Given their unique role as a “middleman” between buyers and sellers, marketplaces have a few special metrics that are important to understand 📝

💡Gross Merchandise Value (GMV) = the total value of products or services sold through a marketplace 💵

This is also sometimes called Gross Booking Value (GBV)

For example, Airbnb reported ~$70B in GMV in 2023, which means that in total, customers spent $70B on Airbnb in 2023.

GMV is NOT the same as revenue because most of the time, the majority of the money that a customer pays a marketplace would go straight to the seller 🌊

💡 Take Rate = the % of total sales (GMV) that a marketplace decides to keep as revenue for themselves.

A simple formula: take rate = revenue ➗GMV

Airbnb made $10B in revenue in 2023, which means their take rate was $10B ➗ $70B, or ~14% 🤔

Another way to think about this: out of every $1 that a customer spends on Airbnb, Airbnb will actually make about $0.14 in revenue 💸

Generally speaking, investors consider higher take rates to be “better”, because that means that the marketplace is able to make more money from each transaction on its platform 🚀

But this can potentially backfire, as buyers, sellers and even the government might feel that the marketplace’s business model is too unfair if its take rate is too high ⚖️

For example, as people flocked towards food delivery apps like Doordash in 2020, New York City actually imposed a maximum take rate that these apps could collect!