Since its founding 30 years ago, eBay has grown into a $40 billion ecommerce juggernaut by hosting online auctions as a consumer-to-consumer (C2C) business. This globally recognized online marketplace has given millions of people the ability to list and bid on an enormous range of items, while managing to earn the company an impressive corporate profit along the way.
If you want to run your own C2C business, learn more about the different C2C business models, as well as the advantages and downsides of starting this type of enterprise.
What is a C2C business model?
Within the realm of ecommerce, C2C refers to a business model where consumers are able to sell directly to other consumers. This differs from business-to-business (B2B) and business-to-consumer (B2C) structures because C2C businesses connect buyers and sellers of goods or services, rather than selling directly to other companies or individual customers.
C2C businesses provide services or a self-serve platform through which consumers browse and purchase goods and services listed by other consumers. As a C2C platform owner, you can charge sellers a fee for listing items, and you can take a cut of the completed sales. You can also charge an additional fee for sellers to have their products recommended to a target audience or appear higher in relevant searches.
Profitability within the C2C business model happens in a couple of ways. In one example, having a higher volume of users can increase profits by increasing the total amount of transactional fees you are paid. Alternatively, facilitating a higher-value transaction can also increase your profits, since higher-priced sales would yield higher earnings from fees.
C2C vs. B2C: What’s the difference?
C2C and B2C businesses both provide products or services to customers, but they accomplish this in different ways. B2C businesses sell products or services directly to individual consumers, while C2C businesses provide a platform for consumers to sell products or services directly to each other.
C2C businesses act as a marketplace for transactions between consumers, and their main responsibility is to connect the two parties involved. B2C businesses are themselves responsible for sourcing, selling, and shipping whatever goods they’re offering. While both models can be profitable, C2C businesses depend on a regular user base and indirect sales for earnings, while B2C businesses earn money through direct purchases.
4 types of C2C business platforms
Here’s a breakdown of how four different types of C2C business models operate and turn a profit, including benefits and examples of successful businesses in each category:
Auction
One of the most popular types of the C2C business model is the auction platform, a website where people can list items for sale, and the goods go to the highest bidder. Once an item sells, the buyer pays the seller, the seller ships the product, and the site takes a cut of the profits. This is how online marketplace eBay makes its money.
On eBay, sellers typically list an item at a lower price than a customer would find in a traditional retail environment, hoping that interested shoppers will bid to price each other out. If the demand for an item is high, the seller has the potential to earn significantly more than the original listed price—and the cut for eBay is higher, too. Buyers are enticed by the possibility of getting a great deal on an item with low traffic or interest.
Having an intuitive user experience and multiple payment processing options can help you attract more users and build a loyal customer base. More recurring users increase the odds of purchases, which can lead to more profit from transaction fees. Additionally, if your platform hosts rare collectables like eBay does, there is room for greater profits from applying fees to higher-priced items.
Exchange of goods
Exchange of goods platforms offer a central hub where people can sell goods to consumers directly through barter or a pre-set price, rather than through real-time bidding. Some of these platforms host a wide variety of goods for sale, while others are curated toward niche markets. For example, Facebook Marketplace allows users to list anything from gym equipment to musical instruments, while Depop is specifically designed to sell used clothing.
While Facebook Marketplace is free to use and doesn’t take a cut from transactions made through the app, Depop earns money by charging US sellers a 3.3% processing fee. Depop appeals to sellers by offering a way to make money from clothes they no longer wear, with the potential of earning them a higher return than if they’d put them up for consignment. Sellers set their own price instead of receiving an offer from a consignment shop. For users looking to buy on Depop, the motivation is rooted in the possibility of getting a better deal on clothing items than if they’d bought them brand-new in a store, without the effort of sorting through bins or racks of clothes at thrift stores and consignment shops.
