What is Alibaba's commission percentage?

However, this 25% includes several smaller commissions and fees. Alibaba has nine different types of commission fees within its standard commission fee. These include a business service fee, category management fee, quality assurance fee, membership subscription fee, branding services fee, storefront promotion fee, storefront operation cost subsidy and an advertising cost subsidy.

Business Service Fee

Alibaba is unique in that it charges a business service fee as part of its standard commission rate. This means that even if your items don’t sell, you will still be charged this fee. The business service fee is charged as a lump sum that is a percentage of your monthly gross merchandise value (GMV) and is charged as a percentage of your total sales.

The business service fee is 0.3% – 1.6% of your GMV, depending on the level at which you are enrolled with Alibaba. The four business service fee levels are bronze, silver, gold, and platinum. To view the criteria for each level, please see the table below.

Escrow Fee

If you are using Alibaba’s third-party escrow payment method, you will be charged a 0.5% escrow fee on each payment. This will be deducted from your seller’s payment and added to the buyer’s.

VAT / Tax Commission

The VAT commission is only applicable and charged to sellers in certain countries. This is a percentage fee that is charged on the gross sales amount, before other fees are taken out. This VAT commission is dependent on the country in which your business is based.

The VAT rates in countries where the seller is responsible for collecting VAT are between 0% and 22%, depending on the country. The VAT rates for countries where the seller is not responsible for collecting VAT are between 0% and 17%, depending on the country.

Category Management Fee

The category management fee applies to sellers on both the Taobao and Tmall marketplace, and is a percentage of the amount that you have been allocated by Alibaba for product listing fees.

If you are on the Taobao marketplace, this fee is 0.5% of your product listing fees. If you are on the Tmall marketplace, the category management fee is calculated on the basis of the number of products that are listed in each category on which you are listed. The percentage charged for each category is listed in the table below.

There are certain categories on Tmall, such as food and beverage, healthcare, cosmetics, and baby care, which are subject to a higher fee. For a full list of categories and their corresponding fees, please refer to the table below.

Quality Assurance Fee

The quality assurance fee is applied if you are selling on the Tmall marketplace, and it is charged as a percentage of your monthly sales revenue. This fee is calculated as 0.3% of your monthly sales revenue and collected from the seller.

If you are selling on the Tmall marketplace, the quality assurance fee pays for the costs associated with managing your products’ quality assurance and product safety. The quality assurance fee is not applicable for sellers on the Taobao marketplace.

Membership Subscription Fee

The membership subscription fee applies to sellers on both the Taobao and Tmall marketplaces, and it is charged as a percentage of your monthly sales revenue. This fee is calculated as 0.3% of your monthly sales revenue and collected from the seller.

If you are selling on the Tmall marketplace, the membership subscription fee pays for the costs associated with your seller membership. The membership subscription fee is not applicable for sellers on the Taobao marketplace.

Branding Services Fee

The branding services fee applies to sellers on the Tmall marketplace, and it is charged as a percentage of your monthly sales revenue. This fee is calculated as 0.5% of your monthly sales revenue and collected from the seller.

If you are selling on the Tmall marketplace, the branding services fee pays for the cost of running the online store and other services related to your store. The branding services fee is not applicable for sellers on the Taobao marketplace.

Storefront Promotion Fee (Only for Taobao)

The storefront promotion fee applies only to sellers on the Taobao marketplace. This fee is charged as a percentage of your monthly sales revenue, and it is calculated as 0.1% of your monthly sales revenue.

If you are selling on the Taobao marketplace, the storefront promotion fee pays for the cost associated with promoting your storefront to increase the number of storefront visitors. The storefront promotion fee is not applicable for sellers on the Tmall marketplace.

Storefront Operation Cost Subsidy (Only for Taobao)

The storefront operation cost subsidy applies only to sellers on the Taobao marketplace. This fee is charged as a percentage of your monthly sales revenue, and it is calculated as 0.1% of your monthly sales revenue.

If you are selling on the Taobao marketplace, the storefront operation cost subsidy pays for the cost associated with operating your storefront and other services related to your storefront. The storefront operation cost subsidy is not applicable for sellers on the Tmall marketplace.

Advertising Cost Subsidy (Only for Taobao)

The advertising cost subsidy applies only to sellers on the Taobao marketplace. This fee is charged as a percentage of your monthly sales revenue, and it is calculated as 0.1% of your monthly sales revenue.

If you are selling on the Taobao marketplace, the advertising cost subsidy pays for the cost associated with advertising and marketing services. The advertising cost subsidy is not applicable for sellers on the Tmall marketplace.

It is important to know all the different fees and commission rates that are applicable to your business when selling through an Alibaba marketplace. This will enable you to plan your business finances accordingly. We hope that this guide has helped you understand Alibaba's fee structure. If you have any questions, feel free to ask in the comments below.