What is Gross Merchandise Value GMV? How GMV Works w Examples

The most simple formula to calculate GMV for a digital marketer or anyone else inside the company is to take the sales price of a product (i.e. piece of merchandise) and multiply it by the number of products sold. You could do this for a single product, multiple products, or the entire product catalog. Gross Merchandise Value, in and of itself, can be a valuable figure to use as a raw estimate of company earnings, as well as its function as a metric or unrefined predictor of growth. Still, it’s wise for a company to use GMV in conjunction with other financial metrics in order to get the most accurate and well-rounded picture of the company’s financial health, as well as its potential for growth. We calculate GMV using gross numbers, or before deducting costs and expenses. Net sales, on the other hand, considers all these deductions before making a calculation.

• GTV is used more in businesses that operate on commissions, as GTV is equal to the number of items sold multiplied by the price collected.
• You’re more comfortable with this metric and ready to put it to good use.
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• On the other hand, Gross Merchandise Value in marketing is used as a metric that represents the total value of products or services sold through a marketing channel or platform in the chosen period of time.

It is used to determine the progress of an e-commerce site as a comparative financial metric by enabling online store owners to review the total sales volume from one recording period and compare it to another. GMV provides a useful measure of the overall transaction volume on eBay’s platforms and is correlated to net transaction revenue. This change has been enabled by the increased visibility derived from the Company’s transition to managing payments globally. Gross merchandise value (GMV), also referred to as gross merchandise volume, is a growth metric used by e-commerce stores and marketplaces for tracking the total dollar amount of products sold online.

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https://personal-accounting.org/gross-merchandise-volume/ (GMV), also known as gross merchandise value, is the total value of the goods or services retailers sell over a set period. Gross Merchandise Value (GMV) is a metric that measures your total value of sales over a certain period of time. It’s a metric that is most commonly used in the eCommerce industry and is also sometimes referred to as Gross Merchandise Volume. The formula to calculate the gross merchandise value (GMV) is the product of the number of transactions and the average order value (AOV). GMV, or “Gross Merchandise Value”, refers to the total order value of all merchandise sold across a given time period.

• Suppose you wanted to calculate the GMV for the whole winter season, no matter which products you sold.
• Also known as Gross Merchandise Value or Gross Merchandise Volume, this important figure tells you the total value of goods you have sold over a certain period.
• Gross Merchandise Value, also referred to as gross merchandise volume, is the total order value of all merchandise sold throughout a given time period.
• When you look at GMV like this, as a comparative measure over time, it can be very useful.
• So, let us shine a light on the ultimate measure of your sales volume – and why it has nothing to do with your revenue.

Bundles are another way to increase your order value by offering lower costs or prices. Most often, all you need to do is show these bulk options and the discounts they come with. Upselling and cross selling are both great ways to encourage customers to increase their order value. Most of the time, all you have to do is show them a small change they can make to their selection or shopping cart.

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Just make sure that these additions obviously make the product they are buying more amazing. Most customers are ok, however, with meeting a certain order value to get free shipping. They know that this is better than paying higher prices for each product so that shipping can be free. For business growth, the ideal rates can vary based on type, industry, and age or stage. The basic rate considered good, all else being equal, is 15-25% every year.

Difference between GMV and Net Sales

In particular, GMV is a critical KPI most often tracked in the eCommerce industry and customer-to-customer (C2C) marketplaces. Yet, when shipping costs are included in the order’s total value, we can justify making an online purchase instead of buying the product from a physical store. For example, if you’re a fashion retailer and want to see the sales volume for your winter jackets, you first need to see how many units you sold. For example, you might see spikes in your total sales during the summer season and a halt in the winter season – when people are worried about energy costs, so they’re more careful with how they’re spending their money. Certain statements herein are “forward-looking statements” within the meaning of Section 27A of the Securities Act of 1933, as amended, and Section 21E of the Exchange Act.

What are the precautions in using GMV?

Offering customers exclusive opportunities or prizes not available anywhere else ensures every transaction has the greatest possible monetary value and spikes up your gross merchandise values. Bundling products together can increase your profit margins and customer loyalty since consumers appreciate bundled deals’ convenience and cost savings. Besides products, you also need to identify customers who might be receptive to cross-selling campaigns.

You can also calculate the proportion of revenue you pour into advertising, and how effective your campaigns are. With other financial metrics, your gross merchandise value can give you accurate details. Then you can measure your business’s health and potential for growth, helping you make better decisions. Gross Merchandise Value is a metric most commonly used by e-commerce companies. Ultimately, the metric is designed to help companies understand and put a figure on the growth of their business in terms of sales.

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It goes without saying – when you track the sales value, you know how much $ you’re producing each month. Alternatively, you could sell subscriptions that qualify for bulk discounts if they pay up front. You can also put the savings on the back end, like it gets cheaper each time they order up to a certain point. Average Order Value (AOV) is the average value of each transaction or order on a platform, i.e. the typical amount spent by a customer in each order. Maximum Retail Price (MRP) is the highest price that can be legally charged for a product as determined by the manufacturer. Having GMV in its calculation formula explains that NMV is an extension of GMV of sorts, portraying a more detailed look into profits as opposed to just the total value of goods sold.