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.
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.
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.
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.
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.
- 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
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