Gross merchandise volume is a metric commonly used by e-commerce businesses to measure total sales transacted through their platforms. In China, e-commerce giants Alibaba and JD.com both use GMV to measure transactions conducted during its shopping events, such as Alibaba’s Singles’ Day on November 11 and JD.com’s 618 shopping festival. GMV measures the total revenue from the sales without taking into account returns, discounts, or other costs. When you calculate the revenue, you calculate the total amount of money you earn from a sale after you deduct the costs we mentioned above. The first is the total volume of goods sold on eBay as a whole, across the entire website, as a measure of eBay’s performance and status as a marketplace.

  • Total Payment Volume (TPV) is a broad term encompassing all transactions processed by a payment getaway regardless of the platform.
  • GMV, (Gross Merchandise Value), measures the total monetary value of merchandise sold through a platform or marketplace.
  • Ecommerce companies can use GMV along with other sales and revenue metrics to understand how the business is functioning and growing.
  • 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.
  • We calculate GMV using gross numbers, or before deducting costs and expenses.

Gross Merchandise Value (GMV) means the total value of all goods a vendor or supplier sells through a specific platform or channel over a set period of time – quarterly, biannually, or yearly. The Gross Merchandise Value is calculated without deducting returns, discounts, and other costs. The gross merchandise value (GMV) is calculated prior to the deduction of any fees or expenses. GMV provides a useful measure of the overall transaction volume on eBay’s platforms and is correlated to net transaction revenue.

How To Calculate Gross Merchandise Volume

Mostly, you should consider what is sustainable for your company specifically. If you go for a higher number than you can manage, it can lead to overwhelm. A growth rate that’s too fast can kill a business, especially if it’s fairly new.

  • You would simply add up the number of orders made for each month and calculate based on that.
  • Gross Merchandise Value (GMV), also referred to as gross merchandise volume, is the total order value of all merchandise sold throughout a given time period.
  • Gross merchandise value is often used to determine the health of an e-commerce site’s business because its revenue will be a function of gross merchandise sold and fees charged.
  • Both metrics are important and are often used alongside other ones to better determine a business’s financial health.

Even with an upsell, you can show them a special deal only available to them for a limited time. You would simply add up the number of orders made for each month and calculate based on that. Using GMV as a way to calculate a company’s health just isn’t a smart https://personal-accounting.org/gross-merchandise-volume/ move, especially when there are other options. Total Payment Volume (TPV) is a broad term encompassing all transactions processed by a payment getaway regardless of the platform. Study based on one billion data points across more than 220,000 e-commerce sites.

In combination, they can give you a better picture of how healthy your company is in terms of operations and growth. Gross Payment Volume (GPV) measures the total amount processed in transactions through payment systems or platforms. Calculating the Gross Merchandise Value of your business will allow you to scale the growth of your operations and the effectiveness of your marketing strategies. It also provides needed insight into sales and patterns for a better understanding of customer purchase behaviors.

Customer-to-Customer Retailers

Such forward-looking statements reflect eBay’s current expectations or beliefs concerning future events and actual events may differ materially from historical results or current expectations. The forward-looking statements in this document speak only as of this date. We undertake no obligation to revise or update publicly any forward-looking statement, except as required by law.

Alternatively, you can calculate GMV using the sale price of goods instead of the average order value. You just multiply your total number of orders by your average order value (AOV). Depending on the context, a seller may be talking about either one or both. For example, « eBay’s GMV is slightly down year-over-year, but I’m seeing much worse numbers in my own business, where the GMV has fallen 20% this month, as compared to last month at this time. » In the context of eBay, GMV refers to the total volume of dollars of sales on eBay and eBay-branded trading websites in a given economic period. Gross Merchandise Sales (GMS) is another term used interchangeably with Gross Merchandise Value (GMV).

Gross Merchandise Volume (GMV)

Combined with the GMV, the qualitative data from surveys highlights the consumers and strategies of use for your best-selling valued products. With cross-selling, you’re actively encouraging customers to buy related or complementary products in addition to the product they are currently interested in. As we mentioned before, the Gross Merchandise Value amount is prior to any deductions related to fees and other expenses, such as taxes, discounts, delivery fees, product returns, and other side costs. A business’ Net Merchandise Value (NMV) is the amount left when you deduct all expenses and fees from Gross Merchandise Value (GMV). As you may expect from the definition, monitoring and calculating gross merchandise value are pretty straightforward.

Product bundling refers to selling two or more products at a lower price than the original, singular product. Suppose you wanted to calculate the GMV for the whole winter season, no matter which products you sold. In this case, you need to calculate and add the GMV for all the products sold during the season. To do so, divide the current GMV by the GMV from the same period the previous year, then multiply the result by 100.

Gross Merchandise Value (GMV): Definition, Formula, Pros and Cons, and Example

If the company sells 50k shirts in 2021, the GMV is the product of the average selling price (ASP) and the number of units sold, which comes out to $1 million. For a more granular calculation of GMV, the sale price of goods – separated by each product segment – can be used instead of the average order value (AOV). Accrued fees and expenses may include advertising, delivery, returns, and discounts. JD.com on the other hand excludes transactions valued at over 2,000 yuan (US$301) that are not ultimately sold or delivered. However, for its GMV, it does take into account shipping charges paid by buyers. For example, in its annual report Alibaba defines GMV as the total value of confirmed orders closed over its marketplace platforms, regardless of whether the transactions are ultimately completed.

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In this way, e-commerce Gross Merchandise Value is specific to products sold through digital channels such as website sales and mobile apps. Net Merchandise Value (NMV) is what you get after you deduct all the fees and expenses from your Gross Merchandise Value over a period of time. It’s a more realistic look into how your business is actually performing as it takes into account costs, refunds, etc. For example, if GMV was your company’s primary growth metric, you may focus on more expensive, big-ticket products as the sales price of these products will help boost your total transaction value. Gross Merchandise Value (GMV), also referred to as gross merchandise volume, is the total order value of all merchandise sold throughout a given time period.

Adam Hayes, Ph.D., CFA, is a financial writer with 15+ years Wall Street experience as a derivatives trader. Besides his extensive derivative trading expertise, Adam is an expert in economics and behavioral finance. Adam received his master’s in economics from The New School for Social Research and his Ph.D. from the University of Wisconsin-Madison in sociology. He is a CFA charterholder as well as holding FINRA Series 7, 55 & 63 licenses.

Gross merchandise value is often used to determine the health of an e-commerce site’s business because its revenue will be a function of gross merchandise sold and fees charged. It is most useful as a comparative measure over time, such as current quarter value versus previous quarter value. For instance, you can see how much you’re actually selling, then look at how much is “lost” due to returns and refunds.