What Is Customer to Customer (C2C)?

Customer to customer (C2C) is a business model whereby customers can trade with each other, typically in an online environment. Two implementations of C2C markets are auctions and classified advertisements. C2C marketing has soared in popularity with the arrival of the Internet and companies such as eBay, Etsy, and Craigslist.

Key Takeaways

  • Customer to customer (C2C) is a business model that enables customers to trade with each other, frequently in an online environment. 
  • C2C businesses are a type of business model that emerged with e-commerce technology and the sharing economy.
  • Online C2C company sites include Craigslist, Etsy, and eBay, which sell products or services through a classified or auction system.
  • Some C2C companies have problems, such as a lack of quality control and payment guarantees.

How Customer to Customer (C2C) Works

C2C represents a market environment where one customer purchases goods from another customer using a third-party business or platform to facilitate the transaction. C2C companies are a type of business model that emerged with e-commerce technology and the sharing economy.

Customers benefit from the competition for products and often find items that are difficult to locate elsewhere. Also, margins can be higher than traditional pricing methods for sellers because there are minimal costs due to the absence of retailers or wholesalers. C2C sites are convenient because there is no need to visit a brick-and-mortar store. Sellers list their products online, and the buyers come to them.

The "Amazon effect" is named after the popular global online retailer and refers to the competitive gains e-commerce businesses have made as more shoppers make purchases online instead of shopping at brick-and-mortar stores.

Types of Customer to Customer (C2C) Businesses

Craigslist is an e-commerce platform that connects people advertising products, services, or situations. Craigslist not only provides a platform for buying, selling, and trading products but posts monthly classified ads, such as employment opportunities and property listings. Like many others, this platform requires the seller to ship items directly to the buyer.

Etsy allows company owners to create their custom website on which to market their products to consumers. The C2C site offers guidance and tools for growing a business that ranges in price according to a company's stage of development. There's also a "Sell on Etsy" app that helps to manage orders, listings, and customer queries efficiently.

eBay features two types of product listings: fixed-price items and auction items. Fixed price items can be purchased quickly by selecting the Buy It Now button. Auction items feature a Place Bid button for entering bids and show a current bid price. These items are open to bids for a predetermined time and are declared "sold" to the highest bidder.

Revenue and Growth of the C2C Market

C2C websites and similar platforms make money from fees charged to sellers for listing items for sale, adding on promotional features, and facilitating credit card transactions. These C2C transactions typically involve used products sold through a classified or auction system.

The C2C market is projected to grow in the future because of its cost-effectiveness. The cost of using third parties is declining, and the number of products for sale by consumers is steadily rising. Retailers consider it to be an essential business model because of the popularity of social media and other online channels. These channels showcase specific products already owned by consumers and increase demand, which drives increased online traffic to C2C platforms.

However, C2C has problems such as a lack of quality control or payment guarantees. In some cases, there is little support for credit card transactions, although the emergence of PayPal and other such payment systems over the years has helped simplify payments on C2C platforms.

Real World Example of Customer to Customer (C2C)

The C2C marketplace has increased over time, as more companies have entered the space to facilitate C2C transactions. Many companies target niche markets and list specific products to attract unique consumers.

For example, Amit Lakhotia, former vice president of payments at Paytm, left his position in January 2016 to pursue other ventures, one of which was Tokopedia, one of Indonesia's largest online marketplaces. Tokopedia is a C2C retailer that provides a platform on which entrepreneurs can open small and midsize C2C enterprises (SME) for free. Between the second quarter of 2018 and the second quarter of 2019, Tokopedia was Indonesia's top e-commerce website, bringing in 140.4 million web visits. 

The C2C marketplace is increasing in popularity among sellers looking to maximize their sales potential by connecting with customers that they otherwise would not reach using traditional selling methods. Online platforms such as Etsy and Craigslist appeal to customers who can locate mostly any product or service at a price they are willing to pay.