Gross Merchandise Value (GMV) and how to calculate it
Gross Merchandise Value (GMV) is a metric frequently used by ecommerce platform vendors to assess the fees due from their customers - the ecommerce businesses and retailers that use their platforms. The retailer pays the software company a percentage of their monthly GMV.
Gross Merchandise Value is the total dollar value of all transactions for goods and services in a calendar month generated through the ecommerce platform, after all shopping cart discounts and promotions are applied. Shipping and handling charges and taxes, although included in the value of the transaction, are excluded from GMV.
A software vendor will often define GMV to include all transactions, regardless of order or shipping status, i.e. once the order is placed, the GMV is incurred, even if the order will not be shipped for another week, or the order is cancelled due to insufficient stock.
GMV includes all transactions passing through the ecommerce engine, not just those placed on the website. For example, if a business has implemented a mobile App and integrates this with the ecommerce engine (for example a headless ecommerce platform), the revenue from the App will be included in the GMV calculation.
Returns do not reduce GMV. The GMV is calculated on the sales values, and is not reduced by customers subsequently returning items and being refunded.