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.
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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
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?
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.