To make your retail store a success, you need one thing: profitability. To achieve and maintain profitability, you need to regularly assess your business’s health and look for ways to improve.
That’s where gross merchandise value (GMV) comes in. By using GMV to track your store’s performance and combining it with other metrics, you can fine-tune your marketing and pricing strategies, making real changes to your earnings and profitability.
This guide covers what GMV is, how to calculate it, why it matters, and its limitations.
What is gross merchandise value (GMV)?
Gross merchandise value (GMV), also known as gross merchandise volume, is the total sales dollar value of goods sold over a specific period, before subtracting expenses like discounts, returns, and shipping costs.
In simpler terms, GMV is the total money customers pay for your products or the total sales on your ecommerce site.
While GMV shows your total sales, profit reveals what you keep after covering all costs such as inventory, operating, and marketing.
How to calculate gross merchandise value
Here’s the gross merchandise value formula:
GMV = Selling price of items x Number of items sold
GMV example
Say you sell handcrafted jewelry online. You sold 200 necklaces at $50 each, and 150 bracelets at $30 each. To calculate your GMV, multiply the number of each item sold by its price and add the amounts.
GMV calculation
Necklaces: 200 x $50 = $10,000
Bracelets: 150 x $30 = $4,500
Total GMV: $10,000 + $4,500 = $14,500
GMV vs. revenue: What’s the difference?
GMV is the total dollar value of all orders before deductions, while revenue is the actual income you bring in. Your business model impacts how close the two figures are.
For direct-to-consumer (D2C) brands selling their own inventory, GMV and revenue are usually similar but not identical. GMV tracks total sales volume, while revenue reflects the actual income a brand earns. The business owns the products and sets prices, so it recognizes the full sale amount as revenue (minus any returns or discounts).
For marketplaces, the gap is much wider because the platform doesn’t own the inventory. GMV tracks the total value of every purchase, while revenue is the specific cut or commission the business keeps from those sales.
| Metric | What it measures | Used for |
|---|---|---|
| GMV | Total value of goods sold before deductions | Measuring sales activity, order volume, and platform scale |
| Revenue | Income the business recognizes based on its model and accounting method | Measuring actual business performance, monetization, and financial results |
The distinction matters because GMV can make different business models look deceptively similar. Two companies might both have $1 million in GMV, but a D2C brand would recognize nearly all of it as revenue, while a marketplace would recognize only a small fraction.
Why measure gross merchandise value?
Here are some things GMV metrics can help do:
Show performance
GMV valuation gives you a quick and clear picture of your total sales volume over a specific period. For example, if your GMV increased from $50,000 in January to $75,000 in February, it means your sales volume is growing. This gives you insight into how your products are performing, allowing you to promote successful products and make adjustments where needed.
Inform pricing strategy
Your GMV should inform your pricing and marketing strategies by aligning them with market demand and profitability goals.
Suppose you sell two types of skirts: one priced at $20 and another at $50. The $20 skirt sells in higher volumes, but contributes less to your overall GMV value. In that case, you might consider adjusting its price or offering it as part of a bundle to increase its revenue potential.
Identify trends
By comparing GMV over different periods, like month over month or year over year, you can spot trends and patterns in customer behavior. For example, if your GMV usually spikes during the winter holiday season, you can take advantage of that by increasing inventory and running special promotions.
Attract investors
Investors often look at your GMV financials to gauge market demand and sales performance. For example, if your GMV has consistently grown from $100,000 to $500,000 over the course of a year, it suggests a robust customer base and steady sales flow. It shows you can generate substantial revenue, making your business more attractive to investors.
What GMV doesn’t tell you
While GMV is a useful top-line metric, it’s not a complete measure of business health:
- It ignores profitability. It’s possible to increase sales volume without improving margins.
- Definitions vary. Companies calculate GMV differently. One might include shipping and taxes, but nets out refunds; while another excludes shipping. This makes direct comparisons difficult.
- Business models distort the data. A brand selling its own goods often recognizes the full transaction as revenue, while a marketplace recognizes only its commission. Identical GMV figures can represent different economic realities.
