Surely you have seen that in some of the industry news (including ours) we talk about terms such as GMV when we analyze the results of some great marketplace. It is a relatively little-known metric outside this context, but one that large companies such as Amazon, or (or Shopify, when referring to the results generated by stores using their platform) frequently use. Therefore, today we will explain in detail what it consists of.
How to calculate the GMV. Differences between GMV and income
The gross merchandise value or GMV, for its acronym in English, is the gross value of the merchandise. The GMV is responsible for measuring the total value of sales made by a company, without taking into account possible discounts, returns or shipping costs. That is, number of units sold multiplied by the selling price
As you will have verified, GMV’s metric will not match the revenue of a marketplace or online store. In the case of Amazon, for example, you will see that when he talks about his marketplace he refers to the GMV, while he talks about his own sales he refers to “revenue” or income.
Let’s put a example very simplified: if Amazon tells us that the GMV generated in its marketplace (through external sellers) in a quarter has been 100 million euros, but we know that the percentage that the platform keeps of these operations is 10%, we will find a GMV of €100M against revenues of €10M.
Of course, this metric can also be applied to retailers that act as intermediaries. Another simple example would be that of an online store that sells 10 t-shirts for 10 euros each, but whose buyers apply a promotional discount of 10%. In this case:
- GMV: 10 X 10= €100
- Income: 10 x 9= €90
In any case, keep in mind that the GMV is not a metric that clearly shows the situation at the level of commercial profitability of the company, because as we said it does not take into account commissions and other sales expenses such as shipping and production costs, marketing , returns, discounts, among others. The most advisable thing is to use the GMV along with other financial metrics to get a more complete picture of the financial health of the company, as well as its growth projection
On the other hand, the GMV focuses on the value of sales and does not show whether the managed customer base is growing or the number of visits each customer makes to the online platform. Customer counting can help personalize service for the most valuable users and
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