Gross Merchandise Volume
Gross Merchandise Volume (GMV) refers to the total value of merchandise sold through an e-commerce platform over a specific period. It includes the total amount of all completed transactions without deducting returns, cancellations, or other fees. GMV is an important metric for assessing the business scale and market performance of an e-commerce platform, but it does not directly reflect the platform's net income or profitability.
GMV = Sales + Cancelled Order Amount + Rejected Order Amount + Returned Order Amount.
GMV is not actual transaction data, but can be used for reference purposes. As long as the customer takes a purchase action, it will be counted in GMV whether the purchase is actually made or not. It can be used to research customer purchase intent. E-commerce platforms like JD.com and Taobao generally use GMV, which has better timeliness than other metrics.
Gross Merchandise Volume (GMV)
Definition
Gross Merchandise Volume (GMV) refers to the total value of goods sold through an e-commerce platform over a certain period. It includes the total amount of all completed transactions without deducting any returns, canceled orders, or other fees. GMV is an important metric for measuring the business scale and market performance of an e-commerce platform, but it does not directly reflect the platform's net revenue or profit.
Origin
The concept of GMV originated with the rise of e-commerce, particularly in the late 20th and early 21st centuries. As online shopping became more popular, e-commerce platforms needed a way to measure their business scale and market performance. GMV thus became a crucial metric for evaluating a platform's sales capability and market penetration.
Categories and Characteristics
GMV can be categorized by different time periods (e.g., daily, monthly, yearly) to better analyze sales trends and seasonal variations. Its main characteristics include:
- Comprehensiveness: GMV includes the total amount of all completed transactions without deducting any returns, canceled orders, or other fees.
- Real-time Nature: GMV can reflect the platform's sales situation in real-time, helping businesses quickly adjust their marketing strategies.
- Referential Value: Although GMV does not directly reflect net revenue or profit, it can serve as an important reference for studying customer purchase intentions and market demand.
Specific Cases
Case 1: JD.com
As one of the largest e-commerce platforms in China, JD.com uses GMV to measure its business scale. During a shopping festival, JD.com's GMV reached hundreds of billions of yuan, reflecting strong sales performance during that period. By analyzing GMV data, JD.com can understand which products are most popular and optimize inventory and supply chain management accordingly.
Case 2: Taobao
Taobao is another e-commerce platform that widely uses GMV. During the Double 11 shopping festival, Taobao's GMV often reaches trillions of yuan. Through this data, Taobao can assess its market penetration and user purchasing power, and adjust its marketing strategies accordingly.
Common Questions
Question 1: Can GMV reflect the platform's profitability?
GMV cannot directly reflect the platform's profitability because it does not deduct returns, canceled orders, and other fees. To assess profitability, net revenue and profit metrics are also needed.
Question 2: Does GMV include incomplete orders?
Yes, GMV includes all orders where a purchase action was executed, regardless of whether the purchase was actually completed. Therefore, it can be used to study customer purchase intentions.
