TL;DR
GMV, gross merchandise value, is the total dollar value of everything sold through a marketplace or platform in a given period, before the platform takes its own cut.
What GMV means
If your marketplace facilitates $1M in transactions and takes a 10% commission, your GMV is $1M but your actual revenue is $100K. That distinction matters enormously, because a large GMV number can make a marketplace look far bigger than the revenue it's actually capturing, and founders sometimes lean on GMV precisely because it's the more flattering figure to quote.
GMV is a legitimate and useful metric for marketplace, e-commerce and logistics businesses specifically, since it shows how much economic activity the platform is enabling, which correlates with market pull and network effects even before the take rate is optimized. It's a poor metric for a SaaS or subscription business, where MRR and ARR are the numbers that actually reflect the company's own revenue.
Why it matters for African founders
E-commerce and logistics marketplaces are a common category among African startups, and any investor with marketplace experience, including sector-agnostic funds that back e-commerce and logistics businesses such as Enza Capital, will ask for GMV alongside take rate and net revenue in the same breath, not GMV in isolation.
Common mistakes founders make with GMV
- Quoting GMV to investors as if it were revenue, without immediately stating the actual take rate
- Growing GMV through unsustainable discounting or subsidies that don't reflect real unit economics
- Not disclosing what percentage of GMV is actually collected as cash versus outstanding or disputed
- Comparing GMV to a SaaS company's ARR as if the two numbers meant the same thing
FAQ
Is GMV the same as revenue?
No, GMV is total transaction value, revenue is what the platform actually keeps after its take rate.What's a good take rate for a marketplace?
It varies widely by category and stage, there's no single industry-standard number that applies across every marketplace type.Should early-stage marketplaces report GMV to investors?
Yes, but always alongside take rate and net revenue, GMV alone doesn't tell the full story of the business.See also
- MRR
- ARR
- Valuation
- Enza Capital, a sector-agnostic fund that has backed e-commerce and logistics marketplaces