What is GMV?
GMV means 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.
What is difference between GMV and 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.
Why is GMV important?
There are several reasons why GMV is important:
- Performance Evaluation: GMV provides businesses with the opportunity to assess their performance and growth over time. By analyzing GMV figures from various timeframes, businesses can identify trends, patterns, and areas where they can enhance their performance.
- Revenue Generation: The amount of money generated by an e-commerce platform is directly linked to the gross merchandise value (GMV). When the GMV increases, it means that more products are being sold, which in turn leads to higher revenue and profitability.
- Market Share: GMV is commonly utilized to evaluate market share in the e-commerce industry. By comparing the GMV of various platforms or marketplaces, businesses can ascertain their position in the market and uncover opportunities for growth.
Read More: Must have shopify apps
Tips for Increasing Gross Merchandise Value
- Free shipping to attract 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.