GMV – Gross Merchandise Value
Total sales before returns, discounts, and fees. GMV = price × quantity for each transaction. Common among marketplaces (eBay, Etsy, Amazon) that measure activity volume. GMV isn't the same as a merchant's revenue.
In practice
GMV measures 'market size' — how much money flowed through a platform. For a marketplace: revenue = GMV × commission rate. For a marketplace seller: GMV is what you report to the marketplace. For an independent store: GMV is roughly equal to gross revenue.
Common misconception
'High GMV means a great business.' Uber and Airbnb report GMV, but their revenue is only 20-30% of it. A store reporting $1.4M GMV on Etsy with an 18% take rate has $250K in revenue. GMV tells you how much passed through, not how much remains.
How to fix it
Confusing GMV with revenue? (1) For an independent store, gross revenue is the right metric, (2) for a marketplace seller, your profit is GMV minus fees and costs, (3) for every financial report, clearly define the metric — gross/net/contribution.
Example
An Etsy seller said, '$50,000 GMV this year — a great business.' Real calculation: Etsy fees 6.5% + processing 3% + ads 8% = 17.5%. Net GMV: $41,250. COGS $18,000. Contribution: $23,250. After fixed costs: $10,500 in annual profit. 'Great' became 'decent.'
Priority
GMV is a vanity metric for an independent store — impressive but not the full story. For reporting to partners and investors, GMV is useful. For daily management, rely only on net revenue plus contribution margin.
Related terms
Keep learning. Metrics that touch the same area:
- Net RevenueFinanceGross sales minus returns, cancellations, and discounts. Net Revenue = Gross Revenue - Returns - Cancellations - Discounts. What's left after deductions.
- ROI – Return on InvestmentFinanceA general profitability metric: (net profit / investment cost) × 100. Different from ROAS — it includes all expenses.
- AOV – Average Order ValueFinanceTotal revenue divided by number of orders. The biggest lever for increasing revenue without more advertising.
- LTV / CLV – Customer Lifetime ValueFinanceTotal expected profit from a customer over the entire relationship. A healthy LTV:CAC ratio is 3:1.
- Gross MarginFinance(Sale price - COGS) / sale price × 100. The basis for every pricing and advertising decision.
- COGS – Cost of Goods SoldFinanceThe direct cost of producing or acquiring products sold. Includes: product + import shipping + customs + packaging.
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