- It hides customer health. GMV can stay high even if active buyer counts or repeat purchases drop. It measures transaction flow, not long-term customer demand or retention.
How to interpret GMV alongside other metrics
In a November 2025 survey of Shopify merchants,* 77% reported tracking sales/total revenue, but less than half tracked profit margin, average order value, or conversion rate. This indicates that many merchants rely on top-line metrics like GMV without pairing them with the deeper metrics needed for a complete financial picture.
Pairing GMV with these supporting metrics provides a more accurate view of performance:
- Revenue
- Conversion rate
- Customer acquisition cost (CAC)
- Average order value (AOV)
- Profit margin
GMV and revenue
Comparing GMV with revenue can help you understand things like the impact of discounting. If you offered a 10% discount and your revenue was $13,050, for example, your GMV would be $14,500, but your actual revenue after discounts would be lower.
Identical GMV figures can also lead to different profit outcomes. For example, two stores might each generate $14,500 in GMV, but if one has higher shipping, marketing, or product costs, it will keep less profit. That’s why GMV shouldn’t be evaluated in isolation.
GMV and customer acquisition cost (CAC)
CAC is the total cost of acquiring a new customer. To calculate CAC, divide your marketing and sales expenses in a specified period by the number of new customers acquired during that period.
Analyzing GMV alongside CAC helps you understand the effectiveness of your marketing efforts. In Shopify’s merchant survey, only 5% of those earning under $100,000 track CAC, compared to 30% of merchants earning $1 million or more.
If your GMV is $100,000 and you spent $10,000 to acquire 500 customers, your CAC would be $20 per customer. This means your marketing efforts are working, and the revenue generated from new customers likely exceeds the acquisition cost.
However, if your CAC was $80 per customer, your total CAC would be $40,000 ($80 x 500). This might indicate that your marketing efforts aren’t as efficient as they should be.
GMV and average order value (AOV)
Looking at GMV and AOV reveals how customers buy—not just how much you sell. While GMV is the total value of orders processed, AOV measures the average spend per order (total revenue divided by order count).
Together, these metrics provide extra context:
- Rising GMV and stable AOV. Growth is driven by a higher volume of transactions.
- Rising GMV and rising AOV. Growth is driven by customers spending more per purchase. Often a result of better bundling, upselling, or pricing strategies.
Tips to improve your gross merchandise value
Once you’ve calculated GMV, here’s how to improve it:
Offer free shipping
Extra costs, including shipping, drive 39% of abandoned carts, and eMarketer found that almost half of online shoppers expect free shipping on every order.
Free shipping can persuade more shoppers to complete their purchases, leading to higher GMV. To avoid taking on costs that limit profits, consider tactics like setting a free shipping threshold slightly above your AOV.
Australian fashion brand Incu used Shopify’s Script Editor to set cart and shipping price customizations. They offer discounts for purchases above a certain value and clearly display shipping costs across countries. Since migrating, they’ve grown 300% year over year and boosted conversion rate by 80%.
Upsell and cross-sell products
Prompt customers to add related items, or offer a discount on an upgraded version at checkout. There are two ways to do this:
- Upselling.: Suggest a premium or feature-rich version of a product when a customer is considering a basic model.
- Cross-selling.: Suggest related items that complement the main product. For instance, when a customer buys a travel-friendly coffee maker, cross-sell a reusable coffee filter. According to McKinsey, this type of cross-selling can increase sales by 20%.
Melbourne, Australia–based luggage retailer July used Shopify Scripts to offer tailored experiences like bundled products and personalized discounts. They upsell personalization for a carry-on at checkout, cross-sell a related product, and offer premium package protection at a nominal fee. This (along with other changes) led to a 640% increase in sales.
Sell product bundles
Product bundling provides a curated collection of complementary products. There are three main types of bundling:
- Pure bundling. Items sold only as a bundle.
- Mixed bundling. Separate products sold at a discount when bought together.
- Price bundling. Discounts for purchasing multiple items together.
Literie puts this into practice with its three-candle bundle. “People want to purchase three candles and we have different themes for different bundles, but we make three candles at a reduced price and it’s one click as opposed to adding three separate candles into your cart,” founder Erica Weber says in a Shopify Masters interview.
