What is GMV?
GMV meaning is gross merchandise value. It helps to measure the growth of the business or e-commerce website that sells merchandise for a certain time.
Gross merchandise value mainly refers to the items of goods sold via customer-to-customer(C2C) or e-commerce platforms. In other words, 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.
GMV v/s Revenue
For example, if you sell an item through your Shopify store for $100 but you pay 10% in commissions, your revenue is actually $90 and not $100.
A tool like a Profit Margin Calculator quickly finds your target cost and product price for products on your eCommerce shopify store based on your desired profit margin.
How is GMV calculated?
Here is the simple gross merchandise value formula to calculate value correctly:
Gross merchandise value (GMV) = Price of Goods * Number of Items Sold
For example, you sell 20 products for $200 each. So, your GMV amount is ($200 * 20) = $4000, which is also known as the total sales or gross revenue of the merchandise.
Importance of Gross Merchandise Value
- It's a good indicator of the overall health and growth of the eCommerce business.
- It helps to measure the value of merchandise sold.
- It helps to compare current quarter sales with the previous year's sales.
- It helps to increase your sales by creating more buying opportunities (eg, free shipping, bundle deals, etc)
- You can use it in conjunction with other eCommerce metrics (eg, AOV, conversion rate, cart abandonment, etc)
Tips for Increasing Gross Merchandise Value
- Free shipping to attract the customers
- Upsell products to the customer
- Discount on the group of items (Bundles)
- Offer Bulk Discount
- Offer gift cards
- Provide good customer service and support
- Improve shipping times
Flash Sales are a reliable technique to drive more traffic and improve sales(GMV) for any online store. Konigles Store-wide Flash Sale actually, helps you to run flash sales across your online store within minutes.