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GMV (gross merchandise volume)

| Article: 2 min read | Analytics

GMV (gross merchandise volume) is the total monetary value of goods sold over a period. For a store, it is the average price of a product multiplied by the number of units sold.

In plain words

GMV is usually used by marketplaces and large stores to show the scale of sales. An example from Wikipedia: 10 books at 100 dollars give a GMV of 1,000 dollars (Wikipedia).

The main point: GMV is not revenue and not profit. It does not account for selling costs and returns, so it does not show net sales. On a marketplace, the platform's own revenue is made up of commissions and differs from the value of goods sold (Wikipedia).

Formula

GMV = number of goods sold × average price

Example (illustrative numbers)

The numbers are made up for the example. A marketplace sold 100,000 items in a month at an average price of 800 UAH. GMV = 80,000,000 UAH. If the platform's commission is 10%, its revenue is 8,000,000 UAH, not 80 million. If 8% of orders were returned or not picked up at the post office, real sales are smaller still.

How GMV differs from other metrics

  • Revenue: for your own store it is close to GMV minus returns and discounts, for a marketplace it is only commissions.
  • Margin and profit: GMV says nothing about them. Look at gross margin and unit economics.
  • Average order value is one of the factors of GMV, together with the number of orders.

Common mistakes

  • Calling GMV "revenue" in a conversation with investors or the team.
  • Including refusals and unclaimed cash on delivery, which inflates GMV.
  • Chasing GMV. It can be grown with discounts and advertising while every order loses money.
  • Comparing GMV across companies without finding out what exactly is counted: VAT, shipping, canceled orders.

FAQ

What is GMV in plain words? The sum of all product sales over a period at shoppers' prices, before subtracting returns and costs.

How is GMV different from revenue? Revenue is the money the company receives. For a marketplace it is commissions, while GMV is the value of all goods sold by merchants.

How do you calculate GMV? Multiply the number of items sold by the average price, or add up order amounts for the period.

Are returns included in GMV? No, by definition GMV does not subtract them, so it does not equal net sales. If you want a net figure, subtract them yourself.

Sources

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