Ecommerce and warehouse glossary

Plain-English definitions of the order management, stock control, warehouse and shipping terms UK online retailers use every day.

DDP and IOSS

DDP (Delivered Duty Paid) means the seller pays the import duty and taxes for an international parcel, so the customer has nothing to pay on delivery. IOSS (the EU Import One-Stop Shop) lets sellers collect EU VAT at checkout on goods worth up to €150 and pay it in one monthly return.

Seller Fulfilled Prime (SFP)

Seller Fulfilled Prime (SFP) is an Amazon programme that lets sellers show the Prime badge on orders they ship from their own warehouse, rather than through FBA. In return, sellers must meet Amazon's strict despatch, delivery and tracking targets.

FBA vs FBM

FBA (Fulfilled by Amazon) means Amazon stores your stock and picks, packs and ships your orders. FBM (Fulfilled by Merchant) means you store the stock and ship Amazon orders yourself or through your own 3PL.

Multichannel selling

Multichannel selling is selling the same products on more than one sales channel at once, such as your own web shop, Amazon, eBay, TikTok Shop and other marketplaces, or a physical shop. It reaches more customers but means managing orders and stock in several places.

Overselling

Overselling is selling more units of a product than you actually have in stock, usually because stock levels on one sales channel weren't updated after a sale on another. The result is cancelled orders, unhappy customers and penalties from marketplaces.

Bin location

A bin location is a specific, labelled place in a warehouse where stock is kept, such as an aisle, shelf and position (for example A-03-2). Recording each product's bin location tells pickers exactly where to go.

Cycle counting

Cycle counting is counting a small part of your stock on a regular schedule, rather than counting everything at once. Over a set period every product gets counted, so stock records stay accurate without closing the warehouse for a full stock take.

Pick and pack

Pick and pack is the warehouse process of collecting the items for each order from their storage locations (picking) and then packing them, with the right label and paperwork, ready for despatch.

FIFO (first in, first out)

FIFO, or first in, first out, means the oldest stock is sold or used first. In the warehouse it is a way of rotating stock so older items go out before newer ones; in accounting it is a way of valuing stock and cost of goods sold.

SKU (stock keeping unit)

A SKU, or stock keeping unit, is a unique code a business gives to each product it stocks, including each size, colour or variant. It is used to track stock, process orders and report sales for that exact item.

Warehouse automation

Warehouse automation is using technology to do warehouse tasks with less manual work. For most online retailers it starts with software and barcode scanning, such as digital pick lists and scan-to-despatch, and can extend to conveyors and robots at very high volumes.

3PL (third-party logistics)

A 3PL, or third-party logistics provider, is a company that stores stock and fulfils orders on behalf of other businesses. It receives the retailer's stock, picks, packs and ships each order, and often handles returns, charging for storage and for each order it processes.

Proof of delivery (POD)

Proof of delivery (POD) is the record that shows a parcel was delivered: usually the time, date and place, plus a signature, photo or PIN. It is used to settle 'item not received' claims and disputes with customers, marketplaces and carriers.

Expedited vs standard shipping

Standard shipping is a carrier's normal-speed delivery service, usually the cheapest option. Expedited shipping is any faster service, such as next-day or timed delivery, that costs more in return for getting the parcel to the customer sooner.

Last-mile delivery

Last-mile delivery is the final step of getting a parcel to the customer: the journey from the carrier's local depot to the customer's door, locker or pickup point. It is usually the most expensive and most visible part of delivery.

Order fulfilment

Order fulfilment (spelt fulfillment in the US) is everything that happens between a customer placing an order and receiving it: receiving the order, allocating stock, picking, packing, shipping and tracking, and handling any returns.

Minimum order quantity (MOQ)

A minimum order quantity (MOQ) is the smallest amount of a product a supplier will sell in one order. It might be a number of units, a number of cartons or a minimum spend, and it affects how much stock a retailer has to buy at once.

Deadstock

Deadstock is stock that hasn't sold for a long time and is unlikely to sell at full price. It takes up warehouse space, ties up cash and often has to be discounted, bundled, returned to the supplier or written off.

Inventory turnover

Inventory turnover is how many times a business sells and replaces its stock over a period, usually a year. A higher figure means stock sells faster and less cash is tied up in it; a lower figure can point to overstocking or slow-moving lines.

Stock control

Stock control is the process of tracking how much stock you hold, where it is and when to reorder it. Good stock control means you have enough to fulfil orders without overselling, running out, or tying up cash in stock that doesn't sell.

Warehouse management system (WMS)

A warehouse management system (WMS) is software that controls stock inside a warehouse. It records where every item is stored, directs picking and packing, books in deliveries and keeps stock counts accurate, so orders go out quickly and correctly.

Lead time

Lead time is the time between placing an order and receiving it. For a retailer it usually means supplier lead time: the days or weeks from sending a purchase order to the stock arriving and being ready to sell.

Sales order

A sales order is the record a seller creates when a customer places an order. It lists the products, quantities, prices, delivery address and payment details, and the business uses it to allocate stock, pick, pack, despatch and invoice the order.

Backorder

A backorder is a customer order for an item that is out of stock, accepted on the understanding that it will ship once new stock arrives. The seller keeps the sale, but the customer waits longer than the normal delivery time.

Order management system (OMS)

An order management system (OMS) is software that brings orders from every sales channel into one place and manages each one through to despatch. It allocates stock, guides picking and packing, prints shipping labels and sends tracking back to the marketplace or web shop the order came from.