C2C is an abbreviation of (Consumer To Consumer), which is a business model that mediates the buying and selling of products and the sharing of information between consumers and individual consumers. C2C is also known as “CtoC” or “personal transaction”.
With the spread of the Internet and mobile devices, the number of platform operators and services that mediate C2C has increased rapidly, but in reality, C2C is a business model that has existed for a long time. Flea markets and garage sales, which are often held on weekends, are also interpersonal transactions. On the other hand, a platform that mediates between individuals on the Internet has attracted particular attention in recent years.
A service known as a service born in the early days of the Internet is the music file exchange site “Napstar”. “Napster” is a platform that provides a “server that can upload music files” and a “song search function”. By using this site, people can exchange music files between individuals. The term “Peer to Peer”, which means interpersonal transactions, was originally a computer term that means “ computers of people who share data are connected ” like this Napstar. Napster was sued by the Recording Industry Association of America (RIAA) and others for providing illegal copies of music, and the service disappeared in 2000, but it had a great impact on the business model via the Internet.
The characteristics of C2C as a business model are as follows.
- Providing a “system” for safe C2C
- If you can develop and operate a payment system in-house, add value such as repeat purchases and payment fee income
In order to continue to earn profits with C2C, it is important for platform operators to continue to provide users with a more convenient transaction mechanism, security, and reliability. Especially on the Internet where the other party’s face cannot be seen, it is necessary to build a system to eliminate illegality and continue to guarantee the reliability of transactions.
- 1 C2C business market size
- 2 Benefits of C2C business
- 3 Disadvantages of C2C business
- 4 C2C business success conditions
- 5 C2C business examples
- 6 What are “B2C”, “B2B” and “B2E”?
- 7 B2G and G2C
- 8 C2C Business Challenges
- 9 C2C is an expanding market
C2C business market size
The size of the domestic C2C market has expanded significantly in recent years. According to a survey by the Yano Research Institute of Japan, the total distribution amount in the CtoC product sales field in 2018 reached 1.5 trillion yen, which is a significant increase from the previous year’s 866.9 billion yen. increase.
The total distribution amount in 2019 is expected to reach 1.18 trillion yen, which is even higher than in 2018, and further growth of the C2C business is expected in the future. Looking at the C2C service field, the largest market is Airbnb and other private lodging services, and the survey results have been announced that the total contract amount in 2018 will increase by 75.0% from the previous year to 63.3 billion yen. ..
In addition, growth rates of more than 150% have been recorded in other C2C businesses such as ride sharing (2.6 billion yen) and housekeeping agency (3.2 billion yen).
Why is the C2C market so big? One of the reasons is that there are many young people as the main users of C2C services.
Among the younger generation, those with an annual income of 2-4 million yen are highly saving-oriented, and it has been found that they will actively utilize the sharing economy, which allows them to acquire goods and services at low cost. In addition, it has been found that housewives in their 30s and 40s are also strongly share-oriented and tend to use C2C services such as Airbnb because they can acquire children’s clothing and toys at low prices.
Benefits of C2C business
Benefits of C2C service users
Products sell high or can be bought cheaply
In the sharing economy where consumers share goods and services, C2C allows them to acquire goods and services at a relatively lower price than purchasing goods and services from companies.
For example, a typical C2C service is “Mercari,” a service that originated in Japan and allows you to get used miscellaneous goods, cosmetics, clothes, furniture, and home appliances at low prices. Therefore, one of the merits of C2C services is that “you can get goods and services at a low price” for general consumers.
Sellers can earn profits by purchasing unnecessary items and assets, and since they do not have to pay consumption tax for interpersonal transactions, it is also an advantage that they can set reasonable prices.
On the other hand, the merit on the buyer side is that you can purchase goods and services cheaper than the market value. The seller also sets a reasonable price based on the demand for “getting things cheaply”, so the buyer may be able to purchase at a surprising price.
Benefits of C2C business providers
No need to have inventory
Unlike B2C companies that sell their products and services to general consumers, one of the major advantages of C2C business is that they do not have the risk of having excess inventory or defective inventory.
The main source of revenue for C2C business providers is service usage fees and commissions that deduct part of the transaction price of the product. Consumers provide products that are traded on the platform. Therefore, as a general rule, the provider does not need to have its own inventory.
It is a feature and strength of the C2C business model that C2C service providers can focus on improving the platform and appealing to facilitate transactions between consumers without having excess inventory or defective inventory.
