How to Calculate Gross Merchandise Value (GMV)

Gross Merchandise Value (GMV) is the total dollar value of goods sold through a marketplace, platform, or e-commerce channel over a specific period. It is calculated by multiplying the total number of items sold by their selling price, before subtracting any fees, discounts, or returns. GMV measures transaction volume and platform scale, making it a key metric for marketplaces, e-commerce platforms, and retail businesses.

GMV Formula

The basic GMV calculation:

GMV = Number of Items Sold x Average Selling Price

Or equivalently:

GMV = Sum of all transaction values in the period

For marketplace businesses:

GMV = Total value of transactions facilitated (regardless of platform revenue)

Step-by-Step Calculation

Step 1: Define the Scope

Determine what transactions to include:

• All products or specific categories
• All channels or specific platforms
• Gross (before returns) or net (after returns)

Step 2: Identify Qualifying Transactions

Count all orders or transactions within the measurement period that match your scope definition.

Step 3: Sum Transaction Values

GMV = Σ (Order Value) for all qualifying orders

Include the full transaction value - product price, shipping, and taxes if applicable to your definition.

Step 4: Determine Gross vs. Net GMV

Gross GMV: All orders placed Net GMV: Excludes cancellations, returns, and refunds

Net GMV = Gross GMV - Cancellations - Returns - Refunds

Example Calculation

Monthly GMV for an e-commerce marketplace:

Metric	Value
Total orders placed	50,000
Average order value	$85
Gross GMV	$4,250,000
Cancellations	$125,000
Returns/Refunds	$210,000
Net GMV	$3,915,000

If this marketplace charges sellers a 12% commission:

Platform Revenue = Net GMV x Take Rate
Platform Revenue = $3,915,000 x 12% = $469,800

GMV vs. Revenue

Understanding the distinction is critical:

Metric	Definition	Example
GMV	Total transaction value	$1,000,000
Take Rate	Platform commission percentage	15%
Platform Revenue	What the platform earns	$150,000

For direct retailers (not marketplaces), GMV and gross revenue are essentially the same. For marketplaces, GMV represents the total market served, while revenue represents platform earnings.

When to Use GMV

GMV is Useful For:

• Marketplace scale: Indicating total market facilitated
• Growth tracking: Measuring transaction volume growth over time
• Market share: Comparing platform size within a category
• Investor communication: Demonstrating market reach

GMV is Less Useful For:

• Profitability analysis: GMV doesn't indicate earnings
• Direct retail: Revenue is more relevant than GMV
• Cross-company comparison: Different take rates make GMV comparisons misleading

Common GMV Mistakes

Mistake 1: Conflating GMV with Revenue

Reporting GMV as if it were revenue misleads stakeholders. A $1B GMV marketplace is not a $1B revenue business. Always clarify the distinction.

Mistake 2: Inconsistent Return Treatment

Gross GMV and Net GMV tell different stories. Reporting gross GMV while competitors report net GMV makes invalid comparisons. Define and disclose consistently.

Mistake 3: Including Non-Merchandise Items

Shipping fees, taxes, and service charges may or may not be included depending on your definition. Define what "merchandise value" means and apply consistently.

Mistake 4: Double-Counting in Multi-Sided Marketplaces

In B2B marketplaces where goods may be resold, counting the same item multiple times inflates GMV. Define transaction counting rules clearly.

Mistake 5: Ignoring Seasonality

E-commerce GMV is highly seasonal (holiday peaks, promotional events). Month-over-month comparisons without seasonality context are misleading. Use year-over-year comparisons.

GMV Variations

Gross vs. Net GMV

Gross GMV = All orders placed
Net GMV = Gross GMV - Cancellations - Returns

Net GMV better reflects actual business activity.

Product GMV vs. Total GMV

Product GMV = Merchandise value only
Total GMV = Products + Shipping + Taxes + Fees

Be explicit about which version you report.

First-Party vs. Third-Party GMV

For hybrid marketplaces:

1P GMV = Products sold directly by the platform
3P GMV = Products sold by third-party sellers
Total GMV = 1P GMV + 3P GMV

Related Metrics

Take Rate

Take Rate = Platform Revenue / GMV x 100

Measures platform monetization efficiency.

Average Order Value (AOV)

AOV = GMV / Number of Orders

Indicates typical transaction size.

GMV per Active Buyer

GMV per Buyer = GMV / Active Buyers

Measures buyer engagement and spending.

GMV in Context-Aware Analytics

metric:
  name: Gross Merchandise Value
  description: Total value of goods transacted on the platform
  calculation: |
    SUM(order_value) WHERE order_status NOT IN ('cancelled', 'fraudulent')
  variations:
    - name: Gross GMV
      filter: Include all orders placed
    - name: Net GMV
      filter: Exclude cancellations and returns
  includes: [product_price, shipping_if_applicable]
  excludes: [taxes, platform_fees]
  dimensions: [category, seller, region, channel]
  time_period: daily, monthly, quarterly
  owner: marketplace_team

With explicit GMV definitions, stakeholders understand exactly what's being measured and can make valid comparisons over time and across segments.

Optimizing GMV Growth

Increase Order Volume

• Expand buyer acquisition
• Improve conversion rates
• Reduce friction in checkout

Increase Average Order Value

• Cross-sell and upsell
• Bundle offerings
• Free shipping thresholds

Reduce Cancellations and Returns

• Improve product descriptions and images
• Set accurate delivery expectations
• Enhance quality control

Expand Categories and Selection

• Add new product categories
• Recruit more sellers
• Expand geographic coverage

GMV is a foundational e-commerce metric that measures platform scale and transaction volume. When combined with take rate, unit economics, and profitability metrics, it provides a complete picture of marketplace health and growth potential.