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Gross Merchandise Value Explained – Importance and Impact

What is Gross merchandise value?

Gross merchandise value (GMV) refers to the value of goods sold via customer-to-customer or e-commerce platforms. It is the total value of goods or services sold through a marketplace or e-commerce platform within a specific time period, excluding discounts, returns, and taxes. GMV is calculated prior to the deduction of any fees or expenses and is a measure of the growth of the business or use of the site to resell products owned by others through consignment.

How is Gross merchandise value useful?

GMV serves as a key performance indicator (KPI) for e-commerce businesses, reflecting the scale and revenue potential of online marketplaces and digital commerce platforms. By analyzing GMV metrics, organizations can evaluate sales performance, identify growth opportunities, and optimize pricing, inventory, and marketing strategies to maximize revenue and profitability. 

Gross merchandise value In Academia

 In academia, GMV is studied within the fields of e-commerce economics, marketplace dynamics, and revenue analytics. Researchers investigate GMV calculation methods, including order value aggregation, transaction tracking, and revenue recognition, to measure platform performance and assess market share and growth trends. Academic studies on GMV also explore its limitations, such as revenue recognition policies, platform fees, and currency conversion effects, as well as its role in valuing e-commerce businesses, investor valuation models, and industry benchmarks in the digital economy.

Also, learn about heatmap.

A heatmap (or heat map) is a graphical representation of data where values are depicted by color. They are essential in detecting what does or doesn’t work on a website or page and which parts and elements of a page users engage with.

Explore other related terms only on Rubick.ai.

Frequently Asked Questions On Gross Merchandise Value

Why is the Gross Merchandise Value important?

The gross merchandise value (GMV) is calculated prior to the deduction of any fees or expenses. It provides information that a retail business can use to measure growth, often on a month-over-month or year-over-year basis.

Can GMV be higher than revenue?

GMV is the total value of the number of goods sold through an eCommerce website without any costs of goods subtracted. Refunds or return amounts are also not included in the GMV number, and the GMV will always be higher than revenue.

Does GMV include tax?

GMV does not include factors such as discounts, shipping costs, returns and refunds, taxes, or the operational costs of running a business (think overhead or advertising costs).

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