Glossary

Every term here is defined in one or two sentences first, then explained in more depth if you want it. Where a term has a calculator behind it, the page links straight to it.

Incoterms

Incoterms · EXW (Ex Works) · FCA (Free Carrier) · FAS (free alongside ship) · FOB (Free On Board) · CFR (cost and freight) · CIF (cost, insurance and freight) · CPT (carriage paid to) · CIP (carriage and insurance paid to) · DAP (Delivered At Place) · DPU (delivered at place unloaded) · DDP (Delivered Duty Paid)

VAT terms

OSS (One Stop Shop) · IOSS (Import One Stop Shop) · Reverse charge · VIES · Postponed VAT accounting · De minimis threshold

Customs terms

EORI number · HS code (commodity code) · TARIC · Anti-dumping duty · CBAM (Carbon Border Adjustment Mechanism) · EPR (extended producer responsibility) · GPSR (General Product Safety Regulation)

Shipping terms

Landed cost · Volumetric weight · Loading metre (LDM) · FCL (full container load) · LCL (less than container load) · Demurrage and detention · CMR note · 3PL (third-party logistics) · MOQ (minimum order quantity)

Inventory terms

COGS (cost of goods sold) · Safety stock · Reorder point · Inventory turnover · Dead stock · Dropshipping

Unit economics

Contribution margin · AOV (average order value) · Conversion rate · CAC (customer acquisition cost) · LTV (customer lifetime value) · ROAS (return on ad spend) · ACoS (advertising cost of sales) · TACoS (total advertising cost of sales) · Buy Box · FBA and FBM · Chargeback

