Why is GMV an important measurement of ecommerce sales?
GMV is a crucial metric for marketplace sellers because it provides an accurate measure of the overall sales performance. It shows how much revenue a seller is generating from its products or services, and it's an excellent way to track the business's growth over time. By monitoring GMV by channel, multichannel sellers can understand their customer buying behavior and identify their popular products or services. It also helps sellers to determine their pricing strategy and sales targets.
What is GMV?
Gross Merchandise Value (GMV) is the total value of merchandise sold through an ecommerce platform over a specific period, typically a day, a week, a month, or a year. It represents the total sales amount before any deductions such as taxes, refunds, or shipping fees. In other words, GMV is the revenue generated by an ecommerce business by selling its products or services.
How to calculate annual GMV?
Calculating annual GMV is quite simple. You just need to multiply the total number of items sold by their respective prices. Let's take an example to understand this better.
Suppose a marketplace seller selling on Amazon and their own website sold 10,000 t-shirts at $10 each and 50,000 pairs of jeans at $50 over twelve months. To calculate the GMV, you need to multiply the number of t-shirts by their price and the number of jeans by their price, and then add the two together.
GMV = (10,000 t-shirts x $10) + (50,000 pairs of jeans x $50)
GMV = $100,000 + $2,500,000
GMV = $2,600,000
So, the GMV for the seller in this example is $2.6 million for the last 12 months
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