What is Take Rate?
Take rate is a term used in eCommerce to describe the percentage fee collected by a platform, service provider or marketplace on a transaction. It is most commonly associated with companies like Amazon, eBay or PayPal, which act as intermediaries between sellers and customers and charge a commission on each transaction.
Take rate is closely linked with gross merchandise volume (GMV). A platform’s revenue can be calculated by multiplying its take rate by the GMV. For example, if a marketplace has a GMV of £1 million and a take rate of 10%, its revenue would be £100,000. Raising the take rate increases revenue per transaction, but it can also make platforms less appealing to sellers who may seek more affordable alternatives elsewhere.
How does take rate apply in different eCommerce contexts?
Take rate can vary depending on the type of service provided. Payment service providers, for example, charge a percentage for processing transactions. If a customer spends £10 and the provider charges £1, the take rate is 10%. Rates may differ based on payment method, such as bank transfer versus card payment. In a different context, take rate can also refer to visitor-to-lead conversion, that is, the percentage of users who take a specific action. For instance, a meal kit subscription brand might track the number of subscribers who select a particular dish in a given week out of all those who placed an order.
This version of take rate helps businesses with:
Whether referring to platform fees or user conversion rates, understanding take rate helps eCommerce businesses optimise performance, pricing and customer experience.
