Gross Merchandise Value (GMV)
GMV represents the total value of products sold through a marketplace or ecommerce site over a specific period, before any deductions.
Definition and Formula
Gross Merchandise Value (GMV) is the total sales value of products sold through an ecommerce platform during a given timeframe. It’s calculated by multiplying the number of units sold by the price per unit. GMV gives an overall measure of the transaction volume but does not account for costs like shipping, discounts, or returns.
Importance for Ecommerce Platforms
GMV is an important performance metric for ecommerce marketplaces and businesses, especially those that operate on a commission model. It reflects the total business generated on the platform and can be a strong indicator of growth. However, GMV alone doesn’t reveal profitability, as it excludes key costs and expenses.
GMV in Context with Profitability
While GMV is useful for understanding sales volume, businesses should also track related metrics like net revenue, profit margins, and return rates to get a more comprehensive view of financial performance. GMV growth should ideally be accompanied by efforts to improve efficiency and customer satisfaction.