What is GMV? GMV Review

The GMV (Gross Merchandise Volume) indicator is usually referred to as the website transaction amount. It is an indicator of e-commerce platform enterprise transaction. It mainly refers to the order amount, including the paid and unpaid parts.

About GMV

As an e-commerce platform, GMV (gross merchandise volume) is the core indicator to measure the competitiveness (market share) of the platform. The GMV of an e-commerce retail company refers to the sales price charged to customers multiplied by the number of goods sold.

For example, if a company sells 10 books for $100, the GMV is $1,000. This is also considered "gross revenue."

In this case, the business model is based on the retail model where the company essentially purchases goods, maintains inventory (if required), and finally sells or delivers the goods to the customers. Since GMV does not include discounts, fees involved, and product returns, it does not indicate net sales or the actual audit service amount.

calculate

The general formula for calculating GMV on e-commerce platforms is: GMV = sales + canceled order amount + rejected order amount + returned order amount, that is, GMV is the sum of paid orders and unpaid orders.

effect

E-commerce platforms can use GMV to analyze transaction data. Although GMV is not actual purchase transaction data, it can also be used as a reference, because as long as you click to buy, whether you actually buy or not, it is counted in GMV. Therefore, GMV can be used to study customers' purchase intentions, the rate of customer return orders after purchase, the ratio of GMV to actual transaction amount, etc., similar to the user stickiness studied in Baidu statistics.

How to increase GMV

1. Product List Page

First, the product image is highlighted to confirm that it is the product you want; second, the price is highlighted to see if it meets your psychological price range; third, the comments are seen to see if there is a herd of followers. At the same time, in order to further help users make quick decisions: sorting functions are designed based on sales, price, popularity, new products and other factors.

2. Product details page

Establish consumer protection;

Create a sense of consumption scene;

Demonstrate cost-effectiveness;

Utilize the principle of reciprocity;

Create a popular and word-of-mouth atmosphere;

Create scarcity of goods;

Manufacturing + time urgency;

Operational means such as full discount and full reduction;

relative reference;

Supporting recommendations;

Related recommendations.

3. Shopping Cart

1. Increase willingness to pay

Notify of price discount information;

Display coupon information;

Highlight the information on guarantees and gifts.

2. Increase the average order value

Multiple coupon information;

Free shipping on orders;

Event promotions;

Recommend related products.

The hidden dangers of GMV indicators

Many platform companies collaborate with users to fake orders in order to meet KPIs (key performance indicators), which deteriorates the overall ecology of e-commerce. Fake orders may form an Internet marketing ecology where "bad money drives out good money", causing unfair competition and seriously disrupting the fair competition order of the online shopping market.

Some analysts pointed out that in the context of China's sluggish real economy and sluggish exports, simply counting GMV has become increasingly meaningless. Behind the seemingly high-growth GMV data, there are a large number of fake transactions, as well as merchants' irregular promotion methods, product defects, and blind pursuit of sales while ignoring consumer experience.

The inflated GMV growth rate has led to an inflated valuation in the capital market. In particular, for e-commerce platform companies that are still unprofitable and lack development potential, and rely mainly on GMV growth indicators to maintain a high market value, once GMV growth and other indicators decline, the capital market will lose patience with them, and there may be a hidden danger of a development bubble bursting.