likely that you are a third party seller and do not need to know how to use Vendor Central.

Verified Review

A review left by a customer after purchasing the product at full price. These reviews carry more weight when Amazon averages the product’s review rating. Best practices for gathering verified reviews include product inserts, email follow-up sequences, and using a tool like Viral Launch to contact customers in bulk through Amazon’s review followup system.



Hopefully this comprehensive Amazon acronyms list gives you the insight you need to build a thriving business. Amazon abbreviations are used frequently, so come back to this list often so that you’re never left wondering what a term or phrase means.


I’ve coached thousands of students on this process and it’s revolutionized my life… especially after I sold one of my brands for 7 figures.


If you’re interested in learning how to sell on Amazon now that you have a great understanding of the most common Amazon FBA terms, click here to sign up and watch your first training for FREE.



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