Loading
Look at customers’ previous buying and browsing behavior or whether they frequently cancel services or return goods. See what type of interactions they had with your customer service teams and what questions they had. To do so, divide the current GMV by the GMV from the same period the previous year, then multiply the result by 100.
Understanding both metrics is crucial for evaluating overall business health. Upselling and cross-selling are proven techniques to increase average order value (AOV). For example, luggage retailer July achieved a 640% sales increase by implementing personalized upselling strategies. Suggesting complementary products or premium upgrades during the shopping process can encourage customers to spend more. GMV also helps identify seasonal trends and evaluate the effectiveness of marketing campaigns by tracking sales volume increases during promotional periods.
Product bundling refers to selling two or more products at a lower price than the original, singular product. Use your customer data from every touchpoint of the customer journey to identify customer segments who will respond positively to a cross-selling campaign. If you want to increase your GMV, you should definitely consider offering free shipping for orders surpassing a specific monetary value.
Tools like a GMV Calculator can simplify this process, allowing businesses to input transaction data and compute GMV efficiently. It helps demonstrate business value to investors, analyze market position against competitors, and provide supporting evidence during tax audits. Tax obligations are calculated on revenue, not GMV, but understanding both helps prevent costly mistakes. Merchandising revenue is the total sales value of goods, not just the markup or profit margin. After subtracting payment processing ($3), return gross merchandise volume handling ($2), and chargeback reserves ($1), your net revenue becomes $94.
This allows the marketplace to prepare to meet the rising demand as summer approaches. During this time, Airbnb invests this money for profits before disbursing them. Gross Merchandise Sales (GMS) is another term used interchangeably with Gross Merchandise Value (GMV).
The actual revenue that eBay makes would be from the fees it charges on the sales. GMV is the total dollar value of sales in a period, while GTV focuses on revenue from commissions. GTV is used more in businesses that operate on commissions because it’s equal to the number of items sold multiplied by the price collected. Understanding GMV is critical for everyone participating in the e-commerce industry.
For online retailers and marketplaces, tracking GMV growth trends offers a clear picture of performance over time. As global eCommerce sales are projected to exceed 4.3 trillion US dollars by 2025, businesses that leverage GMV data gain a significant advantage in this rapidly expanding digital economy. For instance, if an organization’s main growth metric is GMV, it may focus on offering more high-value products as the price can boost its overall transaction value. Nevertheless, the margins on such big-ticket offerings could be lower than on cheaper products. Therefore, this financial metric is not necessarily a correct representation of an e-commerce business’s performance.
Calculating the gross merchandise value (GMV) metric consists of multiplying the number of total transactions by the average order value (AOV). GMV, using the calculation above, can be seen to also represent gross revenue. For example, if an online company sells 15 customized notebooks at $10 per notebook, the GMV would be $150. Previously, selling to international buyers was difficult due to payment complexities, language barriers, and regional additions.
The Gross Merchandise Value is calculated without deducting returns, discounts, and other costs. So, Gross Merchandise Value puts an emphasis on overall transaction volume, while sales measures the revenue through individual sales. Gross Merchandise Value is most often used by e-commerce or online marketplace businesses, but sales can be applied to any business that sells products or services. Gross Merchandise Value is a metric most commonly used by e-commerce companies. Ultimately, the metric is designed to help companies understand and put a figure on the growth of their business in terms of sales. GMV is calculated by multiplying the sales price of goods by the number of items sold.
With cross-selling, you’re actively encouraging customers to buy related or complementary products in addition to the product they are currently interested in. Yet, when shipping costs are included in the order’s total value, we can justify making an online purchase instead of buying the product from a physical store. For example, if you’re a fashion retailer and want to see the sales volume for your winter jackets, you first need to see how many units you sold. So, let us shine a light on the ultimate measure of your sales volume – and why it has nothing to do with your revenue. While GMV can provide insights regarding the revenue potential of the company, it fails to depict the profitability of the company.
Marketers use GMV to track growth trends across different time periods – monthly, quarterly, or yearly. In 2023, eBay’s annual gross merchandise volume reached 73.21 billion US dollars, showing the massive scale of transactions flowing through the platform. EBay defines its Gross Merchandise Volume (GMV) as the “total value of all successfully closed transactions” between users on their marketplace platform during a specific period. The 10% growth trend continues to fuel this marketplace dominance in eCommerce. Brands that position themselves strategically on these powerful selling platforms by 2025 can tap into this tremendous GMV potential. For marketers, this growth indicates Shopify’s continued ability to attract consumers and convert visits into purchases, making it a platform worth considering for online sales strategies.
Since the GMV is calculated before deductions, it doesn’t accurately reflect your company’s profitability. Bundling products together can increase your profit margins and customer loyalty since consumers appreciate bundled deals’ convenience and cost savings. Besides products, you also need to identify customers who might be receptive to cross-selling campaigns.