Commission rate

In eCommerce, a commission rate refers to the compensation structure associated with either a fixed payment or a percentage of a sale. In other industries, concept is common in professions where individuals work on commission, such as insurance brokers, real estate agents, and car salespeople. These professionals earn payments based on their ability to generate sales.

In eCommerce marketplaces, platform providers earn a percentage for each sale of third-party products that contribute to their revenue. This is called a commission fee, which is charged along with other service fees such as logistics, packaging or customer service. Some of the marketplaces with a more modern compensation model, such as Shein, Temu, and AliExpress, do not charge commissions in order to keep prices lower for the end consumer and thus become more competitive. They still make their money from other commission-based activities that include some of the seller services mentioned above.