5 ms·

20% cut is a little stiff.

lorddoig 12y ago
It's outrageously stiff and, if anything, is a signal that selling services online by non-tech businesses is a still massively underdeveloped market.
- michaelt 12y ago
  Depends if the Amazon->Provider model is more like Yell->Advertiser or Uber->Driver. If Amazon provides leads but the service provider still does marketing, customer service, accounting, payments, sets prices, insures against fraud, closes the sales and so on, you'd expect Amazon's margin to be pretty slim as they're basically a telephone directory. But if Amazon manages the customer relationship, does all the advertising and customer service, sets the prices, makes the final sale and all that, so the service provider just turns up to do the job, they could probably make a much better margin.
  - lorddoig 12y ago
    Good point - that could definitely be worth 20% when done properly. But I can't help think of eBay which does all that and still feels like a hella rip-off. My last eBay run had some international sales and when I did the final sums, taking into account FX charges and PayPal fees, the eBay machine sucked up near 40% of the final sale price.
damian2000 12y ago
It depends if they charge a premium or not ... if they charge 20% more than market rates I'd be happy with it. But yeah, that's pretty unlikely - its more likely to be a race to the bottom on prices for some services.
drsim 12y ago
If you consider that the service provider pays nothing to acquire the customer and close the sale, plus Amazon brings the platform and payment processing I think it's very reasonable. As they rightly point out in the benefits these aren't leads, they are closed sales.
- deleted 12y ago
  [deleted]
- maratd 12y ago
  > I think it's very reasonable. It's high. They're not first to the scene. If you look at Elance, it's 8.75% for exactly the same thing including payment processing. On the high end, I've worked with agencies that charge 15% for everything. 20% is steep.
  - gonzi25 12y ago
    Taskrabbit takes a 20% cut as well, I'd say it's going rate for sure. Especially with Amazon backing it and the guarantee.
rikacomet 12y ago
indeed, 15% to 20% is very very stiff. 8% to 10% would have been okay for a matured line, while 3% to 5% during promotional/inauguration period would have been better suited. What is this? the 90's ? Anyone can set-up a simple free website and offer his services, of course a little bit of marketing and patience is still required, but for a smart man, that doesn't cost anything.
- mahyarm 12y ago
  You have %3 minimum for card processing when you do that.
- x13 12y ago
  Yes, anyone can make a website, anyone can accept payments, and anyone can promote their site and reach an audience. (and it'll take time and money; people are free to use another service or build it themselves - isn't this what a free market is all about?) Amazon is the e-commerce juggernaut; Amazon.com is the 7th most popular website in the world. (4th in the U.S.) The dominant player in a market sets the price. (apple & google play take 30%, uber & lyft take 20%, think amex/porsche/jetblue/nike...)
Zigurd 12y ago
20% up to $1000. %15 above $1000. "Transaction fee includes all relevant fees for invoicing, payment processing, and fraud protection."
netcan 12y ago
I think that's a little hard to say genially. In some industries (eg mechanic) repeat business is common pretty so it's really just 20% of the first sale. Other industries tend to spend a lot on customer acquisition anyway, eg personal injury lawyer. In some industries 20% is a money losing exercise. They'll probably acquire more nuance eventually.

It's outrageously stiff and, if anything, is a signal that selling services online by non-tech businesses is a still massively underdeveloped market.

michaelt 12y ago
Depends if the Amazon->Provider model is more like Yell->Advertiser or Uber->Driver. If Amazon provides leads but the service provider still does marketing, customer service, accounting, payments, sets prices, insures against fraud, closes the sales and so on, you'd expect Amazon's margin to be pretty slim as they're basically a telephone directory. But if Amazon manages the customer relationship, does all the advertising and customer service, sets the prices, makes the final sale and all that, so the service provider just turns up to do the job, they could probably make a much better margin.
- lorddoig 12y ago
  Good point - that could definitely be worth 20% when done properly. But I can't help think of eBay which does all that and still feels like a hella rip-off. My last eBay run had some international sales and when I did the final sums, taking into account FX charges and PayPal fees, the eBay machine sucked up near 40% of the final sale price.

damian2000 12y ago

It depends if they charge a premium or not ... if they charge 20% more than market rates I'd be happy with it. But yeah, that's pretty unlikely - its more likely to be a race to the bottom on prices for some services.

drsim 12y ago

If you consider that the service provider pays nothing to acquire the customer and close the sale, plus Amazon brings the platform and payment processing I think it's very reasonable. As they rightly point out in the benefits these aren't leads, they are closed sales.

deleted 12y ago
[deleted]
maratd 12y ago
> I think it's very reasonable. It's high. They're not first to the scene. If you look at Elance, it's 8.75% for exactly the same thing including payment processing. On the high end, I've worked with agencies that charge 15% for everything. 20% is steep.
- gonzi25 12y ago
  Taskrabbit takes a 20% cut as well, I'd say it's going rate for sure. Especially with Amazon backing it and the guarantee.

rikacomet 12y ago

indeed, 15% to 20% is very very stiff. 8% to 10% would have been okay for a matured line, while 3% to 5% during promotional/inauguration period would have been better suited. What is this? the 90's ? Anyone can set-up a simple free website and offer his services, of course a little bit of marketing and patience is still required, but for a smart man, that doesn't cost anything.

mahyarm 12y ago
You have %3 minimum for card processing when you do that.
x13 12y ago
Yes, anyone can make a website, anyone can accept payments, and anyone can promote their site and reach an audience. (and it'll take time and money; people are free to use another service or build it themselves - isn't this what a free market is all about?) Amazon is the e-commerce juggernaut; Amazon.com is the 7th most popular website in the world. (4th in the U.S.) The dominant player in a market sets the price. (apple & google play take 30%, uber & lyft take 20%, think amex/porsche/jetblue/nike...)

Zigurd 12y ago

20% up to $1000. %15 above $1000. "Transaction fee includes all relevant fees for invoicing, payment processing, and fraud protection."

netcan 12y ago

I think that's a little hard to say genially. In some industries (eg mechanic) repeat business is common pretty so it's really just 20% of the first sale. Other industries tend to spend a lot on customer acquisition anyway, eg personal injury lawyer. In some industries 20% is a money losing exercise. They'll probably acquire more nuance eventually.