January Olds, founder of January Labs, equates understanding industry abbreviations with learning a foreign language. “You wouldn’t move to France to live and not learn French. Same applies to business. A crucial lesson I have learned: know the slogans,” says Olds, admitting the lessons never stop. “As I spend more time diving into more of the business end, my head spins when I’m faced with terms like EBITDA, COGS and GAAP.”

When Diana Wright’s brand Pulleez secured its first retail order from Henri Bendel, she jumped at it before realizing she didn’t comprehend the POP she signed on to provide. “I said yes because I was so eager to get in. I had no idea that POP meant point-of-purchase display,” recounts Wright. “We had to hustle to find one and, of course, nothing existed that worked for our product, so we ended up making a custom display.”

Even influencer Bretman Rock is baffled by industry expressions. Discussing his limited-edition Colourpop palette’s sales at Ulta Beauty on Instagram Stories last year, he told his 1.5 million followers, “Ulta says my palette is the number-one SKU, whatever that means.”

If you don’t know your SKU from your MOQ, Beauty Independent has your back. Here’s a glossary we will continue to build of key retail and beauty terms—including several our readers requested—defined.

BAGB: Buy product A and get product B, too.

BB: Bill back. Retailers receive allowances from a manufacturer for any charges made against a brand, not only promotions, but damages, short shipped product, markdowns, penalties for shipments (also known as chargebacks).

BOGO: Buy one, get one free. A sales promotion in which an item is offered free or at a reduced price when another item is purchased at full price.

BOM: Bill of materials. A list of the materials used to construct a product.

Bounce Back: Retailer-specific coupon. The customer receives a coupon that they can only use at that specific retailer versus a national coupon.

BUM: Buy unit of measure. The unit quantity that’s bought by and shipped to a retailer. For example, if a retailer stocking eggs, it’s one for a box of dozen, not a dozen individual eggs. BUM is important for packs of products or displays.

Chargeback: Cost penalty incurred by vendors for missed shipments or noncompliance with vendor standards. It can also be a way for retailers to invoice brands for markdowns and other activities (also known as bill back).

Clean Beauty: The clean beauty movement embraces both natural and manmade ingredients with an emphasis on safety over source. It underscores not all natural ingredients are safe and not all synthetic ingredients are unsafe. Most clean beauty brands avoid parabens, sulfates, silicones, phthalates and synthetic fragrances, and stress the effectiveness of the ingredients they include in products.

COGS: Cost of goods sold. The cost that’s directly related to the manufacturing of the merchandise sold by a brand. On the retail side, it’s what stores pay brands to buy products. On the brand side, it’s the cost for the materials needed to produce a product.

Co-op Advertising: Cooperative advertising policies differ from manufacturer to manufacturer, but most will pay a portion of the advertising costs and supply the retailer with photos or graphics to use in the ad. A manufacturer’s contribution to a cooperative advertising campaign may include money for promotional strategies and point-of-purchase displays.

Contract Manufacturer: A manufacturing facility a brand contracts with to produce its products.

Conversion Rates: The percentage of customers that bought a product out of the total that visited a store or website.

Damage Allowance: Allowance given to cover in-store damages and customer returns so that the merchandise doesn’t to be returned to the brand.

Deskside: Meetings that are typically between brands, public relations representatives and beauty editors to present new products or campaigns.

DC: Distribution center. A warehouse where goods are stored before being sent to retailers or consumers.

DIF: Destroy in field. A way for retailers to process return-to-vendor merchandise. It can be less expensive than the retailer shipping the goods back, but some retailers charge for the DIF process.

Drop-ship: Products shipped from the brand directly to a customer upon purchase rather than by an e-tailer or retailer.

DTC: Direct to consumer. A direct-to-consumer business model relies on relationships between brands and customers without a retail intermediary. It generally refers to sales conducted through a brand’s digital platform or owned stores.

EAN: Similar to UPC, EAN or European Article Number is a type of bar code used internationally to identify unique products at the point of sale.

EBITDA: Earnings before interest, taxes, depreciation and amortization. It’s an indicator of a company’s financial performance and an important metric evaluated by investors.

EDI: Electronic Data Interchange is the computer-to-computer exchange of business documents in a standard electronic format between business partners, notably retailers and brands, that often encompasses purchases orders, invoices and ship notices.

Endcap: A desirable display at the end of an aisle that offers high visibility for merchandise inside stores.

FDA: The U.S. Food and Drug Association, which is responsible for protecting the public health by assuring the safety, efficacy and security of human and veterinary drugs, biological products, medical devices, the nation’s food supply, supplements, cosmetics and products emitting radiation.

Filler: A filler is a manufacturer that produces the contents—powders, liquids, etc.—of beauty products on a contract basis.

FOB: Freight on board. A shipping term indicating who’s responsible for paying transportation charges. It is the location where ownership of the merchandise transfers from seller to buyer. The seller pays the freight and the buyer takes the title once it’s been shipped. FOB-Factory means the retailer pays the shipping. FOB-Store means the brand pays shipping.

FP: Featured price. A QVC-specific term for markdown.

Fulfillment: The process of executing upon an order.

GAAP: Generally accepted accounting principles. The term refers to a common set of accepted accounting principles, standards and procedures companies and their accountants follow when compiling financial statements.

GM: Gross margin. A company’s total sales revenue minus its cost of goods sold (COGS), divided by total sales revenue and expressed as a percentage. The gross margin represents the percent of total sales revenue the company retains after incurring the direct costs associated with producing the goods and services it sells.

GS1: A nonprofit organization that guides business communication and issues the certificate of ownership of a UPC/barcode.

GWP: Gift with purchase. A free gift included with a beauty product purchase.

