What is GMV In eCommerce?

Knowing about GMV (Gross Merchandise Value) in eCommerce will shed light if your online store is working or not. It allows you to keep track of the overall amount of sales for your e-commerce business. Whether your business is new or established, GMV will be important to you.

Your revenue increases as more and more transactions take place. So how do you increase sales and transaction volume?

That can be accomplished with top-notch digital marketing. As such, GMV is related to your digital marketing activity. Your e-commerce business may employ many digital marketing tactics to increase sales and revenue.

As many professionals in the eCommerce business will tell you, eCommerce is the fastest-growing segment of retail sales. With a better understanding of gross merchandise value, you can increase your market share in this fast-growing eCommerce market.

Today, we’ll examine GMV in more detail. We will cover what it is, why eCommerce businesses need it, and some tips for raising it. Find out more about what GMV can do for your eCommerce business or marketplace.

Table of contents

What is the definition of GMV?

Gross merchandise value (GMV), a phrase you may not be familiar with, is a growth indicator. It is utilized by e-commerce websites and marketplaces as a KPI to measure the total dollar amount of goods sold.

You can visualize this in the visual below:

The flow when calculating GMV in eCommerce

Where did GMV come from?

In the 1990s, the era in which Amazon and eBay first appeared, many e-commerce platforms relied on gross merchandise value as their main key performance indicator (KPI) for growth.

It is believed that GMV is a term that originated from eBay. eBay used it to refer to the total value of goods being sold on its platform. But it wasn’t until 2015 that GMV became ubiquitous in marketing discussions, thanks largely to Amazon’s decision to share data about its sellers’ GMVs to businesses (and thus the rest of the world.)

How does GMV relate to digital marketing?

Digital marketing and eCommerce go hand in hand. For digital marketers, GMV is a reliable growth metric that they can quickly calculate.

For instance, if digital marketers are investing resources in the promotion of a certain product, they may compare the GMV for the product from the previous month with the GMV for the product this month. Of course, to determine the actual ROI, it would be prudent to exclude advertising expenses.

How to calculate GMV?

For a digital marketer, the simplest way to determine GMV is to multiply the sales price of a product (or an item) by the number of products sold. You might carry this out for a single item, various items, or the full product line.

The formula to calculate a single product’s GMV is Product Sales Price x Number of Products Sold. 

The GMV would be $10,000 if you sold 100 widgets at $100 each. To avoid having to tally up the GMV for individual goods, many commerce and marketplaces allow you to extract GMV for the whole product catalog or a specified product category.

When you compute GMV, look for trends. You may notice an increase. This means one of the following two things is happening. Either you’re selling more products overall, or your product prices are increasing. The best course of action is to examine your sales to determine which of the above factors is driving the growth.

Why is GMV important to digital marketers in eCommerce?

Digital marketers can find out their entire revenue for a specific period by calculating GMV. There are more advantages to doing so as well. In your online retail model, measuring GMV could:

Offer insight into how well digital marketing campaigns did

GMV gives you both the actual hard data and the capacity to draw more insights from it. You can view both your eCommerce revenue and other variables that have affected your GMV. For instance, it may indicate the impact your digital marketing changes have had one month to the next.

Act as a benchmark for company insights and planning

GMV serves as a comparison figure between various timeframes and other metrics. For example, You can think about your gross sales (as reported by GMV) in comparison to your net profits.

Add an additional dimension for other metrics

GMV is only one of the metrics you may use to gauge the volume of transactions over a period of time. It can provide another dimension to other KPIs you are tracking.

Use gmv in ecommerce to reach more customers and sell to them
Reach more customers by using GMV with your digital marketing

How can you improve gross merchandise value with digital marketing?

It takes some effort, but using these digital marketing tactics will help increase GMV of your eCommerce store:

Social media: Ensure you are where your customers are

First, think about the variety of platforms that your prospective customers could be on. Instagram and Facebook are crucial for consumer goods or the fashion industry. Your potential customer will be able to find your products when they search on social media. A LinkedIn profile is essential if your primary target market is businesses.

Next, consider your product offerings and how each social media platform can be leveraged to showcase that. If you offer some visually aesthetic products, an Instagram Shopfront is great for garnering new customers and click-throughs. Pinterest is also increasingly used to discover inspirations. Imagine a potential customer pinning your product to a mood board and eventually returning to purchase it.

Finally, it is important to ensure that your social media feed is updated regularly. Hence, choosing the right platforms at the start will pave your way to a robust social media presence. 

Like to learn more about social media? We recommend you read these articles:

SEO: Be found on search engines such as Google

Customers are constantly looking for solutions. Every search on Google is a deliberate and motivated effort. When deciding how to approach SEO, whether paid search or organic search, this is the most crucial thing to keep in mind.

You must make sure to provide a concrete solution. It is important to rank higher than your rivals and direct potential clients to your website.

You may achieve this by using SEO tactics to raise your search ranking. Every month, Google handles billions of searches a month. Always be on top of your SEO game. You can use organic (longer term) and paid (short term) search techniques. These will help to improve your ranking on search engine results pages (SERPs).

