Retail has its own vocabulary, and knowing it changes how confidently you buy, price and talk to vendors. Below is a grouped glossary of the terms boutique owners run into most often, with a plain-English definition, why it actually matters day to day, and a link to a deeper guide or calculator where one exists.
I am Carina Hatton, boutique owner since 2013 and ecommerce coach since 2019. I built this page because new owners tend to nod along in vendor calls and buying meetings without a firm grip on what half the terms mean, then feel behind. You are not behind. You just need a reference. Bookmark this one and come back to it.
Buying and sourcing terms
These are the terms you hit first, usually in a line sheet or a vendor's first email back to you.
MOQ (minimum order quantity)
The smallest amount a vendor will let you order, either per style, per size run, or as a total order dollar amount. It matters because it decides whether a vendor is realistic for your current order size, and whether you can test a new style without overcommitting. The full breakdown, including how to negotiate one, is in minimum order quantity (MOQ).
SKU (stock keeping unit)
A single trackable version of a product, usually unique by style, color and size. Two shirts in the same style but different colors are two SKUs. SKU count matters because it drives how much your inventory system, your reorder process and your staff's mental map of the store have to hold. If you are unsure how wide to run, see how many SKUs should a small boutique carry.
Wholesale
The price and terms at which a vendor sells to a retailer for resale, as opposed to the price a shopper pays. Understanding wholesale terms is the entry point to buying inventory at all, and mixing it up with retail pricing is one of the most common beginner errors. See wholesale vs retail for the full comparison and how to buy wholesale for a boutique for the buying process itself.
Retail
The price a shopper pays at the register or checkout, and more broadly the business of selling goods directly to the end customer. It matters as a term mainly in contrast to wholesale, since your margin lives in the gap between the two.
Case pack
A vendor's pre-set bundle of units, often a fixed assortment of sizes or colors that ships as one unit and cannot be broken apart. It matters because a case pack can force you to carry sizes or colors you did not plan for, which affects both your open-to-buy and your floor space. Ask about case pack requirements before you finalize quantities, the same way you would ask about MOQ.
Line sheet
A vendor's catalog document showing styles, wholesale prices, MOQs and available sizes or colors, usually the first thing you review before placing an order. It matters because a clear line sheet tells you a lot about how organized a vendor is to work with long term, not just what they sell.
Purchase order (PO)
The formal document you send a vendor confirming what you are ordering, at what price, and on what terms. It matters because it is your paper trail if a shipment arrives short, wrong, or late, and most vendors expect one before they will process an order at all.
Lead time
The amount of time between placing an order and receiving it. It matters enormously for planning, since a long lead time means you have to commit to inventory further in advance, and it directly affects your reorder point calculation below.
Delivery window
The date range a vendor commits to for shipping or delivering an order, common at trade shows and with pre-order or seasonal buys. It matters because missing a delivery window can mean product arrives after the season it was meant for, which is a common complaint with slow-shipping overseas vendors in particular.
Pricing and margin terms
These are the terms that decide whether an order that looks exciting on a line sheet actually makes you money.
Markup
The amount you add to your cost to set a selling price, expressed as a percentage of cost. It matters because markup and margin are calculated differently and get confused constantly, which leads owners to price lower than they think they are. The formulas and the difference between the two are laid out in retail math formulas.
Margin
The amount you keep from a sale after cost, expressed as a percentage of the selling price, not the cost. It matters because margin, not markup, is what actually tells you how much of each sales dollar is profit before expenses. See retail pricing for how to set prices around a margin target.
Gross margin
Total revenue minus the cost of goods sold, usually looked at across a period or a whole assortment rather than one item. It matters because it is the number that tells you whether your buying and pricing decisions, taken together, are actually funding the rest of the business. The full walkthrough with worked hypothetical numbers is in retail math formulas, and you can run your own numbers in the Profit Margin Calculator.
Landed cost
What a unit actually costs you once you add freight, duties and any other charges on top of the wholesale price. It matters because pricing off the wholesale number alone, without landed cost, quietly erodes margin on every order that involves shipping or import costs. See wholesale landed cost and the Landed Cost Calculator.
Keystone pricing
A pricing shortcut of doubling your cost to set the retail price. It matters because it is easy to apply but does not account for landed cost, freight or the fact that some categories can support more and others less. The pricing method that replaces guessing at keystone with a real margin target is covered in how to price boutique clothing.
Markdown
A reduction from the original selling price, used to move slow inventory, clear seasonal stock, or run a promotion. It matters because an unplanned markdown eats directly into the margin you built at the pricing stage, so it helps to plan markdown timing and depth in advance rather than reacting late. Model a markdown before you run it with the Markdown Sale Calculator.
Inventory and planning terms
These terms show up once you are managing an ongoing assortment rather than a single opening order.
