What is GMV?
GMV, or “Gross Merchandise Value”, refers to the total order value of all merchandise sold across a given time period. In particular, GMV is a critical KPI most often tracked in the eCommerce industry and customer-to-customer (C2C) marketplaces.
- GMV stands for “Gross Merchandise Value”.
- The GMV measures the total value of goods sold across a given period.
- The GMV metric is a common method to determine the performance of an eCommerce business, particularly for tracking its trajectory of growth.
- The formula to calculate GMV equals the product of the total number of transactions and the average order value (AOV), or sale price per item.
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How to Calculate Gross Merchandise Value (GMV)
The GMV, an abbreviation for “Gross Merchandise Value”, is defined as the total volume of revenue generated across a given period of time.
In particular, the gross merchandise value (GMV) – often used interchangeably with the term “Gross Merchandise Volume” – is an important key performance indicator (KPI) to track for eCommerce platforms such as:
- Amazon (AMZN)
- eBay Inc. (EBAY)
- Alibaba (BABA)
- Etsy (ETSY)
- Shopify (SHOP)
Calculating the gross merchandise value (GMV) metric consists of multiplying the number of total transactions by the average order value (AOV).
- Total Number of Transactions → The total number of customer orders received and processed by a company over a given period.
- Average Order Value (AOV) → The average order value (AOV) estimates the average monetary value per transaction. The AOV metric can be determined by dividing the total revenue from all orders divided by the total number of transactions.
GMV Formula
The formula to calculate the gross merchandise value (GMV) is the product of the number of transactions and the average order value (AOV).
The total number of transactions is self-explanatory, while the average order value (AOV) is the amount spent on average per customer order.
For a more granular calculation of GMV, the sale price of goods – separated by each product segment – can be used instead of the average order value (AOV).