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A transactional email is an automated email.
Transactional emails are typically triggered by an event and sent to individuals one at a time (vs. bulk sends like a newsletter). Order confirmation, abandoned cart, and customer winback emails can all be considered transactional. This is because they are triggered based on a preset list of criteria.
Transactional emails are a great opportunity to engage with your potential buyers in a timely manner to motivate them to take that next step in your marketing and sales funnel.