Also, because there is no need to manage inventory, we can focus on how comfortable consumers (sellers and buyers) can trade. Another advantage of C2C service providers is that they can focus on this appeal.
Disadvantages of C2C business
Disadvantages of C2C service users
Responsibility in case of trouble
In many C2C businesses that provide a place for transactions to consumers, it is common for service providers to not be responsible for troubles in transactions between individuals. The provider side updates the rules and guidelines for users and provides support to prevent troubles, but there are cases where troubles in interpersonal transactions obscure the responsibility through communication between the parties and self-solving. I have.
Therefore, when troubles such as cancellation or return of goods, delay in delivery, whether or not the shipping fee is borne, etc. occur between the purchaser and the seller, depending on the other party, a dishonest response may occur or further troubles may occur. May be done.
Even if unexpected troubles such as “the product was canceled”, “the price was paid but the product did not arrive”, or “the product was damaged”, basically the seller and the purchaser discuss it. You may have to resolve it.
However, service providers are also implementing various trouble prevention measures, such as setting up a support window and paying the fee when payment and shipping are confirmed through mediation of payment.
There is no guarantee at the time of payment
One of the disadvantages of C2C business is that there is no guarantee at the time of payment. Unlike the B2B EC site, the trading partner is not a company but a general consumer, so there is a possibility that there is no guarantee that the product will be shipped even if you make a payment.
If the seller is malicious, the item may not be shipped even if you pay the price. Therefore, C2C companies have to prevent troubles at the time of payment, such as introducing an “escrow method” in which the service provider mediates at the time of payment and pays the fee after confirming the payment of the purchaser and the shipment of the seller. We are making various efforts.
Disadvantages of C2C service providers
Trouble between users
Since the products and services that are the products of transactions are individual-dependent , there is a risk that the business itself will disappear if an illegal listing or trouble between users becomes an incident. In fact, there are many cases where stolen goods and cash are listed on flea market sites. How to work on the patrol system as an operation is important. In addition, the operation of an interpersonal transaction intermediary platform is less difficult to imitate , so how quickly you can acquire user scale rather than competitors is the key to business success.
Measures are needed to increase the number of users
A certain number of users is required to activate the C2C service. However, since the name recognition is low at the stage of launching the service, it is necessary to implement marketing measures from a medium- to long-term perspective.
For example, it is important to implement marketing measures that are compatible with your company, such as managing your own media based on SEO measures and attracting customers using advertisements and SNS. Increasing the number of users is the most important issue for success in C2C business, so approaches such as market development and increasing the chances that your service will be noticed by users are indispensable.
I explained that the revenue sources of C2C services are user membership fees and usage fees, but in order for C2C services to be successful, a marketing strategy that increases the number of users who use the company’s platform and establishes it in the company’s service. Is required. Therefore, one of the disadvantages of C2C is that it requires costs to develop the market and acquire customers.
C2C business success conditions
There is a certain size of market and customers
In order for a successful C2C business, both the seller who wants to sell the product or information and the customer who wants to purchase the product or information are of a certain size in order for the personal transaction to be completed. Must be present in.
Eliminate the hassle of users and ensure safety
It is necessary to have a mechanism to eliminate the “ trouble of finding a partner ” and to ensure “ safety ” in transactions between individuals. For example, Mercari has introduced various mechanisms that competitors do not have in order to eliminate the two troublesome tasks of buying and selling products between individuals: “shipping products” and “settlement”.
The genres of the products offered are diverse
In order to scale up due to network externalities, it is necessary to have services that meet diverse customer needs. Flea markets and mediation of personal skills are successful examples due to the variety of genres of offerings.
C2C business examples
Airbnb is a C2C service that matches people who want to rent a house or room with those who want to rent it. The homes and rooms offered do not offer the services of a hotel, but there are many consumers who want to secure cheap accommodation. One of the personal benefits of renting a room is that unused rooms generate revenue.
Originally born in the United States, Airbnb has grown into a popular service not only in the United States but around the world, including Japan, and is popular among travelers. For big events like the Olympics, it is expected to help solve the shortage of hotels in the area.
Similarly, the business model of the sharing economy is developing in various places, such as “akippa,” a service that originated in Japan that matches vacant parking lots in private homes.
