Gross Merchandise Volume (GMV) is a key top-line metric used primarily by marketplaces and e-commerce platforms to measure the total sales dollar value of all merchandise sold through their platform over a specific period. It is calculated by summing the sale price of all items sold, before deducting any fees, discounts, or returns. It is a “gross” measure, meaning it does not account for the cost of goods sold or any other expenses. For example, if a marketplace facilitates the sale of 100 items at $50 each, the GMV is $5,000, even though the marketplace’s actual revenue is only the commission it takes from those sales. GMV is a crucial indicator of the scale, growth, and health of a platform’s ecosystem. Investors and analysts closely watch GMV trends to gauge a company’s market traction and ability to facilitate transactions. However, it is important to note that GMV can be inflated by factors like high return rates or discounted sales, so it should always be analyzed alongside other metrics like net revenue, take rate (the percentage of GMV captured as revenue), and customer retention to get a full picture of financial performance.