Assortment
The full mix of products you carry, viewed by category, price point, size range and style, rather than any single item. It matters because a well planned assortment gives customers reasons to buy more than one thing and avoids being either too narrow or too scattered. See retail assortment planning.
Inventory turn
How many times you sell through and replace your average inventory over a given period, usually a year. It matters because a low turn number usually means cash is tied up in slow-moving stock, while a very high turn can mean you are frequently out of stock on winners. Calculate yours with the Inventory Turnover Calculator.
Open-to-buy
A budgeting method that tells you how much you can spend on new inventory for a period, based on planned sales, current stock and what is already on order. It matters because buying without an open-to-buy plan is how owners end up overstocked in one category and empty in another at the same time. See open-to-buy for small boutiques and the Open-to-Buy Calculator.
Reorder point
The inventory level at which you need to place a new order so you do not sell out before the replacement stock arrives. It matters because it is built directly from lead time and how fast an item sells, so getting it wrong in either direction means either lost sales or excess stock. Calculate yours with the Reorder Point Calculator.
Carrying cost
The ongoing cost of holding inventory before it sells, including storage space, insurance, and the opportunity cost of cash tied up in stock rather than earning elsewhere. It matters because it is the hidden cost that makes slow-moving inventory more expensive than the sticker price suggests. See inventory carrying cost.
Shrinkage
Inventory loss from theft, damage, administrative error or miscounting, measured as the gap between what your records say you should have and what you actually have. It matters because unaddressed shrinkage quietly distorts your margin and your reorder decisions since you are working from stock numbers that are not accurate. See retail inventory shrinkage.
Selling and performance terms
These are the numbers you check to see how the store is actually performing, not just what is planned.
Sell-through
The percentage of received units in a style or category that have sold within a given period. It matters because it is the clearest early signal of whether a buy was right, letting you reorder a winner or mark down a miss before it stalls out. See sell-through rate for boutiques and the Sell-Through Calculator.
GMROI (gross margin return on inventory investment)
A measure of how much gross margin you generate for every dollar tied up in inventory, combining margin and turn into a single number. It matters because two categories can have the same margin percentage but very different GMROI if one turns much faster than the other, which changes which category deserves more of your buying budget. Run the number with the GMROI Calculator.
Average order value (AOV)
The average dollar amount spent per transaction, calculated by dividing total revenue by number of orders over a period. It matters because raising AOV, through bundling, upsells or a simple recommendation at checkout, is often a faster lever than finding new traffic.
Conversion rate
The percentage of visitors, whether foot traffic or website traffic, who complete a purchase. It matters because it tells you whether a traffic problem is really a traffic problem or actually a merchandising, pricing or checkout friction problem. Check yours with the Conversion Rate Calculator or the in-store Conversion Rate Checker.
A quick reference table
| Term | Group | One-line meaning |
|---|---|---|
| MOQ | Buying | Smallest order a vendor accepts |
| SKU | Buying | One trackable version of a product |
| Markup | Pricing | Price increase over cost, as a percent of cost |
| Margin | Pricing | Profit kept, as a percent of selling price |
| Landed cost | Pricing | Cost plus freight, duties and fees |
| Sell-through | Performance | Percent of received stock sold in a period |
| Open-to-buy | Planning | How much you can spend on new stock right now |
| Inventory turn | Planning | How many times stock sells through in a period |
| GMROI | Performance | Margin returned per dollar tied up in inventory |
| Conversion rate | Performance | Percent of visitors who buy |
This table is a memory jog, not a replacement for the fuller definitions above. Use it to find the section you need, then read the entry for the practical detail.
Using this glossary as a working owner
You do not need to memorize every term on this page before you place your next order. What is worth doing is keeping this page open the first few times you review a line sheet, negotiate with a new vendor, or sit down to plan a season. Most owners pick up the vocabulary quickly once they see it applied to their own numbers rather than in the abstract.
A good habit is to pair each term with the report or number in your own business that it maps to. When you read sell-through, open your point-of-sale report and find your actual sell-through by category. When you read margin, pull your last order and calculate it for real. The definitions stick faster once they are attached to something you can see on your own screen.
If a vendor or a fellow owner uses a term that is not on this page, it is worth asking what they mean rather than nodding along. Retail vocabulary is not standardized everywhere, and a term can carry slightly different meaning depending on the category or the region. Clarity is always cheaper than a costly misunderstanding on an order.
Building fluency over time
Most owners build real fluency with these terms not from a glossary but from repetition: placing orders, reading reports, and running the numbers on a decision before making it rather than after. Treat this page as the reference you return to when a term is fuzzy, and treat your own sales and inventory reports as the classroom where the terms actually become useful.
For a deeper look at how these terms connect into a full buying and inventory system, start with boutique inventory management, which walks through how sell-through, open-to-buy, reorder point and turn work together across a real buying cycle rather than as isolated definitions.