What is GMV? (and why it is not your income)
GMV is the total value of orders placed, before cancellations, returns and every cost, so it looks big and says very little about what you keep.
GMV stands for gross merchandise value. It is the total rupee value of the orders customers placed in a period. If your store took orders worth Rs 1,00,000 this month, your GMV is Rs 1,00,000. It is a headline number, and headline numbers are easy to love.
The trouble is that GMV counts money you never saw and money you already spent. It is not your income, and it is not your profit.
Walking down from Rs 1,00,000
Here is an illustrative month. The figures are made up to show the logic, not to predict yours.
- Orders placed (GMV): Rs 1,00,000
- Cancelled before dispatch: Rs 12,000
- Refused at the door or returned: Rs 8,000
- What actually stayed sold: Rs 80,000
Already your Rs 1,00,000 has become Rs 80,000. Next, the costs.
- Cost of the products you sold: Rs 40,000
- Courier charges you paid: Rs 12,000
- Payment gateway fees: Rs 2,000
- Ads: Rs 10,000
Add those costs: 40,000 plus 12,000 plus 2,000 plus 10,000 is Rs 64,000. From Rs 80,000, that leaves Rs 16,000. And that is before your packaging, tools, subscriptions and your own pay.
So a Rs 1,00,000 GMV month left Rs 16,000 on the table. That is the gap between the number people brag about and the number you live on.
Why the gap grows with cash on delivery
COD orders can be cancelled or refused after you have already paid for shipping. They inflate GMV on the day of purchase and shrink later. If you are curious how large that effect can get, read what is RTO and why it hurts sellers.
Which numbers deserve your attention
Instead of fixating on GMV, track these:
- Orders that were delivered and stayed sold.
- Profit per order after all costs.
- What you spend to get one order.
- How many customers buy a second time.
Simple monthly profit and loss for a store builds a one-page view of these.
When GMV is useful
It is not worthless. GMV helps you see growth in demand over time. If the figure rises while your margins hold, that is a good sign. The key is to use it as an activity measure, and not to confuse it with money earned. When someone tells you their brand "did a crore in GMV," ask what it turned into after returns and costs. I will not quote GMV figures for any business or industry here, because I have none I could verify.
In your admin
The Varchas admin shows your orders along with their status and payment status, so you can see how many were placed and how many ended cancelled or delivered. That helps you build your own walk-down from gross orders to what stayed. The orders page lets you export to a spreadsheet; see exporting store orders to a spreadsheet to do the arithmetic above on your real numbers.
Next step
Take last month. Write GMV at the top, subtract cancellations and returns, subtract product cost, shipping, fees and ads. Whatever remains is the number worth celebrating or fixing.