Ecommerce Finance Glossary
Plain-English meanings of the marketplace, unit economics, GST, TDS and accounting terms that D2C and marketplace sellers meet every month — with worked examples in rupees.
Reviewed by CA Apurav GargLast reviewed
All terms
53 terms
- Unit economics
ACoS
ACoS (advertising cost of sales) is ad spend divided by the sales those ads are credited with, shown as a percentage. It is the inverse of ROAS: a lower ACoS means each rupee of ads brought in more sales.
- GST
Additional place of business (warehouses / FCs)
An additional place of business is any premises other than the main address on a GST registration where a business keeps goods or works, such as a warehouse or marketplace fulfilment centre. It must be declared on that state's registration.
- Unit economics
AOV
AOV (average order value) is the average amount a customer spends per order: net revenue for a period divided by the number of orders in it. It shows how much each order has to cover fixed per-order costs.
- GST
Assessable value (customs)
Assessable value is the value of imported goods on which customs duty is calculated: broadly the price paid plus freight and insurance to India, converted to rupees at the notified exchange rate.
- Unit economics
CAC
CAC (customer acquisition cost) is what a business spends on marketing and sales to win one new customer: the spend for a period divided by the number of new customers gained in that period.
- Unit economics
Cash conversion cycle
The cash conversion cycle is the number of days between paying for stock and collecting the cash from selling it: days of inventory, plus days receivables are outstanding, minus days payables are outstanding.
- Marketplace operations
Chargeback
A chargeback is when a customer disputes an online payment with their bank or card issuer and the money is pulled back from the seller through the payment gateway, unless the seller proves the order was genuine and delivered.
- Marketplace operations
Closing fee
A closing fee is a flat amount a marketplace charges for each item sold, on top of its commission. It usually depends on the item's price band and the fulfilment method, and GST is charged on it.
- Marketplace operations
COD remittance
COD remittance is the courier or shipping aggregator paying a seller the cash it collected from customers on cash-on-delivery orders, after a set number of days and usually net of its charges.
- Unit economics
Cohort analysis
Cohort analysis groups customers by when they first bought, usually by month, and tracks what each group does afterwards: how many come back, how often, and how much contribution margin they bring.
- Marketplace operations
Commission / referral fee
A commission or referral fee is the share of each sale a marketplace keeps for selling a seller's product on its platform. The rate depends on the category and price band, and GST is charged on it.
- Unit economics
Contribution margin (CM1, CM2, CM3)
Contribution margin is what each order leaves after its variable costs, measured in three layers: CM1 after product cost, CM2 after fulfilment, fees and returns, and CM3 after marketing.
- Marketplace operations
Customer return vs RTO
A customer return is an order that was delivered and later sent back by the customer. An RTO is an order that was never delivered and went back to the seller. They cost, settle and are accounted for differently.
- Marketplace operations
Dark store (quick commerce)
A dark store is a small warehouse, closed to walk-in shoppers, that a quick-commerce platform uses to pick and pack orders for customers within a short radius, so it can deliver within minutes.
- Accounting & reconciliation
Dilution
Dilution is the fall in an existing shareholder's ownership share when a company issues new shares, for example to investors in a funding round or to employees under an ESOP, even though their number of shares stays the same.
- GST
DRC-01B and DRC-01C
DRC-01B and DRC-01C are GST notices sent when returns differ beyond set limits: DRC-01B when GSTR-1 tax exceeds GSTR-3B, DRC-01C when input tax credit in GSTR-3B exceeds GSTR-2B. Each asks for payment or an explanation.
- Income-tax & TDS
E-commerce TDS (section 393 of the Income-tax Act, 2025; earlier section 194-O)
E-commerce TDS is income tax a marketplace deducts from a seller's sales and deposits against the seller's PAN. It is an advance payment of the seller's own tax, claimed back in the income-tax return, not a cost.
- GST
E-invoicing
E-invoicing is reporting each B2B invoice to the government's Invoice Registration Portal, which returns an Invoice Reference Number (IRN) and a signed QR code. Above the turnover limit, an invoice without an IRN is not valid.
- Accounting & reconciliation
ESOP pool
An ESOP pool is the block of a company's shares set aside to grant to employees as stock options. Investors often ask for it to be created or enlarged before a funding round, which dilutes the founders.
- Accounting & reconciliation
FIFO inventory valuation
FIFO (first in, first out) values stock as if the units bought first are sold first, so closing stock carries the latest purchase costs. Indian accounting standards allow it, or weighted average, for interchangeable stock.
- Income-tax & TDS
Form 168 (earlier Form 26AS) and AIS
Form 168, which replaced Form 26AS from tax year 2026-27, is the annual statement on the income-tax portal showing tax deducted or collected against your PAN and taxes you paid. The AIS adds a wider view of reported income.
- Unit economics
GMV vs net revenue
GMV (gross merchandise value) is the total value of orders placed, at the prices customers saw. Net revenue is what the business actually earns from them, after GST, discounts, cancellations, returns and RTOs.
- GST
GST TCS by e-commerce operator (section 52)
GST TCS is tax an e-commerce operator holds back from sellers' payouts on the net value of taxable sales made through it, and pays to the government. The seller can use it as a credit against GST due.
- GST
GSTR-8
GSTR-8 is the monthly statement an e-commerce operator files under GST, listing every seller's sales and returns made through it and the TCS collected on them. Sellers use it to accept their TCS credit.
- GST
HSN code
An HSN code is the number that classifies a product under the international Harmonized System, used in India's customs tariff and GST rate schedules. It decides the GST rate and customs duty, and is shown on invoices and returns.
- GST
Input Service Distributor (ISD)
An Input Service Distributor (ISD) is a GST registration that an office uses to pass the input tax credit on common services billed to it to the business's other GSTINs that used those services.
