Gross Merchandise Volume (GMV) is a term used in the online retailing for the purpose of indicating a total sales dollar value for the merchandise sold through any marketplace over a particular period of time. Beginners to the GMV in business have to understand that the site revenue comes from fees and such revenue is different from the dollar value of all items sold. The term GMV for the e-commerce retail companies means the sales price which is charged to the customer and multiplied by the total number of items sold. If your business sells 10 books at $100 each, then the total gross revenue is $1000.
How to calculate the GMV
There are different methods to calculate the gross revenue of the business. However, GMV is one of the most common and recommended methods as it refer to the entire volume in dollars of the sales over a particular time period on the e-commerce platforms. You can focus on different methods to calculate the GMV and make positive changes in your approach to develop the business.
The overall performance of the e-commerce website depends on several things such as the GMV. You can focus on everything about this term in the online retailing sector and make certain how it is used to describe the entire sales dollar value for the merchandise sold over a particular period via a specific customer too customer exchange website. The GMV in the ecommerce website refers to the whole amount of money paid by all customers.
Many people do not aware of how and when the gross merchandise volume is calculated. They have to understand and keep in mind that GMV is calculated before deducting the fees, taxes and all other associated expenses. An ecommerce business can use the information from the GMV to measure its growth in a given period. This GMV lets sellers to find the gross value of all completed sales almost immediately.
Specialists in the business development strategies these days argue that the GMV does not provide any important insight into the company’s productivity. This is because the GMV does not take into discounts, account returns and price reductions. The GMV also does not include some fees like the inventory management and storage. The dollar value of products sold is not the only factor used in e-commerce marketplaces for the purpose of calculating the site revenue.
Make an informed decision
As a metric commonly used by leading e-commerce companies, gross merchandise value functions primarily to view the total sales volume from the recording period to the entire sales volume from another recording period. This factor is designed to assist all companies to understand and put a significant figure on the business growth in terms of sales.
Smart business people make use of this metric to understand and also put a figure on their business’s growth in terms of the overall sales. They remember that this factor is always measured in dollars. They use the GMV in a good combination with other sales and revenue metrics for understanding how their business is operating and growing.
Last Updated on November 3, 2020 by Musa D
Magalie D. is a Diploma holder in Public Administration & Management from McGill University of Canada. She shares management tips here in MGTBlog when she has nothing to do and gets some free time after working in a multinational company at Toronto.