GMV (Gross Merchandise Value)

Gross Merchandise Value (GMV) represents the total dollar value of merchandise sold over a specific period on an e-commerce platform or marketplace, before any deductions such as returns, discounts, taxes, or fees.

GMV is commonly used by marketplaces, e-commerce platforms, and multi-vendor businesses to measure overall sales volume and business scale.

What GMV Includes (and Doesn’t Include)

GMV includes:

• The listed price of all products sold
• Sales across all channels (online store, marketplace, mobile app)
• Orders regardless of payment method

GMV does not include:

• Returns or refunds
• Discounts or promotions
• Shipping fees
• Taxes
• Payment processing or platform fees

Because of this, GMV should not be confused with revenue or profit.

How GMV Is Calculated

GMV = Sum of Product Prices × Quantity Sold (for a given period)

Example:
If a store sells 1,000 products at $50 each in a month, GMV for that month is $50,000, even if actual revenue is lower after refunds or discounts.

GMV vs Revenue

Although often used interchangeably, GMV and revenue measure different things:

• GMV reflects total sales volume
• Revenue reflects actual earnings after deductions

For marketplaces, GMV may be very high while revenue represents only a percentage of GMV (e.g., commissions or fees).

Why GMV Matters

GMV is an important indicator of:

• Business growth and scale
• Customer demand
• Marketplace or platform activity

Investors and stakeholders often look at GMV to evaluate momentum, even when profitability is still developing.

GMV in E-commerce vs Marketplaces

For direct-to-consumer (D2C) brands, GMV closely mirrors gross revenue but still excludes deductions.

For marketplaces, GMV represents the total value of all third-party seller transactions, not the platform’s earnings.

Understanding this distinction is critical when comparing companies.

GMV and Key E-commerce Metrics

GMV is often analyzed alongside:

• Average Order Value (AOV)
• Conversion Rate (CVR)
• Traffic volume
• Net revenue
• Gross margin

Improving GMV can come from higher traffic, higher AOV, better conversion rates, or increased purchase frequency.

How to Increase GMV

Brands and platforms grow GMV by:

• Improving conversion rates
• Increasing AOV through bundles and upsells
• Expanding product assortment
• Driving repeat purchases
• Optimizing checkout and fulfillment

Lifecycle marketing channels like email and SMS play a key role in driving repeat GMV over time.

Limitations of GMV

While useful, GMV has limitations:

• It does not reflect profitability
• It can overstate business performance
• It ignores operational costs

For a complete view of business health, GMV

GMV vs Revenue

GMV does not account for:

• Returns
• Discounts
• Fees

Revenue is typically lower than GMV.