Every term, A to Z

3PL (third-party logistics): An external provider that stores your inventory, picks and packs orders and ships them under your brand. The marketplace-independent alternative to FBA.
ACoS (advertising cost of sales): Ad spend divided by the revenue that spend produced, as a percentage. Used mainly by Amazon sellers; it is the reciprocal of ROAS.
Anti-dumping duty: An extra duty charged on top of the normal rate for specific goods from specific countries, imposed where the EU has found them sold below fair value. Rates regularly reach double digits.
AOV (average order value): Total revenue divided by the number of orders. The lever most sellers ignore while chasing traffic.
Buy Box: On a listing shared by several sellers, the one whose offer is selected by default when a buyer clicks add to cart. The large majority of orders go to whoever holds it.
CAC (customer acquisition cost): Total sales and marketing spend divided by the number of new customers it produced in the same period.
CBAM (Carbon Border Adjustment Mechanism): An EU charge on the carbon embedded in certain imported goods — steel, aluminium, cement, fertiliser, hydrogen and electricity — designed to match the carbon cost EU producers already pay.
CFR (cost and freight): The seller pays freight to the named destination port, but risk passes to the buyer once the goods are on board at origin.
Chargeback: A card payment reversed by the buyer’s bank after a dispute. You lose the sale amount, usually the goods, and a fixed fee on top.
CIF (cost, insurance and freight): The value of the goods plus insurance and freight up to the point of entry into the EU. This is normally the customs value — the figure duty is calculated on.
CIP (carriage and insurance paid to): CPT plus insurance, and since 2020 that insurance must be all-risks cover, not the minimum.
CMR note: The standard consignment note for international road transport in Europe. Also the document most often used to prove that goods physically left your country.
COGS (cost of goods sold): The direct cost of the goods actually sold in a period — the purchase price plus what it took to get them saleable and into your warehouse.
Contribution margin: What is left of each sale after every cost that varies with it — goods, shipping, commission, fulfilment, payment fees — expressed as a share of the net price.
Conversion rate: The share of visits that end in an order. Orders divided by sessions, as a percentage.
CPT (carriage paid to): The seller pays carriage to the named destination, but risk passes to the buyer at the handover to the first carrier.
DAP (Delivered At Place): The seller delivers to the named destination ready for unloading, but import clearance, duty and VAT are yours. The middle ground between FCA and DDP.
DDP (Delivered Duty Paid): The seller delivers to your address with all duties and import charges paid. The most convenient term on paper, and the one most likely to cost you money you cannot see.
De minimis threshold: The value below which customs duty is not charged — €150 per consignment in the EU. It does not relieve import VAT, which is due from the first cent.
Dead stock: Inventory that has stopped selling at any acceptable rate. It still costs storage and still occupies the cash you paid for it.
Demurrage and detention: Daily charges for time. Demurrage runs while the container sits at the terminal; detention runs while you hold the container after taking it away.
DPU (delivered at place unloaded): The seller delivers to the named place and unloads. Risk passes only after unloading — the single Incoterm that requires it.
Dropshipping: A model where you sell goods that your supplier ships directly to the customer, so you never hold the stock yourself.
EORI number: The identifier customs authorities use for your business across the whole EU. Required for any commercial import or export, issued free by your national customs authority.
EPR (extended producer responsibility): The obligation to register and pay for the collection and recycling of the packaging, electricals or batteries you place on a market. Registration is per country, not per EU.
EXW (Ex Works): The seller makes the goods available at their own premises and does nothing else. You arrange collection, export clearance, freight, import and delivery — and carry the risk from the factory gate.
FAS (free alongside ship): The seller delivers by placing the goods alongside the vessel at the named port, cleared for export. Risk passes there, before anything is loaded.
FBA and FBM: FBA (fulfilled by Amazon) means the marketplace stores, packs, ships and handles returns for you. FBM (fulfilled by merchant) means you do all of it yourself.
FCA (Free Carrier): The seller delivers the goods, cleared for export, to a carrier you nominate at a named place. Risk passes at handover, not at the ship’s rail.
FCL (full container load): A shipment that occupies a whole container, booked as a unit. You pay for the box whether or not you fill it.
FOB (Free On Board): The seller delivers the goods on board the vessel at the named port and handles export clearance. From that point the freight, insurance and risk are yours.
GPSR (General Product Safety Regulation): The EU rules requiring consumer products to have an identifiable responsible person established in the EU, traceability markings and safety information — applicable since December 2024.
HS code (commodity code): The numeric classification of your goods. Together with the country of origin it decides the duty rate, any import restrictions, and whether anti-dumping measures apply.
Incoterms: The standard three-letter terms that decide who pays for transport and insurance, where the risk passes from seller to buyer, and who handles export and import clearance.
Inventory turnover: How many times you sell and replace your average inventory in a period. Cost of goods sold divided by average inventory value.
IOSS (Import One Stop Shop): A scheme for goods sent to EU consumers from outside the EU in consignments worth up to €150. You collect the import VAT at checkout and declare it monthly, so the parcel is not stopped for VAT on arrival.
Landed cost: The full cost of imported goods once freight, insurance, duty, import VAT and clearance charges are added to the supplier’s invoice.
LCL (less than container load): A shipment that shares a container with other consignments, priced per cubic metre. The option when you have less than a container.
Loading metre (LDM): One metre of trailer floor across the full width — roughly 2.4 m² of load space. The unit European hauliers price road groupage in.
LTV (customer lifetime value): The total contribution margin a customer generates across all their purchases, not just the first one.
MOQ (minimum order quantity): The smallest quantity a supplier is willing to make or sell in one order. It exists because setup costs are fixed, which is also why it is negotiable.
OSS (One Stop Shop): A scheme that lets you declare the VAT on cross-border sales to consumers in other EU countries through one quarterly return at home, instead of registering for VAT in each of those countries.
Postponed VAT accounting: A scheme in several member states that lets you account for import VAT on your periodic return rather than paying it at the border and reclaiming it later.
Reorder point: The stock level that triggers a new order — enough to cover demand during the supplier’s lead time, plus safety stock.
Reverse charge: A mechanism where the buyer, not the seller, accounts for the VAT. You invoice a VAT-registered business in another EU country without tax, and they declare it in their own return.
ROAS (return on ad spend): Revenue divided by the advertising spend that produced it. A ROAS of 4 means four units of revenue for every one spent — which says nothing about profit on its own.
Safety stock: The buffer inventory held above expected demand, to absorb demand spikes and late supplier deliveries.
TACoS (total advertising cost of sales): Ad spend as a percentage of your total sales, not just the sales the platform attributes to ads. The long-run counterpart to ACoS.
TARIC: The European Commission database of duty rates, import restrictions and trade measures, searchable by commodity code and country of origin.
VIES: The European Commission service that confirms whether an EU VAT number exists and is authorised for cross-border trade. It queries each member state’s own database live.
Volumetric weight: A parcel’s size expressed as a weight, calculated as length × width × height divided by a contractual divisor. Carriers bill whichever is higher: actual weight or volumetric.

Why these definitions are short

Most glossary entries elsewhere either restate the acronym or reproduce a paragraph of legislation. Neither helps when you are halfway through a customs form and need to know what a field means.

These start with the answer, in the words a seller would use, and only then explain where it matters and what it is commonly confused with.

The five confusions that cost the most money

Definitions are cheap; the expensive part is two terms that look alike and settle different things. These five come up again and again.

OSS and IOSS. One covers goods already inside the Union moving to a consumer in another member state; the other covers goods arriving from outside it, in consignments up to 150 €. Separate schemes, separate registrations — see the VAT set.

EXW and FCA. Both look like “the buyer arranges everything”. Under FCA the seller still clears the goods for export; under EXW nobody does, and a foreign buyer often cannot — see the Incoterms set.

DAP and DDP. One letter, and it decides who pays import duty and VAT. Under DDP that is the seller, who usually cannot reclaim the import VAT in the buyer’s country — see the Incoterms set.

HS, CN and TARIC. Not three codes but three lengths of one: six digits worldwide, eight for EU export and statistics, ten for EU import — see the customs set.

Volumetric and chargeable weight. The first is a calculation from the dimensions; the second is what the carrier bills, and it is the larger of that and the scale — see the shipping set.