What Is Gross Merchandise Value (GMV)?
GMV is the total value of goods sold before fees and returns. Learn when it matters and when it misleads.
Key Takeaways
- GMV = total transaction value before deducting fees, returns, or discounts
- GMV measures scale but not profitability
- Marketplaces report GMV; their actual revenue is take rate x GMV
- GMV growth is only meaningful when compared to net revenue and margin trends
Definition
Gross Merchandise Value is the total monetary value of all orders placed during a given period, before deducting marketplace fees, payment processing costs, returns, or cancellations. If 1,000 customers each buy a £50 product, the GMV is £50,000 regardless of what percentage flows through as actual revenue.
Why marketplaces love GMV
Marketplaces like Amazon and eBay report GMV as their primary volume metric because it reflects total economic activity on their platform. Their actual revenue is a percentage of GMV called the take rate — typically 5% to 15%. A marketplace with £10 billion GMV and a 10% take rate earns £1 billion in revenue.
When GMV misleads
GMV without context can be dangerously misleading. A brand that sells £5 million GMV through Amazon but pays 15% fees, has 12% returns, and 30% COGS is not nearly as healthy as those seven-digit numbers suggest. Focus on net revenue, gross margin, and ultimately contribution margin.
GMV vs net revenue
For direct-to-consumer stores, the distinction between GMV and net revenue matters less. For any business selling through a marketplace or aggregating sales across channels, always track both. Net revenue tells you what you actually earned. GMV tells you how much gross activity you generated.
Using GMV for benchmarking
GMV is useful when comparing businesses in the same channel at the same stage — two Shopify stores both reporting 40% GMV growth year-on-year. If one is Amazon and one is DTC, the comparison is meaningless. Use GMV for like-for-like comparisons and always accompany it with margin data.