What is GMV?
GMV stands for gross merchandises 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.
How to Calculate GMV?
Here is the simple formula to calculate gross merchandise 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 GMV is Important?
- 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)
How to Increase GMV?
- 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
Q. Is GMV same as revenue?
Ans. It depends on the e-commerce site but mainly revenue is a portion of the Gross merchandise value.
Q. What is GMV and Nmv?
Ans. In simple words, Nmv is the amount you get after deducting all costs and expenses from the Gmv (NMV = GMV - All Costs/ Expenses).