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New to the buying scene or simply in need of a refresh? Here are all of the terms you’ll need to know:

Backorder: A type of order normally created when there is insufficient quantity available for sale or to fulfill an order.

Black Friday: Occurring the day after Thanksgiving, Black Friday is traditionally a day when physical retail stores drop prices dramatically on big ticket items for 24 hours in order to clear stock before the close of the calendar year. Gaining popularity internationally thanks to the internet, it is followed by the online retail equivalent, Cyber Monday.

Click and Collect: A service offered usually by online retailers, or retailers with an online presence, for customers to purchase goods online and collect their order either in store or from a pre-arrange spot, such as their local grocery store or post office.

Click to Buy: Click to Buy allows shoppers to pre-register their details with an outlet in order to process transactions with a single click when a desired item appears on social media or website.

Cost of Goods Sold: The price paid for the product, plus any additional costs necessary to get the merchandise into inventory and ready for sale, including shipping and handling.

E-commerce: The practice of buying and selling online.

Electronic Data Interchange (EDI): EDI is the application-to-application transfer of business documents like purchase orders, invoices, shipping notes, etc.

Goods and Services Tax (GST): Tax payable to the Australian Taxation Office (ATO) on sales of goods sold less credit tax offsets. GST is an additional 10% off the goods or service price.

Gross Profit Margin: The difference between an items price and cost ex GST, expressed as a percentage of value. Approximate guide is between 40%-80%, this differs from “mark up”.

Inventory: Inventory refers to the merchandise a retail store has on hand. The term also refers to the act of counting, itemising and recording in-stock merchandise or supplies. This must be balanced against sales to create appropriate stock turns.

Inventory Stock Turns Ratio: The number of items during a given period that the average inventory on hand is sold and replaces. The average should be between 4 and 6 times a year. If stock is too low and stock turns are too high, then lack of sales will occur. The ratio is calculated by dividing the cost of goods sold by the amount of average stock at cost.

Loss Leader: An item of stock sold at a loss in order to attract buyers to make a purchase, under the expectation that they will buy more than just that single item once in the transaction process.

Mark Up: This is when you add an amount onto the cost and give it a sell price. Example: $100 cost + 100% = $200. Profit = $100. As a mark up this is 100%, not to be confused with gross profit.

Minimum Order: The smallest sale volume permitted by a manufacture or wholesaler.

Omni-Channel Retailing: The practice of selling through more than one medium simultaneously – such as in store, online, catalog or social media.

Open-to-Buy (OTB): The dollar amount of merchandise that a retailer can order from a particular period. Open-to-Buy is calculated by deducting from the period’s planned purchases the amount of merchandise already received and the retail amount of purchase orders planned for delivery within the period. This is generally budgeted from sales budgets known or forecasted.

Pop Up Shop: A pop up shop is when a retailer or supplier takes up a short term lease or space-for-hire arrangement in a high traffic location, such as shopping malls or markets, for a short period. Pop up shops can be very successful particularly for online retailers to offer consumers the opportunity to experience products in person, and for start up businesses to experiment with having a retail space. Pop up shops can also refer to mobile retail outlets such as modified food trucks and “car boot sales”.

Product Breadth: The product breadth is the variety or category of product lined offer by a retailer. Example: beach, inspiration, jewellery, kitchenware, glassware.

Product Depth: The number of each item or particular style of a product on the shelves. Product depth is also known as product assortment or merchandise depth.

Product Mix: The combination of products offered for sale by a retail outlet, which takes into account both the variety and quantity of goods. The product mix is more than just inventory. It defines the retail outlet’s niche in the market and the personality of the brand. The product mix is often used to attract a certain demographic of shoppers to the store.

Profit Margin: A ratio of profitability calculated as earnings divided by revenues. It measures how much out of every sales dollar a business actually keeps in earnings.

Pro-forma Invoice: This is sent to you to pay prior to goods arriving at your store. It is basically a request for “cash up front” and payment is required prior to the delivery of goods.

Purchase Order (PO): A PO is a written sales contract between buyer and seller detailing the exact merchandise or services to be rendered from a single supplier or vendor.

Quantity Discount: A reduction in price based on the amount purchased. May be offered in addition to any sales contract.

Recommended Retail Price (RRP): These prices are recommended prices only and there is no obligation for any resellers/retailers to comply with these recommendations. It is up to retailers to set their prices for good for sale. This will depend on the costs to run the business and the profit required annually.

Sales Forecast: Estimate of future sales based on current sales figures and current information from manufacturers, wholesalers, accountants and bankers. As a guide – for a small business, it is recommended to budget sales of between $1,500-$20,000+ per week ($78,000-$1million+ per annual revenue).

Terms: A set of payment requirements for an invoice. For example, terms of “2/10, net 30″ indicates that an invoice paid within 10 days receives a 2% discount, otherwise the full stated amount must be paid within 30 days.

Trade Credit: An account with suppliers of goods and services. Generally 30 days to pay from invoice date.

Trade Discount: A discount on the list price given by a manufacturer or wholesaler to a buyer.

Visual Merchandising: Creating visual displays and arranging merchandise assortments within a store. The purpose is to increase foot traffic and sales by improving the layout and presentation by making it visually appealing.