Gross merchandise value is calculated by adding up the final transaction value of every sale a platform processed during the reporting period. If a marketplace handled 10,000 orders in a quarter and those orders totaled $2 million, GMV for that quarter is $2 million. That is the whole formula. The complications are not in the arithmetic. They are in what each company decides to count as a “transaction value,” and in the large gap between GMV and the money the platform actually keeps.
GMV is a gross figure. Nothing has been subtracted for platform fees, operating costs, or (depending on the company) refunds, shipping, and taxes. A $15 candle and a $900 couch both count at face value. You will sometimes see GMV described as “price times quantity,” but that framing only works when every item sells at the same price. In practice, GMV is the sum of all completed transaction values across a catalog of thousands of different items.
What Counts Toward GMV
There is no universal standard for what goes into a GMV figure. Each company defines the metric in its own filings, and the differences matter more than most readers realize. The two biggest variables are shipping costs and taxes.
eBay defines GMV as “the total value of all paid transactions between users on our platforms during the applicable period inclusive of shipping fees and taxes.”1eBay Inc. Investor Relations. eBay Announces Change to Gross Merchandise Volume Definition and Releases Updated Historical Metrics Shopify is similar, defining GMV as “the total dollar value of orders facilitated through the Shopify platform…net of refunds, and inclusive of shipping and handling, duty and value-added taxes.”2Securities and Exchange Commission. Shopify Announces First-Quarter 2021 Financial Results
Other platforms strip out shipping and taxes entirely. Salesforce’s B2C Commerce platform, for example, excludes both from its GMV reports.3Salesforce. Recommendations for GMV Report Calculation in B2C Commerce The logic for excluding taxes is that the platform collects them as an agent for the government, so they do not represent economic value the marketplace created. The logic for including them is that GMV is meant to capture the full transaction size from the buyer’s perspective.
What virtually every platform agrees on: platform commissions and transaction fees are never part of GMV. Those are deductions applied against GMV to arrive at the company’s actual revenue. GMV measures what buyers paid, not what the platform earned.
This inconsistency is why the footnotes matter whenever GMV is reported. Two platforms with identical transaction volumes can post meaningfully different GMV numbers depending on whether shipping and taxes are folded in. Comparing them without adjusting for the definitions is not a clean comparison.
GMV vs. What the Platform Keeps
The distance between GMV and net revenue is where marketplace economics live. GMV captures total transaction value. Net revenue captures what the company keeps. The size of that gap depends on whether the company is acting as a principal or an agent in each transaction.
Principal vs. Agent
Under ASC 606, the accounting framework that governs revenue recognition, a company that controls the goods before they reach the customer is a principal. A company that merely arranges the transaction between a buyer and a seller is an agent. The distinction controls how much of the transaction value the company can book as revenue.4FASB. Revenue from Contracts with Customers (Topic 606)
A traditional retailer is a principal. It buys inventory, owns it, and sells it to you, so the full sale price is its revenue. A marketplace like Etsy is an agent. It never touches the goods; the seller ships directly to the buyer, and Etsy’s revenue is only the fee it charged for facilitating the sale.
The accounting standard identifies three indicators that a company is a principal rather than an agent: the company is primarily responsible for delivering the goods, it carries inventory risk before the customer receives the product, and it has discretion over pricing.5Deloitte Accounting Research Tool. ASC 606-10 – Determining Whether an Entity Is Acting as a Principal The more of those boxes a company checks, the more likely it recognizes revenue on a gross basis.
Take Rate
Take rate is the percentage of GMV a marketplace keeps as revenue. Divide marketplace revenue by GMV. A platform that generated $50 million in revenue on $500 million in GMV has a 10% take rate.
Take rates vary by how much work the platform does beyond connecting buyer and seller. Marketplaces that aggregate demand and let sellers handle fulfillment tend to operate in the 5% to 15% range. eBay’s fees run roughly 2.5% to 15% depending on category. Etsy charges a 6.5% transaction fee plus listing fees and payment processing. Platforms that manage logistics or handle delivery, such as Uber and DoorDash, command higher take rates, often 20% to 30%.
For an agent-model marketplace, the subtractions that get you from GMV to net revenue include the seller’s share of each sale (the bulk of GMV), returns and refunds, canceled orders and chargebacks, and any shipping costs the platform absorbed instead of passing to the buyer. A platform with $1 billion in GMV and a 12% take rate earns $120 million in net revenue. The other $880 million flows straight through to sellers.
Related Metrics That Aren’t GMV
Not every company calls its transaction volume “GMV,” and the related metrics measure slightly different things.
- Gross transaction volume (GTV), used by companies like Lightspeed, measures the total dollar value of transactions processed through a platform’s software, regardless of whether the platform handled the payment. It is typically broader than GMV.
- Total payment volume (TPV), used by PayPal and payment processors, captures the dollar value of payments the platform actually processed, net of reversals. It measures payment activity, not merchandise value.
- Gross payment volume (GPV), used by Block (formerly Square), measures the total dollar amount of card and bank payments processed through the platform, net of refunds. Unlike GTV, it only counts transactions where the platform touched the money.
A company reporting GTV will show a larger number than the same company would report as GPV, because GTV includes transactions where the platform facilitated the sale but a different processor handled the money. When comparing platforms, confirm you are looking at the same metric defined the same way.
How GMV Must Be Presented in SEC Filings
GMV is not a GAAP metric. No accounting standard defines it or prescribes how to calculate it. That means any company reporting GMV in SEC filings has to follow the rules governing non-GAAP financial measures.
Regulation G requires that whenever a company publicly discloses a non-GAAP measure, it must also present the most comparable GAAP measure alongside it and provide a quantitative reconciliation showing how the two numbers connect.6eCFR. 17 CFR 244.100 – General Rules Regarding Disclosure of Non-GAAP Financial Measures For a marketplace reporting GMV, that typically means showing GAAP revenue next to the GMV figure and walking through the math between them.
Item 10(e) of Regulation S-K adds further requirements for SEC filings specifically. Companies must present the comparable GAAP measure with “equal or greater prominence,” explain why management believes the non-GAAP metric is useful, and avoid labeling non-GAAP measures with names that are “the same as, or confusingly similar to” standard GAAP line items.7eCFR. 17 CFR 229.10 – General
The SEC has specifically flagged misleading revenue presentations in its non-GAAP guidance. Presenting revenue on a gross basis when GAAP requires net presentation, or vice versa, is considered potentially misleading under both Regulation G and the SEC staff’s interpretive guidance.8Securities and Exchange Commission.