GMV stands for Gross Merchandise Value or Gross Merchandise Volume. It refers to the total value of merchandise/products sold over a given period of time through an eCommerce or customer-to-customer (C2C) website. GMV is an important metric to track the overall health of an eCommerce business and its financial proficiency. So, if your GMV is up, business should be good.
Analyzing GMV is also imperative when working on improving sales and expanding your business’s bottom line. It is calculated at least once per year and before the deduction of accrued expenses such as the cost of delivery, discounts, advertising costs, returns, etc.
How is GMV calculated?
GMV is calculated by multiplying the number of total transactions by the average order value (AOV).
Average order value (AOV) is the average amount spent each time a customer places an order on a website or mobile app.
AOV = Revenue / Number of Orders
So, the formula for calculating GMV is
GMV = Number of Transactions x Average Order Value (AOV)
So let’s say you sell 20 products for $1000 each on your website; your GMV would be $20,000.
GMV calculation for SaaS companies
The base calculation will be the same in the SaaS environment where you sell digital services on a subscription-based model. If you sell a single service to 20 customers for $1000, your GMV will be $20,000. The only difference is that this figure will increase every month with more customers signing up for your digital services.