GMV vs. Revenue vs. Net sales
Can someone clearly explain the terms GMV, Revenue, and Net Sales in the context of e-commerce & and online businesses? Lately, there has been a lot of confusion for me as people are using these terms interchangeably.
Aaron Taye
Stealth
a year ago
Gross Merchandise Value (GMV) = Sale Price * Units Sold
Net Sales = Net Revenue = GMV - RRR (Returns/Repair/Replacement) - Taxes at Sale side - Discount
To elaborate further down the PnL,
Gross Margin(GM) or Gross Profit = Net Sales or Net Revenue - Cost of Goods Sold (COGS) or Cost of Sales (CoS)
Contribution Margin 1 (CM1) = GM - Direct Costs (CAC, Commissions, Salaries)
Contribution Margin 2 (CM2) = Operating Income = CM1-Indirect Costs (Tech, G&A)
Net Profit pre-taxes = CM2- Financial Costs (like Interests)
Net Profit = Net Profit pre-taxes - Taxes
Kendall Taye
Student
a year ago
Thanks for the explanation ! Having one more doubt, where do we account for other revenue streams, in the above mentioned equations for example, ad revenue or other revenue streams?
Kendall Carmden
Stealth
a year ago
If the company is in the business of selling a X product and Ad Revenue is not part of the same, then Net Sales and Net Revenue are not exactly the same. In that case, Net Sales will include Product X sale revenue and Net Revenue will be Net Sales + Ad Revenue.
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