Glossary of Terminology
The vaping/packaging/wholesale industry has a lot of specific terms, acronyms and keywords that can be confusing, but are important to know. We decided to set up this page as an ongoing, continually updated glossary for you to better understand these terms and what they mean. This glossary covers general wholesale, retail and other important areas of business.
B2B (Business-to-Business) - In commerce, a type of transaction that occurs between two businesses, such as a wholesaler and a retailer.
B2C (Business-to-Consumer) - A transaction in which there is no middleman between the seller and the consumer, such as a retailer engages in with their customers, or a producer engages in with customers at a farmers’ market. Also known as direct-to-consumer.
Case Pack - A carton containing multiple units of one specific product, offered to retailers at a wholesale price. Case packs simplify the ordering process for both buyer and seller.
Case Pack Quantity (CPQ) - The number of individual units per case pack (often 8, 12, or 24). CPQ varies depending on the value and physical size of the product, as retailers generally expect one case to fit on their shelf at a time, while not breaking the bank. Therefore, smaller and/or lower price products can have larger CPQs.
Cash on Delivery (COD) - In a wholesale arrangement, COD terms means that the retailer must pay for your product upon delivery, rather than in advance (aka prepay) or after a certain period of time (aka net terms).
Cost of Goods Sold (COGS) (aka Direct Costs) - Manufacturing and packaging expenses that a company can easily connect to a specific product or products (depending on whether you’re calculating COGS for an individual product or for the business overall). For most wholesale producers, labor and materials make up the majority of COGS.
CPG - Consumer Packaged Goods, consumable goods that get used up relatively quickly and need to be replaced relatively often, such as as food, beverages, cosmetics, clothing, and household products.
CR Packaging - Child Resistant Packaging, special packaging designed to prevent the risk of children ingesting hazardous materials.
Dimensional (DIM) Weight - UPS and FedEx bill according to DIM weight, meaning that they multiply the box’s dimensions together and divide that by a certain constant. The resulting number is compared with the box’s actual weight, and the larger of the two is the box’s billable weight.
Freight on Board (FOB) Destination - The seller of goods is responsible for shipping costs and remains liable for the product until it is delivered to the store.
Freight on Board (FOB) Origin - The buyer of goods is responsible for shipping costs and liability. Sometimes you’ll see FOB as shorthand for “Freight on Buyer,” which means that the buyer is expected to arrange for pickup at the seller’s warehouse, or at least reimburse the seller for freight, or provide their own shipping account info.
GCC - General Certificate of Conformity in which the manufacturer or importer certifies that its non-children's (general use) product complies with all applicable consumer product safety rules (or similar rules, bans, standards, or regulations under any law enforced by the Commission for that product.)
GMP - Good Manufacturing Practices certification from SGS ensures the integrity of your food manufacturing process as well as your compliance with food safety regulations.
Landed Cost - For a buyer, this is the total cost of a product once it has arrived and all fees have been tabulated. It can be estimated at the time of purchase, but it can only be calculated with 100% accuracy once it has arrived at the buyer’s door, especially when importation is involved (since customs, duties, taxes, currency conversion, and insurance will be assessed at various points in transit).
Lead Time (aka Turnaround Time) - The amount of time between when you receive an order from a retailer and when you deliver the order to that retailer. Lead time includes any production time, fulfillment time, and transit time, and it can vary depending on any of those variables.
LTL (Less Than Truckload) - A category of freight that is larger than what a parcel carrier like UPS or FedEx would handle, but smaller than a semi-trailer load. A single pallet of product is considered LTL.
Master Case (aka Master Pack, Master Carton) - If your case pack is the carton that contains a set number of individual units of your product, then your master case is the larger carton that contains a set number of case packs of your product. Large volume buyers such as distributors that order by the pallet will commonly place their orders in terms of master cases, rather than case packs.
MOQ - Minimum Order Quantity, certain products/manufacturers may require a minimum quantity to place an order as some products come in pre-arrange cases.
Net Terms - The number of days that a retailer has to pay you in full for an order, beginning the day that the product is shipped. “Net 15” or “Net 30” means that the retailer has 15 or 30 days to pay you.
OOS - Out of Stock, When a supplier don’t have a certain product available for whatever reason, they would list it as OOS.
Pallet (aka Skid) - A wooden or plastic platform that is loaded with master cases and then shrink wrapped, for easy maneuvering onto and off of semi-trailer trucks via forklift or pallet jack.
Payment Terms - The policies regarding payment that the seller expects buyers to adhere to when ordering. Terms should address when you expect to be paid (net 15, net 30, prepay, etc), forms of payment you accept, which party pays for shipping, whether or not you accept returns or offer credits, and anything else related to payment.
Purchase Order (aka PO) - A document that a retailer submits to a wholesaler, detailing the products and quantities that they’d like to buy, along with the prices they expect to pay and their desired delivery window. The wholesaler responds to the PO with an order confirmation, indicating any out of stock products or price changes, and whether or not the delivery window is achievable.
Resale Numbers and Tax IDs - Resale Numbers are issued to retailers by their state’s tax agency, and Tax IDs by the IRS. These identify the retailer as being exempt from paying tax on purchases intended for resale. States only collect sales tax once, so there’s no need for retailers to pay sales tax at the time of purchase from a wholesaler.
Sell Through Rate (aka Movement) - A retailer’s measure of how fast a product sells in their store, based on the amount of inventory received from a vendor versus how much of it sells during a given period of time (generally a month).
SKU - Also known as an item number, a SKU is a unique code or series of numbers assigned to each product in a line. SKUs are most often used when a manufacturer has a large inventory to manage.
Temporary Price Reduction (TPR) - A classic consumer program where there’s a colorful shelf tag announcing that your product is on sale. This can be a strong call to action for consumers.
TI-HI - When a retailer or distributor orders a pallet of your product, they’ll want to know the number of master cases per tier (TI) and the number of tiers high (HI) that will be layered onto a pallet. Hence, “TI-HI.” This helps them when arranging for transportation of your product, and allocating space for it in their warehouse.
Trademark - Elements of a company’s brand identity, such as taglines and logos, that are registered with the USPTO and owned by the company.
Turn Rate (aka Turnover or Turn) - A retailer’s measure of a given product’s movement over the course of a year, which is an important tool for assessing whether too much or too little backstock is being kept.
Universal Product Code (UPC) - The barcode on a product’s packaging that most retailers scan when taking inventory or selling it at their POS. UPCs are purchased by the producer from a certified barcode vendor.
Vendor Compliance - Rules that major retailers expect their vendors to follow carefully as a condition of doing business with them. These rules relate to everything from liability insurance and invoice formatting, to shipping, packaging, and labeling standards.