GMV vs. Revenue

In business, revenue is a popular term that gets frequently tossed around when discussing overall numbers. While it’s well known that revenue is closely associated with the amount of sales a business generates, is it actually the proper term to measure sales numbers? We are going to find out in this blog.

Whether we’re talking about e-commerce or brick and mortar retail business, sales numbers are often referred to as ‘revenue’.

However, when analyzing business metrics, revenue doesn’t actually provide you with the full picture. This is where GMV (gross merchandise value) comes into play, simply put GMV is the sale price paid by customers before taking into account any fees, returns, or discounts associated with the sale. 

Let’s say a customer has purchased a product for $39.99 and has clipped a $5 coupon. The GMV for that transaction would be $39.99 while the revenue would show as $34.99. You can see how at scale these numbers can be drastically different. GMV gives you an accurate representation of the total value of goods sold over revenue. While these terms may be similar, when it comes to evaluating the numbers of your business it is important to understand the difference.