- GST
Inverted duty structure
An inverted duty structure is when the GST rate on a business's inputs is higher than the GST rate on what it sells, so unused input tax credit builds up and may be claimed as a refund.
- GST
Invoice Management System (IMS)
The Invoice Management System (IMS) is the GST portal facility where a buyer sees invoices its suppliers have reported and marks each one accepted, rejected or pending before it flows into GSTR-2B and input tax credit.
- GST
ITC on marketplace fees
ITC on marketplace fees is the input tax credit a seller claims for the GST a marketplace charges on its commission, closing, shipping, storage and ad fees. It reduces the GST the seller pays, once the usual conditions are met.
- Unit economics
Landed cost
Landed cost is the full cost of getting a product into your warehouse, ready to sell: the purchase price plus freight, insurance, customs duties that cannot be claimed back, clearing charges and inland transport.
- Unit economics
LTV
LTV (customer lifetime value) is the total contribution margin a customer brings over the whole time they keep buying from you. It is compared with CAC to judge whether acquiring customers pays off.
- Accounting & reconciliation
Marketplace receivable
A marketplace receivable is the money a marketplace owes a seller for orders already delivered but not yet paid out, plus reserves and claims still pending. It is a debtor in the seller's books, tracked per marketplace.
- Income-tax & TDS
MSME payment rule
The MSME payment rule means an amount owed to a registered micro or small enterprise is deductible for income tax only when paid, if it is paid later than the time limit in the MSMED Act.
- Marketplace operations
NDR (Non-Delivery Report)
An NDR (Non-Delivery Report) is the courier's notice that a delivery attempt failed, with the reason given. The seller must act on it quickly, or the shipment is usually returned to origin as an RTO.
- Accounting & reconciliation
Order–settlement–bank reconciliation
Order–settlement–bank reconciliation matches three records: the orders you sold, the settlements the marketplace or gateway reported, and the money that reached your bank. Every gap is explained, claimed or corrected.
- Accounting & reconciliation
Payment gateway reconciliation
Payment gateway reconciliation matches each prepaid order on your own website with the gateway's transaction, its settlement and the bank credit, after the gateway's fees, GST on fees, refunds and chargebacks.
- Marketplace operations
Payout / remittance
A payout, or remittance, is the actual bank transfer a marketplace, payment gateway or courier makes to the seller for a settlement cycle: the net amount after fees, deductions and taxes withheld.
- GST
Place of supply for online sales
The place of supply is the state treated as where a sale takes place for GST. It decides whether the seller charges IGST (another state) or CGST and SGST (same state), and which state receives the tax.
- GST
QRMP scheme
The QRMP (Quarterly Return Monthly Payment) scheme lets smaller GST taxpayers file GSTR-1 and GSTR-3B every quarter instead of every month, while still paying tax monthly through Form PMT-06.
- Marketplace operations
Quick-commerce PO model
In the quick-commerce PO model, a quick-commerce platform buys a brand's stock through purchase orders and resells it to customers itself, instead of the brand selling through a marketplace and paying a commission per order.
- Marketplace operations
Reorder point
The reorder point is the stock level at which to place the next purchase order so new stock arrives before the old runs out: average daily sales × supplier lead time in days, plus safety stock.
- Unit economics
ROAS
ROAS (return on ad spend) is the revenue credited to ads divided by what the ads cost. A ROAS of 4 means ₹4 of sales for every ₹1 spent. Break-even ROAS is the level below which ads lose money.
- Marketplace operations
RTO (Return to Origin)
An RTO (Return to Origin) is an order that was shipped but never delivered, because the customer refused it, could not be reached or cancelled at the door, so the courier brought it back to the seller.
- Marketplace operations
Safety stock
Safety stock is extra inventory kept above expected demand to cover sales spikes and supplier delays, so a product does not go out of stock while a replenishment order is on its way.
- Marketplace operations
Settlement cycle (T+n)
A settlement cycle is the schedule on which a marketplace, gateway or courier pays a seller. "T+n" means payment n days after a trigger date (T), such as the day of payment, dispatch or delivery.
- Marketplace operations
Settlement report
A settlement report is the statement a marketplace or payment gateway sends for each payout, listing every order, return, fee and deduction that adds up to the amount credited to your bank.
- Marketplace operations
Shipping / weight-handling fee
A shipping or weight-handling fee is what a marketplace charges a seller to deliver an order through its logistics. It depends on the parcel's chargeable weight and the distance band, and GST is charged on it.
- Unit economics
SKU-level P&L
A SKU-level P&L shows the profit or loss of each product (SKU) after the costs it causes: product cost, channel fees, shipping, returns, RTOs and the ads that sell it, so loss-making products can be spotted and fixed.
- GST
Social Welfare Surcharge
Social Welfare Surcharge is a customs levy on imported goods, charged on the basic customs duty rather than on the goods' value, and included in the value on which import IGST is calculated.
- Marketplace operations
Stock transfer between fulfilment centres
A stock transfer between fulfilment centres is moving a seller's stock from one marketplace warehouse to another. Within one state it moves under a delivery challan; between states it is a supply between two GSTINs.
- GST
Stock transfer between GSTINs
A stock transfer between GSTINs is moving goods between two GST registrations of the same business, such as warehouses in different states. GST treats it as a supply, so it needs a tax invoice even though nothing is sold.
- GST
Supplies taxed in the operator’s hands (section 9(5))
Under section 9(5) of the CGST Act, for certain notified services sold through an e-commerce operator, the operator pays the GST as if it were the supplier, instead of the business that actually provides the service.
- Marketplace operations
Volumetric weight
Volumetric weight is a parcel's weight worked out from its size: length × width × height divided by the courier's divisor. Couriers charge on the higher of this and the actual weight, called the chargeable weight.