C2C-business-model

What Is The C2C Business Model? The C2C Business Model In A Nutshell

The C2C business model describes a market environment where one customer purchases from another on a third-party platform that may also handle the transaction. Under the C2C model, both the seller and the buyer are considered consumers. Customer to customer (C2C) is, therefore, a business model where consumers buy and sell directly between themselves. Consumer-to-consumer has become a prevalent business model especially as the web helped disintermediate various industries.

Understanding the C2C business model

In the offline world, the customer-to-customer business model has existed for years. Take the humble farmers market, for example, where farmers pay market organizers for a stall where they can sell their produce to consumers. The classifieds section of a newspaper is also a typical example of the C2C model.

The model has also become popular online due to advances in eCommerce technology, with eBay considered a pioneer of the strategy when it was launched in 1995. The C2C model has also benefitted from the rise of the sharing economy, where goods and services are shared on a community-based online platform. Companies in this space include Airbnb, Uber, Spacer, Airtasker, and Gumtree.

Four types of C2C business model platforms

Most C2C platforms make money by charging sellers a listing fee or collecting a small commission on each successful transaction. 

Examples of these platforms include:

Exchange of goods platforms

Which connects buyers and sellers looking to exchange physical goods. Some of these platforms exist in website and app form and allow both parties to complete the transaction in person. Examples include eBay and Etsy

Exchange of services platforms

Where buyers and sellers come together to exchange money for services. Freelancing platforms such as Fiverr, Upwork, and 99designs are commonly cited examples. However, there are also platforms selling dog walking, house sitting, and employment services. 

Auction platforms

Here, sellers list goods at a minimum price and allow buyers to bid on them for a set time. Auction platforms such as eBay offer an assortment of goods, while others are more specialized. For example, Sotheby’s is known for luxury and collector items while Copart sells used and wholesale vehicles.

Payment platforms

These C2C platforms exist to facilitate transactions between the buyer and seller, with many also charging a small fee when sellers transfer earnings to their bank accounts. Examples include Stripe, PayPal, and Payoneer.

Strengths of the C2C business model

There are several obvious benefits for buyers and sellers under the C2C model:

  • Increased profitability – the model is attractive for sellers because they avoid many of the costs associated with rent, website hosting, marketing, and distribution. For example, a freelancer can create an account on a services platform for free and start attracting customers almost immediately.
  • Increased customer base – online merchants can also sell their goods to a vast online audience where there is demand for niche or less-popular items. In most cases, the merchant also gains access to the C2C platform’s user base when they sign up for an account.
  • Credibility – one drawback of the customer-to-customer business model is the potential for fraudulent transactions from unproven sellers. While many sellers do not have a proven track record, they can leverage the reputation of a C2C platform to build positive customer reviews and establish a reputation that way.

Key takeaways:

  • Customer to customer (C2C) is a business model where consumers buy and sell directly between themselves. The strategy has become very popular thanks to advances in eCommerce technology and the sharing economy.
  • Customer-to-customer platforms include exchange of goods platforms, exchange of services platforms, auction platforms, and payment platforms. Third-party facilitators earn revenue by charging listing, transaction, or withdrawal fees. 
  • The C2C model reduces overheads and increases profitability for sellers. With access to a vast online audience, sellers may also be able to find a market for niche items or items otherwise unviable in a bricks-and-mortar store. Buyers can transact through established C2C platforms to reduce the potential for fraudulent transactions.

Connected Business Concepts

Marketplace Business Models

marketplace-business-models
A marketplace is a platform where buyers and sellers interact and transact. The platform acts as a marketplace that will generate revenues in fees from one or all the parties involved in the transaction. Usually, marketplaces can be classified in several ways, like those selling services vs. products or those connecting buyers and sellers at B2B, B2C, or C2C level. And those marketplaces connecting two core players, or more.

Food-Delivery Business Models

food-delivery-business-model
In the food delivery business model companies leverage technology to build platforms that enable users to have the food delivered at home. This business model usually is set up as a platform and multi-sided marketplace, where the food delivery company makes money by charging commissions to the restaurant and to the customer.

Wholesale Business Model

wholesale-business-model
The wholesale model is a selling model where wholesalers sell their products in bulk to a retailer at a discounted price. The retailer then on-sells the products to consumers at a higher price. In the wholesale model, a wholesaler sells products in bulk to retail outlets for onward sale. Occasionally, the wholesaler sells direct to the consumer, with supermarket giant Costco the most obvious example.

Retail Business Model

retail-business-model
A retail business model follows a direct-to-consumer approach, also called B2C, where the company sells directly to final customers a processed/finished product. This implies a business model that is mostly local-based, it carries higher margins, but also higher costs and distribution risks.

B2B2C

b2b2c-business-model
A B2B2C is a particular kind of business model where a company, rather than accessing the consumer market directly, it does that via another business. Yet the final consumers will recognize the brand or the service provided by the B2B2C. The company offering the service might gain direct access to consumers over time.

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