Customer-to-customer model definition, benefits, tips

You’re probably familiar with B2B (business-to-business), B2C (business-to-consumer), and D2C (direct-to-consumer) business models. But what is C2C e-commerce? C2C is customer-to-customer, or consumer-to-consumer business model.

Early forms of C2C business took the form of flea markets and garage sales. Today, C2C is primarily an e-commerce business model hosted on platforms that facilitate business transactions between buyers and sellers of goods and services.

E-commerce continues to evolve and adapt after the pandemic forced the world online to do business even more than it had been, and the C2C e-commerce model has experienced exponential growth over the last couple of years.

In Europe, according to McKinsey research, 30% of respondents said they’ve used C2C platforms to buy secondhand clothes.

With many people changing careers or building side businesses, C2C platforms are likely to continue growing and connecting people who sell their goods and services to those who wish to buy them.

What is C2C?

C2C means consumer-to-consumer or customer-to-customer business model, where individual consumers transact goods or services directly with other individual consumers using online marketplaces or platforms like eBay, Etsy, or Craigslist.

Most platforms also provide ways for sellers to offer shipping options and buyers to select their preferred shipping and handling speed and price point. C2C e-commerce platforms offer varying benefits and incentives for sellers and buyers, like discounts for selling in bulk and prompting sellers to offer deals for customers who buy multiple items at the same time.

C2C e-commerce has been popular for well over a decade, but saw massive growth when the pandemic forced many customers and companies to take their business online.

What is C2C e-commerce?

C2C e-commerce is a type of e-commerce where consumers can sell items they no longer need or want directly to other consumers, without the involvement of a business or intermediary.

C2C e-commerce platforms like Craigslist, eBay, and Facebook Marketplace started out like online garage sales or a table at a craft show, but have evolved to include many actual businesses with digital storefronts either in place of or in addition to a brick-and-mortar presence.

Many individuals sell products part time or full time on C2C platforms, while some use the platforms to sell items very rarely.

The primary function of C2C e-commerce platforms is to facilitate the transactions between buyers and sellers. At a minimum, this includes providing a space for sellers to list goods and services for sale, and often includes payment services like PayPal, Venmo, Apple Pay, Amazon Payments, and other convenient methods that allow buyers to make purchases and sellers to collect payments.

How does C2C e-commerce work?

Every platform has its own features, but here’s a general outline of how C2C e-commerce works:

1. 1. Registration
   2. Listing items for sale
   3. Searching and browsing
   4. Making a purchase
   5. Shipping
   6. Feedback

Step 1: Registration

Buyers and sellers must register for an account by providing their name, email address, and other relevant information to get started buying and selling. This often includes connecting or setting up a method for paying sellers or collecting and processing payments from customers, which may include registering for additional payment services like PayPal, Venmo, Apply Pay, and CashApp. For sellers, the more payment options available, the more convenient it is for potential customers to make purchases.

Step 2: Listing items for sale

As a seller, a crucial part of the process is listing your items with a description, photos, and video of what you’re selling. Research your competitors on the platform and other similar platforms to find out how they describe and price items similar to what you’re offering. Improving on descriptions, images, or videos can help a listing stand out from the competition.

Step 3: Searching and browsing

Each C2C platform has its own internal search engine driven by algorithms to display items most relevant to the user’s search intent, just like Google and Bing, except on a narrower scale. As on search engines like Google, users enter keywords or phrases for what they’re looking for, and the platform returns results that it hopes will eventually lead to a transaction between a seller and a buyer.

Step 4: Making a purchase

Most platforms allow customers to make purchases by clicking a “buy now” button or by adding items to a cart and then completing a checkout process. Some C2C sales proceed as auctions, as on eBay. However, eBay also allows sellers to simply list items with a fixed price or as a hybrid listing that begins as an auction, then allows customers to “buy now” if they don’t want to wait for the auction to end, or if they don’t want to compete in an auction and potentially pay more for the item. The customer then chooses shipping speed (if multiple options are offered) and payment method to complete the sale. Typically, C2C e-commerce platforms allow buyers to use services for free while earning revenue through fees collected from sellers for each sale. Additional revenue often comes from advertising.

Step 5: Shipping

Options for shipping often range from the speediest “expedited” offering—which usually has the highest price—to possibly a mid-range speed and price or a standard shipping rate and speed. Some platforms offer local pickup as an option, and sellers on some sites like Craigslist and Facebook Marketplace tend to offer local pickup as the only option.  Shipping options will depend on the item size and weight as well as the distance—whether the package is going across town or to another continent.

Step 6: Feedback

Customers tend to feel confident when buying from a well-known brand that has a strong reputation and a customer service department. However, finding trustworthy information about an individual seller on Amazon or Etsy can be hard. Feedback left by previous customers often provides a sense for what it’s like to deal with the seller, if the products are described accurately, what the packaging is like, and how easy it is to resolve any issues that may come up. To gain customer trust, platforms also have an interest to make sure the feedback is fair and accurate, but they also want to focus on positive comments to encourage sales. So, it’s important as a buyer to learn to read between the lines and read reviews with a grain of salt. It’s also important for buyers to do their part by leaving fair and accurate feedback.

What factors impact C2C e-commerce?

One of the biggest hurdles in the early days of C2C e-commerce was convincing customers that their information was safe when paying online. Services like PayPal helped get buyers and sellers both used to and comfortable with paying online with a credit card or bank account.

