- C2C is a business model where customers purchase goods from other customers via a third-party platform or business.
- Businesses that facilitate C2C transactions help sellers reach vast numbers of potential buyers.
- Companies running C2C marketplaces must maintain safe platforms and quality controls, or desirable buyers and sellers won’t use them.
- This article is for entrepreneurs who want to understand the C2C business model.
C2C stands for “consumer to consumer” or “customer to customer”; it’s a business model that fosters commerce between private individuals, usually in an online environment. C2C companies act as intermediaries to foster engagement and help consumers reach bigger audiences.
Whether a C2C platform focuses on goods or services, this e-commerce category facilitates transactions between people. We’ll look at C2C commerce and explain how this business model operates.
What is C2C commerce?
In the C2C model, a consumer – not a business – sells goods or services to another consumer.
Today, the C2C business model is typically associated with e-commerce and online selling platforms like Craigslist or Etsy. Some C2C platforms, including OfferUp, prioritize mobile commerce via apps. However, C2C can refer to any business that creates a market between consumers. A newspaper’s classified ads section or an in-person auction house are also examples of C2C businesses.
C2C companies facilitate consumer relationships, helping buyers and sellers locate and engage with each other. They’re especially useful for niche markets. For example, if you’re selling a used car, you may not know anyone interested in its specific make and model. However, a C2C marketplace can help you connect with your target customer and make the sale.
The C2C model allows customers to access hard-to-locate products and find the best price among competing sellers.
Did you know? Some sellers use C2C platforms as an arbitrage opportunity, buying goods, such as high-quality used clothes, for their online resale business.
How is C2C different from B2C?
While C2C platforms help consumers sell to other consumers, business-to-consumer companies sell directly to consumers. Today, B2C typically refers to online retailers, but traditional retailers like mall stores also follow a business-to-consumer model.
Here are some characteristics of the B2B business model:
- B2B organizations typically offer various products or services they develop or purchase from a manufacturer or originator.
- B2B companies make money by selling directly to their customers.
- To succeed, B2B companies must understand what customers want and how to motivate them to purchase.
- B2B companies usually have control over their products’ quality.
- B2B companies must offer excellent customer service to stand out and build customer loyalty and repeat business.
In contrast, a C2C business’s primary service is helping sellers reach larger audiences. They make money from fees or commissions they charge sellers in return for listing items for sale.
Additionally, since C2C websites are intermediaries that match buyers to sellers, they have little control over product quality.
Did you know?: Money-transfer platform PayPal is often used to facilitate transactions for C2C sales, usually with a small transfer fee. But this market is also evolving, thanks to the rise of C2C payment platforms like Venmo, Google Pay, and Zelle.
What are the advantages of the C2C model?
C2C companies and participants enjoy several benefits from the business model.
- C2C has minimal costs. Since C2C platforms don’t have to provide products, minimal costs are involved. This keeps margins higher for sellers and prices lower for buyers.
- C2C is convenient for sellers. Sellers enjoy the convenience that C2C marketplaces provide. For example, if someone wants to sell a collection of old books, they don’t have to deal with the hassle of locating potential buyers. Instead, they can join a C2C marketplace and access many potential buyers.
- C2C is convenient for buyers. Buyers also find the C2C model convenient. They don’t have to research offline and drive around to visit stores searching for an item they want. They can access a C2C site and easily search for even hard-to-find items.
What are the disadvantages of the C2C model?
C2C businesses also create challenges for participants.
- Credit card payments can be challenging. Credit card transactions can be difficult on some C2C platforms. Some platforms may not support or be able to process credit cards. However, options like PayPal and Venmo are mitigating these challenges.
- Lack of quality control. C2C transactions may lack quality control. Since the sellers are consumers, there is often little recourse for poorly made or misrepresented products. Additionally, because the buyers are also consumers, payment guarantees can be hard to enforce.
- C2C platforms can be vulnerable to scams. C2C platforms can be rife with scams as opportunists find ways to take advantage of others. Buyers must be wary of sellers who can’t answer detailed questions about items for sale. They should also avoid any seller that pressures them to buy immediately. C2C platforms must enforce rigorous policies to ensure buyers and sellers feel safe using their C2C marketplace. Many platforms implement comprehensive selling policies that, if violated, result in the users being banned.
What are examples of C2C companies?
Thanks to the internet, bigger and more powerful companies are fostering C2C interactions. Here are some examples:
- eBay. eBay is a prominent example of a C2C intermediary. It includes fixed-price and auction items and appeals to customers seeking good deals and hard-to-find products.
- Amazon. Amazon is both a B2C and C2C platform. Its Amazon Marketplace focuses on third-party sellers offering new and used items. Selling on Amazon requires creating a seller account, listing products, and shipping directly to the consumer or Amazon.
- Craigslist. Craigslist is another well-known C2C marketplace where people can buy and sell goods and trade services. Craigslist’s localized sites for cities worldwide create a community feel. Craigslist focuses on facilitating relationships. For example, property owners can reach potential renters, and experts can reach people who need their services.
- Etsy. Etsy began as an online community for artists, crafters, and vintage fans. It’s now an established marketplace for unique, handmade, original items.
- Facebook Marketplace. Facebook Marketplace connects buyers and sellers in specific locations. All transactions are free, unlike eBay, which takes a transaction fee on sales.
- Airbnb. Airbnb allows users to post their residence for short-term lodging to other users for a nightly rate.
- Fiverr. Fiverr enables users to post a personal for-hire service for as low as $5. These services range from giving financial advice to graphic design.
Key takeaway: While similar, C2C differs from the P2P (peer-to-peer) model. P2P transactions are directly between consumers, while C2C typically has an intermediary platform.
C2C commerce has a bright future
The internet has enabled companies to create C2C marketplaces on an unprecedented scale. In Europe, the pandemic accelerated the C2C trend, consultancy McKinsey found, since so many people took the time to get rid of unwanted possessions. Additionally, since customers prefer sustainable products, sustainability concerns could drive further C2C growth.
One thing to note: creating a C2C platform is often unrealistic for SMBs since the business model often requires having or building a huge audience.
Alex Halperin contributed to the reporting and writing in this article.