Revenue per merchant (RPM) is a key metric for online marketplace businesses that helps to measure the financial performance of each individual merchant on the platform. It is calculated by dividing the total revenue generated by a particular merchant by the number of active merchants on the platform.
RPM is a useful metric for online marketplace businesses because it helps them to understand the overall health and profitability of their merchant base. By tracking RPM, businesses can identify which merchants are generating the most revenue and, conversely, which merchants may be underperforming. This information can then be used to optimize the platform and improve the overall user experience for both buyers and sellers.
For example, if a marketplace has a large number of merchants who are generating low RPM, it may indicate that there is a problem with the platform's user experience, pricing structure, or marketing efforts. On the other hand, if a marketplace has a small number of merchants who are generating high RPM, it may indicate that the platform is well-positioned to attract and retain high-quality merchants.