Exchange of services
Exchange of services platforms connect people who want to offer or buy services rather than goods. For example, Taskrabbit allows people to find and hire help for home-improvement tasks, and Fiverr connects freelancers to projects in a variety of industries, including tech, graphic design, digital marketing, and writing and translation. Airbnb is another exchange of services platform, allowing homeowners to rent out their properties to vacationers and business travelers.
Taskrabbit makes its money by charging users fees for purchasing services through the app; Fiverr charges freelancers a percentage of their sales when their services are elicited; and Airbnb charges processing fees to the user who is renting a space and listing fees to the user who is leasing it out.
With a platform like Taskrabbit or Fiverr, the appeal to potential customers is that they can outsource different projects or responsibilities without having to pay the kind of costs incurred when hiring a specialist or assistant. The appeal to those providing the goods or services is that they can make money using their skills and be completely in control of their hours.
Payment app
Another type of C2C business model is a payment platform, but it is a highly complex undertaking that requires significant technical expertise, knowledge of industry regulations, and capital. Examples of payment platforms include Venmo, Zelle, and PayPal.
Each of these apps makes money in different ways. Venmo charges users a fee to immediately transfer funds from their Venmo balance to their bank account and charges businesses a fee when customers pay them through Venmo for their products or services. Zelle charges fees to the banks that partner with the app. PayPal charges fees to users for instant transfers, fees to sellers for conversion rates if sales are made internationally, and fees to retailers for selling through the app, as well as a percentage cut from each individual sale.
C2C pros and cons
As with all business models, C2C ventures have both advantages and disadvantages. Here’s the breakdown:
C2C pros
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Low overhead costs. Since you aren’t providing the goods or services that will be sold, you don’t need to purchase or store any goods that will be sold through your business. You also don’t need to pay for storage space.
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Large usership potential. Since sellers are not required to be licensed businesses, there is extensive room to attract additional consumers via email marketing, social platforms, and classified ads.
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Scalability. Since little is required of you as an owner to host new users, the business can easily grow without heavily increasing operational costs or specialized skills.
C2C cons
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Less quality control. Since the C2C business owner doesn’t manufacture or select the products they offer on their site, there’s less oversight of the quality of the merchandise that’s being offered. You want to make sure sellers are setting clear expectations so customers don't end up disappointed with their purchases.
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Tricky customer service management. If you need to handle any dispute resolution between buyers and sellers, it can be complicated and crucial, since both parties are active users of your business.
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Competition from free C2C platforms. If you want to charge your users listing fees, it could be hard to compete with sites like Facebook Marketplace and Craigslist, which offer this service for free.
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Potential for scams and fraud. You’ll need to actively manage your platform to avoid counterfeit goods, fraudulent listings, and goods and services not being delivered as promised.
C2C meaning FAQ
What is an example of a C2C?
Consumer to consumer (C2C) is a business model where consumers connect to other consumers, typically on a website, for the purpose of selling and purchasing goods or services from each other. While eBay is one of the most recognizable C2C businesses, other examples include Discogs, Depop, Airbnb, and Etsy.
What are the benefits of C2C?
Some advantages of operating a consumer-to-consumer business are: lower upfront costs when getting started, large user potential (particularly if you offer incentives like advertising support or help with shipping labels), and ease of scalability.
What are the disadvantages of C2C?
Since consumer-to-consumer businesses are built on transactions between consumers, it’s harder to maintain the quality control you have when you source the products yourself. It can also be difficult to resolve customer complaints when you’re not responsible for inventory or processing. Several large companies offer free C2C platforms, making it harder for small businesses to compete.
What are C2C and B2C?
C2C and B2C are both types of ecommerce business models. C2C stands for “consumer to consumer” and refers to businesses that facilitate transactions from one consumer to another consumer. Popular examples of C2C businesses are eBay, Etsy, Facebook Marketplace, and Airbnb. B2C stands for “business to consumer” and refers to businesses that sell goods and services directly to consumers via ecommerce sites, retail stores, or a combination of both—like Target or Walmart.