INCI: The International Nomenclature of Cosmetic Ingredients. INCI is a system of names internationally recognized to identify cosmetic ingredients. The names are developed by the International Nomenclature Committee (INC) and published by the Personal Care Products Council (PCPC) in the International Cosmetic Ingredient Dictionary and Handbook, available electronically as wINCI.

Influencer: An influencer is a person active on social media that creates content and attracts a following for it. There are different tiers of influencers. Macro-influencers typically have at least 500,000 followers and many have more than a million. Micro-influencers typically have followings in the 10,000 to 50,000 range. Nano-influencers are an emerging group with high engagement levels who have 100 to 10,000 followers.

Ingredient Deck: The recipe or formula of a beauty product. In each deck, the ingredients at the top are greatest in concentration, and concentrations descend going down the deck.

Line Review: The line review process is a validation step for retailers to confirm that they are offering the right products at the right prices. Retailers routinely ask primary manufacturers in each product category to educate them on the market opportunities, their companies, products and distribution strategies.

MDA: Markdown allowance. It’s provided by a vendor to a retailer in exchange for the retailer’s temporary or permanent reduction.

Masstige: A combination of the words mass and prestige. The term masstige pertains to goods that are perceived to have high-end positioning, but are affordable for a wide range of customers.

MOV: Minimum order value. The lowest value of stock a supplier is willing to ship in a single order.

MOQ: Minimum order quantity. The lowest quantity of stock per product a supplier is willing to ship in a single order.

MSRP: The manufacturer’s suggested retail price.

Natural Beauty: There are no regulatory rules determining what constitutes natural beauty in the U.S. However, natural beauty typically refers to products focused on plant and mineral ingredients. There are generally no genetically-modified ingredients or potentially harmful synthetic ingredients.

OH: On hand inventory. The inventory a brand or retailer has on hand.

OI: Off invoice. The manufacturer or distributor decreases a product’s cost per a promotion’s term. Typically, OI involves a decrease for a specified period of time, a certain amount of product or both. The term refers to the amount the deduction takes off of the original product price. Suppliers offer off-invoice deductions as fixed amounts or percentages of original cost.

OO: On order. The inventory a brand or retailer has ordered.

On-Pack: Additional product packaged with the original item for promotional purposes.

Open to Buy: Open to buy is the dollar amount budgeted by a business for inventory purchases during a specific time period.

Open Sell: Instead of locking beauty products up and requiring sales assistance, beauty products are placed out in the open for self-service.

Organic Beauty: The FDA doesn’t define organic as it relates to beauty. The U.S. Department of Agriculture regulates the term organic, and a beauty product can’t be labeled organic under USDA certification unless it contains at least 95% organically-produced ingredients. Beauty products containing at least 70% organically-produced ingredients can be described as made with organic ingredients, but can’t garner the USDA organic seal.

PM: Promotional money.

POG: Planogram. A map showing how products are set up on a shelf.

PO: Purchase Order. The order detailing the amount of merchandise a retailer is buying from a brand.

POP: Point of purchase. POP usually refers to a display to catch the eye of customers buying products at the register.

POS: Point of sale. POS typically refers to the physical cash register, but could refer to mobile payment systems that process transactions.

Prestige: Prestige beauty products are on the expensive end of the beauty market and primarily sell in department or upscale specialty stores with a focus on education and service.

Private Equity: Private equity or PE refers to investment funds often organized as limited partnerships that buy and restructure companies that are not publicly-traded to sell at a later point in time.

PWP: Purchase with purchase. A second item will be available to purchase at a reduced price if purchased with another item.

QA: Quality assurance. Maintaining quality and ferreting out errors in products or services.

QC: Quality control. A review process to ensure manufactured goods meet a company’s standards.

RA: Return authorization. Also known as return merchandise authorization (RMA), customers request return authorization from brands to return a product. Oftentimes, brands will issue a return authorization number to go with a customer’s return request.

ROG: Receipt of goods. Official document issued to acknowledge receipt of items listed under specified terms and conditions.

ROI: Return on investment. A performance measure used to evaluate the efficiency of an investment or compare the efficiency of a number of different investments. ROI tries to directly measure the amount of return on a particular investment, relative to the investment’s cost. To calculate ROI, the benefit (or return) of an investment is divided by the cost of the investment. The result is expressed as a percentage or a ratio.

RTV: Return to vendor. Goods that are returned from a retailer to the vendor.

Seed Round: A funding round when an investor or investors injects capital into a usually young startup in exchange for a minority equity stake. It is called seed because it’s an early-stage investment meant to support the business and typically ranges from $50,000 to $2 million.

Sell-Through Rate: The amount of merchandise sold out of the total inventory a retailer received from a brand.

Series A: A series A round is a company’s first major round of venture capital financing. The name refers to the class of preferred stock sold to investors in exchange for their investment.

SKU: Stockkeeping unit. A distinct item a brand is selling. If a brand sells a single cream in two sizes, that brand’s selection includes two SKUs even though it has only one product.

Start Date/Cancel Date: The earliest and latest dates a retailer will receive a specific purchase order shipment.

3PL: Third-party logistics. A provider offering outsourced logistics services encompassing one or more facets of procurement and fulfillment activities.

SUM: Selling unit of measure. The unit quantity that’s sold by a retailer.

Trade Fuel: Money given to the retail to promote products. It’s usually part of a brand’s sales department budget allocated for the retailer.

UPC: Universal product code. A barcode symbology for tracking trade items in stores. In the U.S., UPC consists of 12 numeric digits that are uniquely assigned to a trade item.

Venture Capital: Venture capital firms or funds invest in early-stage companies in exchange for equity stakes in the companies they invest in. Venture capitalists invest in risky startups in the hopes that some of the firms they support will become successful.

WOS: Weeks of supply. A term referring to how long the inventory on hand will last based on present sales demand.