“That [bundling] saves time just through our warehouse and allows people to make larger purchases perhaps larger than they would have when they were coming just to purchase one candle.”
Tip: Shopify Bundles lets you create fixed bundles and multipacks directly from the Shopify admin.
Offer discounts
Providing discount codes to first-time buyers can entice them to purchase. But use them strategically to avoid harming your brand value or profitability—some 11.7% of shoppers think deep discounts make a brand feel cheap.
For example, you could offer discounts at the end of the quarter for seasonal stock clearance, or send personalized discount codes to cart abandoners through follow-up email reminders.
“If you start pushing discounts all the time, people will only buy when they get a discount,” says Daniel Brinch, partner at Camille Brinch, in a Shopify Masters episode.
After moving to Shopify, fitness and nutrition brand BUBS Naturals began offering tiered discounts by customer segments and turning off discount codes during sales periods. As a result, they saw a 100% increase in conversion rates, an 84% increase in repeat customer rates, and a 10% increase in revenue from its D2C site.
Reduce checkout friction
Some 18% of customers abandon their carts because the checkout process is too long or complicated.
“We monitor how quickly customers move through the purchase process because our goal is to make it as swift as possible,” says Anna M. Peterson, product lead at Everlane. “The longer customers linger on the checkout page, the more they might reconsider their purchase, potentially leading to abandoned carts.”
To streamline your checkout process and influence GMV:
- Offer one-click or guest checkout options. You want to avoid discouraging customers with lengthy processes.
- Provide multiple payment options. Including debit and credit cards, mobile wallets (Shop Pay, Google Pay, Amazon Pay), and buy now, pay later options (Shop Pay Installments).
- Speed up shipping. Slow shipping can turn away 21% of online shoppers. Partner with a reliable and fast third party logistics (3PL) provider like Shopify Fulfillment and offer multiple shipping methods.
TIP: Offering Shop Pay can increase bottom funnel conversion rates by 5%. It converts up to 50% better than typical or guest checkouts.
Sell internationally
Selling to international buyers used to be difficult due to payment complexities, language barriers, and regional additions. With Shopify Markets, you can sell across geographies and scale internationally from a single Shopify store. It lets you create a localized shopping experience with storefront customizations, translations, and more than 130 local currencies.
Toilet paper brand Who Gives A Crap upgraded to Shopify to expand internationally. It built three customized online stores, for the US, the UK, and Europe, tailoring pricing, brand messaging, currency choices, and checkout processes. Post-implementation, it recorded double year-over-year revenue growth, a 15% increase in conversion rates, and a 20% growth in customer lifetime value.
Use GMV to grow your ecommerce business
GMV is a simple metric, but it can be a powerful indicator of your business’s health when evaluated alongside other numbers. The key to sustainable growth is understanding GMV and finding ways to boost it without hurting your bottom line.
Gross merchandise value FAQ
How do you calculate profit from GMV?
Subtract the cost of goods sold (COGS), shipping, returns, and other expenses from your GMV. The remaining amount is your profit.
What is the difference between GMV and gross sales?
GMV and gross sales are often used interchangeably, but there’s a slight difference. Gross merchandise value calculation includes the total value of all goods sold through your platform, including third-party sales. Gross sales include only the value of goods sold directly by your company.
What is the difference between gross merchandise value and net sales?
GMV represents the total value of all goods sold through your platform, including taxes and shipping fees, before deductions. Net sales refer to revenue after subtracting costs like discounts, returns, and third-party seller fees.
Can gross merchandise value be used to measure a company’s profitability?
Gross merchandise value calculation alone cannot measure profitability. It shows the total value of goods sold, but doesn’t account for selling costs. Consider COGS, operating expenses, and other financial metrics to measure profitability more accurately.
What is a good GMV to revenue ratio?
There is no universal good GMV-to-revenue ratio—it depends entirely on your business model. D2C brands typically see these metrics align closely, while marketplaces show a wider gap because revenue only reflects commissions.
*Source: Shopify Merchant Survey, November 2025
