GMV
What is GMV
If you’re working in e-commerce or operating in the context of an online marketplace, then you must know about Gross Merchandise Value, or GMV for short. (Note that you might also hear this metric called Cross Merchandise Volume).
GMV represents the total value of goods and services transacted through a platform within a specific time frame, excluding discounts and returns.
Learning the GMV calculation
To calculate GMV, you can use the following formula:
GMV = Number of Products Sold x Sales Price of Products
It’s important to emphasize that this calculation covers all sales by merchants on the platform and not just the commission collected by the platform.
In addition, the GMV calculation is performed before deducting fees and expenses associated with product sales, such as advertising and delivery costs.
Why you need to evaluate GMV
GMV provides an important snapshot of a platform’s overall commercial performance while serving as a key metric for assessing the platform’s growth, attractiveness to buyers and sellers, and overall contribution to the digital economy.
In practice, GMV works best when recorded and implemented over time at regular intervals, such as quarterly or annually, allowing platforms and other stakeholders to assess the platform’s performance over time. For example, by comparing the most recent GMV quarterly sales and with that of a year ago, you can effectively measure and evaluate the year-on-year performance of the platform.
GMV vs. CPS
Still wondering about the difference in meaning between GMV and CPS? We know that GMV represents the total value of transactions on a platform. Cost Per Sale, meanwhile, is a metric commonly used by advertisers to measure money spent on each sale generated from a specific ad or marketing campaign.
Related topics: CPS, Content Seeding