Like to learn more about SEO? We recommend you read these articles:

Paid media: Use online advertising to beat the competition

eCommerce PPC is an online advertising tactic. PPC stands for Pay Per Click. These advertisements may appear on websites, social media platforms, and search engines. PPC for e-commerce targets customers who are interested in making a purchase, which boosts its ability to generate sales successfully.

Pay-per-click advertising is a form of online advertising in which you only pay when a user clicks on your ad. Regardless of how frequently or widely your advertisement is seen, you only pay for the click-throughs you get.

The two biggest and most well-known ad platforms to employ are Google and Facebook. Chances are you have seen a Google shopping advertisement when you perform a search online. It is one of the most widely used forms of eCommerce PPC.

Because of its data-driven nature, PPC is an excellent marketing tool for e-commerce companies. It is possible to scale, test, and be optimized indefinitely, all of which are ideal for online marketplaces.

Like to learn more about PPC Advertising? We recommend you read these articles:

Blogging: Be helpful and add value to your customers

Profitable eCommerce stores generally use blogs as they will increase traffic, sales, and profits.

Of course, you have the option to decide not to go for a blog. However, the chances are that your rivals are already blogging, which would put you at a disadvantage.

Blogs are crucial in boosting the search visibility of your products. Blogs that rank well in search can help to attract more customers to your website. Although Google or Bing index all the materials found on the Internet, they only provide results that are pertinent to the user’s search query.

Make sure that the content of your blog is relevant to your products and that it is useful for your prospective customer. Additionally, search engines favour websites that are updated often. Blogging is an exceptional method to inform search engines that your website has been updated. It tells Google that you are active in the market and that you are there to serve customers’ needs.

As a result, the search engines will give your website a higher ranking. You will be seen and rank well on search result pages and hence, bringing traffic and potential, new customers to your eCommerce storefront.

Like to learn more about blogging? We recommend you read these articles:

Email marketing: Get your loyal customers to drive referrals

Another essential promotional tool for eCommerce is email marketing. It allows you to engage with clients in a tailored way at a far lower cost.

Email marketing, as its name suggests, is an effective marketing tactic that relies on emails. Through email, you can promote your products to potential and current consumers. Emails are a common method of communication. People, if they are loyal to your brand, will not mind reading them. For marketplaces, email marketing can be lucrative, effective, efficient, and cost-effective.

eCommerce email marketing can be as straightforward as sending an email to a customer who added things to their baskets but did not complete a purchase. Your email marketing campaigns can also be as complex as combining various campaigns to lift sales.

It is up to you how you make the most out of your email marketing campaigns. It depends on your audience, business development, and marketing objectives. The main point is that email marketing is a terrific tool for cultivating and establishing long-lasting relationships with customers. If the customers are loyal to your brand, they will turn into brand advocates and may even drive referral sales.

Like to learn more about email marketing? We recommend you read these articles:

GMV in ecommerce is a valuable metic to understand your online sales
Marketers care about GMV. It is an important metric that can help drive online sales.

Why do marketers for eCommerce businesses care about GMV?

GMV is a marketing metric used to measure the value of transactions on a website. Marketers, eCommerce businesses, and social media professionals care about GMV because it informs their marketing strategies.

GMV is one of the most important metrics in eCommerce digital advertising. This is because it’s one of the few ways to measure how much advertisers achieve on an eCommerce campaign. It tells marketers if their ad campaigns are effective at driving sales or not. 

For example, imagine you’re the owner of a Shopify dropshipping business selling women’s clothing and footwear. Naturally, you would want to know the ROI of the digital marketing efforts you put in around driving sales. In addition, you would want to know how many people are interested in the particular product type that you sell. GMV is a powerful metric that elaborates on both aspects.

Final thoughts on gross merchandise value in eCommerce

GMV plays an important role in e-commerce. It can help inform how well your marketplace is doing in terms of driving sales.

We hope that you found this article helpful and that there are ways to improve GMV through digital marketing tactics. There are a lot of great ways to learn more about digital marketing. Here are some useful blog articles that we recommend you read:

If you are a busy business owner or leader, you may not have the time you need to drive your gross merchandise value to its full potential. If this is the case, we encourage you to review some of our strategic digital marketing services:

Of course, more than anything, we would love to help you succeed in eCommerce. If you have any questions, please get in touch with one of our expert digital strategists. It is obligation free.

FAQs

Here are answers to some frequently asked questions about GMV in eCommerce.

How can you calculate eCommerce GMV?

GMV is a way of measuring how much money you make in a given period. It’s calculated by multiplying the total amount of goods sold by their sales price in that period.

What does GMV mean in the eCommerce world?

GMV refers to the total value of merchandise sold over a given period through a customer-to-customer (C2C) exchange site.

How is GMV different from net revenue?

 It reflects the total value of goods sold but not the actual net revenue generated by those sales.

What can I do to increase my GMV?

There are many ways to do that. Here are three most commonly used strategies: offering free shipping, product bundles, and cross-selling strategies.