What is Gross Merchandise Value or GMV?

Gross merchandise value is the total amount of sales for a given time period (usually monthly, quarterly, or annually) before considering any deductions like fees and expenses that are applied to each sale.

GMV Formula

eCommerce GMV can be calculated using the following formula:

Total Transactions*AOV

AOV* is the average order value.

You can calculate that if you divide the amount of revenue from a month of sales per the number of sales for the same month.

GMV valuation can be an indicator of future success for a company’s online business. But many believe this acronym stands on shaky ground and doesn’t necessarily show whether or not the company is profitable.

When taking a user-related form of measurement such as GMV, it is important to consider who the company’s revenue comes from. While high growth rates are often celebrated, this perspective can also mean lower total revenue and an increase in operational losses if too many non-profitable users need support.