Today, it’d seem absurd to mail a personal check or money order for everything (or anything) we buy online—then to wait for it to reach the seller, wait for the seller to cash the check and make sure it clears before actually shipping the item.

But paying safely is only one aspect of the trust and safety customers expect from C2C platforms. Buyers and sellers alike must trust that the platform can and will mediate and safeguard against fraud or a deal gone sour so it doesn’t become the digital Wild West.

After trust and security, user experience is a top factor in C2C e-commerce success. If the platform is difficult to use in any way, people will simply go somewhere else. Everything must be as intuitive and user friendly as possible:

• Registration
• Listing items
• Searching for items
• Making purchases
• Tracking sales and purchases
• Returns and refunds
• Dispute resolution
• Sharing items with others across social media, email, and text

Other factors that impact C2C include:

Pricing and fees. If prices and fees are unreasonable or there’s a lack of transparency or consistency, sellers will find other platforms where they can predict and earn wider profit margins. Fewer sellers means fewer items for customers means fewer customers means fewer sellers, becoming a catch-22.

Competition. Keeping sellers and a greater selection of products on the virtual market keeps competition among sellers healthy and prices down, which attracts more customers, making it worthwhile for sellers to do more business there.

Customer service. One of the most important parts of any business is ensuring exceptional customer service. Although platforms urge both parties to resolve any conflicts amicably, some buyers and sellers just aren’t going to be able to work things out on their own. A C2C marketplace like Amazon has its own customer service policies and procedures in place to step in and resolve conflicts when necessary.

Marketing and promotion. Word of mouth and loyal customers only happen after marketing and promotion have brought them to an online store in the first place. Listing items is a start, but driving traffic, sales, and revenue requires getting the word out about your products and where people can find them. The right kind of marketing for your business will be different from the next person’s, but doing nothing is not an option. Even optimizing your listings for search can go a long way.

What are advantages and disadvantages of the C2C model?

As with any business model, C2C has its pros and cons for both buyers and sellers. Here are some of the main advantages of the C2C model:

• Zero to minimal set-up costs. Startup costs can add up quickly for other business models, often taking years to recover and become profitable. C2C platforms provide the space and most of the tools for getting your goods and services in front of your target audience.
• Higher margin for seller. Lower startup costs and overhead means wider profit margins for sellers.
• Lower prices for buyer. Competition among sellers keeps prices down, benefitting buyers looking for great deals.
• Access to large customer base. For sellers, when so much of the startup cost is marketing and reaching customers, having immediate access to people who are there to buy is a huge advantage.
• Access to a large selection of products & services. For buyers, large C2C e-commerce marketplaces like eBay, Amazon, and Etsy mean they can find almost everything they want and more. Have you read about what people buy when they’ve been drinking? “Large selection” hardly begins to describe it.
• Convenience. There’s no question that convenience is worth a lot to everyone when time is at a premium and stress is everywhere. The convenience of a solid C2C platform reduces friction, making a great experience for buyers and sellers alike.

And some top disadvantages of the C2C model:

• Lack of quality control. The C2C platform does not inspect the items listed for sale, which can lead to lower-quality products being sold to unsuspecting buyers and hurting buyer trust and confidence.
• Scams. Unscrupulous sellers can register and sell fakes or misrepresented items, potentially scamming buyers until removed from the platform.
• Competition undercutting prices. Sometimes the competition gets a little too intense and, well, ruthless, when sellers undercut each other’s prices until there’s no profit margin left. Eventually, customers get used to a price point and it becomes difficult to raise the price to make a profit.

How can I succeed with my ecommerce business on a C2C platform or marketplace?

As with any business, whether B2B, B2C, D2C, or any others, sticking to the fundamentals should serve you well and help build a strong foundation for a successful C2C e-commerce business. Here are a few suggestions to keep in mind:

• Understand your target audience. Selling to everyone can be selling to no one. Know who you’re selling to and understand what they want, how your products serve a need and/or help them solve a problem. Understand what’s important to them and their pain points. Meet customers where they are with the right message and the right product at the right time and in the right place.
• Provide high-quality products or services. Not only does this mean customers are more likely to return to buy again, but you can believe in what you’re selling and stand by it. Seeking cheaper, lower-quality goods and services to sell is likely to backfire in the form of dissatisfied customers, more complaints and refunds, less profit, and more headaches to deal with.
• Price competitively. Although you want to sell high-quality products, customers still want a good deal. And the competition will keep trying to undercut you anyway.
• A professional profile goes a long way toward establishing your credibility, trustworthiness, and the value of the products you offer. Authenticity and transparency are virtues.
• Use high-quality images & videos where possible. As part of your professional profile, high-quality images and videos speak to the quality of your business and the products you offer.
• Offer excellent customer service. As always, customer service can make or break a business. Exceptional customer service can bring customers back even after a less than exceptional experience.
• Stay active on the platform. Being visible and responsive is another way to gain customer trust and keep your products and business top of mind for customers on the platform.
• Continuously seek feedback. Improving and innovating requires the capacity for taking feedback and using it to meet customer needs and grow the business.

The C2C business model is a form of e-commerce that will continue to grow as digital tools and cloud computing enable greater capabilities and open new opportunities for where and how sellers can reach consumers and customers can pay for and consume goods and services.

Entrepreneurs from all over the globe and in areas previously out of reach will find increasing business opportunity through C2C platforms.