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Comment by sumanthvepa | Hacker News Reader

It's a term of the trade in the retailing (and by extension e-commerce) industry. It refers to the value of the goods sold. If a retailer sells a widget for $100 at 50% margin, then the GMV is $100 and revenue to the retailer is $50.

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>It's a term of the trade in the retailing

No its not. I've seen dozens of retailing operations in multiple countries. None use this term, which brings me smoothly to my next point...

>It refers to the value of the goods sold.

aka CoGS (Cost of Goods Sold) (or CoS in some regions). Unlike GMV you'll actually find that on the financial statement of major retailers. As I said:

>Must be some type of startup slang so to speak.

Would be curious to hear if there is some actual business reason that warrants giving this a new name in the startup context though...

GMV is only meaningful for "marketplace" businesses that facilitate sales for third parties. It's essentially the combined revenue for all parties involved in selling through the marketplace. For example, if someone sells something for $100 through eBay and eBay takes a 10% cut, that's $100 GMV for eBay, $90 of revenue for the seller and $10 of revenue for eBay.

Here is the wiki definition - https://en.wikipedia.org/wiki/Gross_merchandise_volume

eBay and many other marketplaces use it. My guess is that since these marketplace platforms are not actual retailers their GMV is pretty high as compared to revenue. To showcase the dollar value of total sales that happened on the platform they use GMV. But again I am not an expert in this field.

>Here is the wiki definition - https://en.wikipedia.org/wiki/Gross_merchandise_volume

Yeah I googled it too - a while ago - wikipedia isn't exactly a winning moving here.

>eBay and many other marketplaces use it.

That is deeply disingenuous. You originally said its "term of the trade in the retailing". I called bullsht - because I know its not used in retailing. In response you shift your argument (!!!) and reckon its used by ebay (FYI NOT A RETAIL OPERATION) - and copied the ebay stuff straight off wikipedia.

>I am not an expert in this field

Indeed.

I think you were accidentaly conflating the two users sumanthvepa and saurabhtandon (happened to me too, btw).

Personal attacks aside, you point still stands and I want to thank you for bringing some actual financial expertise into the discussion :-)

You would be right, if the goods sold were purchased by the retailer and then resold. In that situation, you would have revenue and CoGS. However, often retails do not own the goods they sell. In that situation the price paid for the widget is not the revenue of the retailer. It counts as the GMV, and the revenue is the portion that goes to the retailer.

Maybe you have this switched? Many major retailers (supermarkets) to not own much of their product.

Wait... I thought COGS referred to the production costs of goods sold. The direct material and labor costs. For example, in a restaurant it would involve food costs and wages for cooks.

GMV sounds like it refers to what in this example would be revenue from the finished food. A burger COGS is meat+bun+cook, a burger GMV is the menu price.

Am I wrong in my understanding?

No. Its a bit of a regional difference. UK affiliated people prefer "cost of goods sold" while the rest of the world uses "cost of sales". They're essentially interchangeable with CoGS leaning towards enterprises that produce physical goods.

>GMV sounds like it refers to what in this example would be revenue from the finished food.

GMV was pulled out of thin air & means nothing at all, aside from CoGS/CoS with a lick of startup paint. Anyone that reckons otherwise please step forward with a coherent argument...

If I build a box and sell it to you, the cost of the parts is cogs. If you buy someone else's box through my website that's gmv. Your example is correct too, but probably not what somebody would use because in that example it's also the revenue.

This also applies to `burn`, no?

I'm pretty sure if a retailer sells a widget for $100 then the revenue is $100. COGS is $50.

GMV is probably a term more useful in situations where the entity is not a retailer per se, like eBay, who still wants a number to represent the value of the goods they are facilitating transactions upon. They don't own the items on auction so the purchase price is not revenue to them, but the fees are revenue.

I always thought GMV is more like gross revenue. So if you sell 5 of these widget at $100 your GMV is $500.

Which is different from your Net Sales. Because let say if one of these widgets got returned. And one of them was sold at 20% discount. Your GMV will still be $500 but your net sales will be:

Net Sales = GMV - (discount $20) - (returns $100) = $500 - $20 - $100 = $380

What is the value of this number? I can see how some research into operations would identify the cost incurred by holding a certain value of inventory, but decreasing inventory costs by selling at a discount without recognizing that decrease in value really seems like it is using the number for the wrong purpose entirely. Sure, if you're looking into decreasing insurance costs or something, but I how is it defensible when trying to explain your value to investors?

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