What is Gross Merchandise Value (GMV)?

Gross Merchandise Value (GMV) is the total value of all goods and services sold through a particular marketplace or e-commerce platform over a specific period. It's a key metric for measuring the overall size and growth of a marketplace business.

For Startups: For marketplace startups (like an e-commerce platform or a service aggregator), GMV is the primary top-line metric to show traction to investors. It represents the total economic activity flowing through the platform, even though the company's actual revenue (the "take rate" or commission) is only a fraction of the GMV.

For E-commerce: It's crucial to distinguish GMV from revenue. High GMV growth is positive, but it must be accompanied by a healthy take rate and positive unit economics to be sustainable.

Calculation: GMV = Total Number of Items Sold * Average Price of Items

Example: An online marketplace facilitates ₹1 Crore in sales (GMV) in a month and earns ₹10 Lakhs in commissions and fees. Its take rate is 10%.