Every June and November, the same headline reaches global headquarters from China: record GMV. The number is real. The conclusion drawn from it is almost always wrong.
Here is what the headline hides: most brands post record festival GMV in the very same season their Net Revenue and profit decline — often by double digits, across most categories. The two move in opposite directions, and GMV is the reason no one notices.
GMV — Gross Merchandise Value — is the most quoted figure in Chinese e-commerce, because it is the only one platforms make public. It is also the least useful. It counts how much merchandise was ordered. It says nothing about how much was kept, and nothing about how much was made.
Between the order and the profit sit your markdowns, your paid-traffic spend, your platform commissions, the returns and cancellations a large share of festival orders were always going to become, and the logistics cost of shipping all of it both ways. GMV is measured before any of this. That is the whole problem: it is the number furthest from your P&L, and the only one anyone reports.
So why is GMV so detached from reality? The single biggest reason is the platform coupon.
First, the good news: the overwhelming majority of festival coupons are funded by the marketplaces, not the brand. They do not come off your margin. But the mechanism is the point:
- Coupons are built around purchase thresholds. Spend a set amount, unlock the discount.
- To reach the threshold, customers deliberately buy more than they intend to keep.
- Once the discount is unlocked, they return the excess — and the discount stands.
- Every one of those orders, including the ones already destined to come back, is counted in the GMV announced that night.
The result is a number inflated by design. A meaningful share of festival GMV is made up of orders placed with no intention of being kept, and all of it is counted before a single return is processed. A rising GMV, on its own, tells you nothing about real revenue, profit, or consumer confidence.
The costs that decide whether you made money are elsewhere, and they are all yours: your markdowns, the returns booked days after the sale, the platform commissions, and your true return on ad spend (ROAS) on everything you put into Performance Marketing. None of it appears if GMV is the only number on the page.
So why does the trap hold, when the flaw is this clear? Because every incentive points at GMV. Platforms rank you by it. The festival recap opens with it. Growing GMV is simple. Growing it profitably is the actual job — and only one of the two shows up on your P&L.
There are two more fundamental reasons to stop steering by festival GMV.
First, revenue is not the goal — profit contribution is. Pursuing GMV, or even Net Revenue growth, at all cost is one of the surest ways to destroy it.
Second, your marketplace presence matters less for the revenue it generates than for what it enables. A strong presence on Tmall and JD supports the decision journey of your offline customers and feeds your customer-acquisition pipeline, online and offline. That is its real value. When the platforms celebrate record Double 11 GMV, they are spotlighting the least valuable thing the channel does for you — and asking headquarters to judge the entire effort by it.
So judge it by the right thing. GMV tells you the store was busy. Only the e-commerce profit contribution on your P&L tells you whether the business was worth running.
Foresight Performance Partners helps luxury and prestige brands turn their China e-commerce presence — on Tmall, JD and Douyin — into measurable profit contribution. To start a conversation, please get in touch.