Gross Merchandise Value (GMV) is the total sales value of goods and services sold through a platform over a specific time period. It’s commonly used to measure the overall health of an e-commerce business or marketplace. For SaaS platforms that facilitate sales for other businesses, GMV is an important metric to track because it shows how much revenue their users are generating.
Unlike net revenue, GMV doesn’t account for expenses like shipping costs or returns. It simply represents the total value of transactions on a platform, giving businesses a broader picture of their sales activity.
Why is GMV Important?
GMV plays a key role in understanding the growth and potential of an online marketplace or SaaS platform. It’s often used in company valuations, as higher GMV can indicate a strong business model and high demand. Even though GMV doesn’t provide the most accurate look at profits, it helps companies and investors see how much merchandise is moving through a platform, which is a key indicator of success.
For SaaS businesses, GMV helps measure the performance of subscription-based services, showing how much value users are bringing in through their transactions.
Key Takeaways About GMV
- Definition: GMV represents the total value of goods and services sold, not accounting for returns or expenses.
- Valuation Impact: It is commonly used in business valuations to measure the performance of online marketplaces and SaaS platforms.
- SaaS Relevance: For SaaS companies facilitating transactions, GMV is a useful metric for assessing overall platform growth.