Mercari launched in July 2013 as a smartphone-specific free arcet (inter-personal transaction) platform . Despite the late entry into the market where many other interpersonal auction services exist, sales expanded by developing unique services specialized for smartphones, and in 2018 it was listed on the stock market Mothers. bottom. Mercari’s revenue source is a commission of 10% of the trading value established in individual transactions between users.
The biggest feature of Mercari is ease of listing and purchasing with only a smartphone . All you need to do to list is (1) take a picture of the product you want to sell with your smartphone camera, and (2) enter the product information and short comments according to the instructions on the app. By improving operability and realizing ease of use, we succeeded in cultivating a new user base such as young women and housewives who did not sell on the conventional auction site, and rapidly expanded the number of users.
In addition, by partnering with three major convenience store companies nationwide, the time and effort unique to personal transactions such as “packing and shipping performed by the seller himself” can be greatly eliminated, and the electronic money service “” By introducing “Mercari ” and building a mechanism such as making it possible to use the amount of money sold at Mercari at physical stores other than Mercari, we have realized differentiation from other companies and improvement of customer satisfaction. increase.
The number of monthly users of Mercari has reached 16.57 million, and the total transaction value on Mercari is 164.1 billion yen. (As of June 2020)
Coconala is a Japanese company that operates a free market service where you can buy and sell “individual skills” such as illustration, web design, translation, and fortune-telling. The number of registered members is 1.3 million, and there are more than 200 types of service categories listed.
The uniqueness of Coconala is that it enables individuals to provide services that were originally mainly B2B and B2C transactions. Specifically, we offer the value of increasing order opportunities to the seller and the value of cost reduction to the customer. For example, you can order from 3000 yen to 10000 yen for creating characters that can be used for commercial purposes, and 4000 yen for creating materials in foreign languages. There is also a function called “publication request” that allows you to set the content and budget you want to order and search for the contractor.
Both the seller and the customer can use it anonymously, and when using the service, messages are exchanged on a private bulletin board called “talk room”, and when the transaction is completed, Coconala will act as a payment agent. After the transaction, we will publish the ratings of both the seller and the customer.
In this way, Coconala has succeeded in providing user privacy protection and secure transactions that tend to be troublesome in interpersonal transactions.
Coconala’s revenue source is brokerage fees based on the seller’s total sales. It is set in stages according to the amount of money.
What are “B2C”, “B2B” and “B2E”?
Next, I will explain each type of “B2C”, “B2B”, and “B2E”.
B2C (Business to Customer)
B2C is to provide consumers with the products and services that a company sells. B2C is the most popular form of sales in the world. Most of the products and services provided to consumers on general EC sites and shopping malls are B2C, and the market size is still expanding little by little, so among the companies developing B2C business. Companies that do not have a digital strategy are disappearing. Cross-border EC (sales of products that transcend national borders) is becoming more active on the Internet, and more and more companies are launching Japanese products into overseas markets.
B2B (Business to Business)
B2B is the trading of goods and services between companies. It means that both the person who sells the goods and services and the person who buys them are companies. Some people may wonder if B2B services exist on the Internet. In recent years, the market size of EC services for B2B has expanded, and the purchasing process of companies is gradually changing to digital.
Companies that develop B2B businesses have built a system that allows them to actively carry out digital marketing, estimate prices and order products from the website while paying attention not only to EDI but also to the purchasing process on the Internet. There are many companies that do.
B2E (Business to Employee)
B2E is a sales form that provides company products and services to employees, not ordinary consumers. In this form of sales, the company sees employees as consumers. For example, selling a special product or service to an employee, or selling a product or service at a lower price than usual.
As explained above, “B2C”, “B2B”, and “B2E” have different meanings and characteristics, and there are various forms of business.
B2G and G2C
In addition to the above, there are also special classifications called B2G and G2C. We will also discuss two special types.
BtoG (Business to Government)
B2G is a product or service provided by a company to the government. For example, various goods and services such as consumables, road construction, and management consulting are provided in B2G format. In B2G, government agencies often have a stronger power balance than entrepreneurship, and the companies with which they do business are often fixed. Entering a business in the field of B2G can be difficult, but if you can propose innovative ideas without being bound by such stereotypes, you will be able to obtain a strong customer of government.
G2C (Government to Customer)
G2C is a service provided by the government to consumers. It is also said to be “Government to Citizen”. Typical services provided by the government to individuals include, for example, resident cards, family register copies, passports, tax returns on e-Tax and the Internet, and electronic reservations for sports facilities and libraries. Speaking of the latest topic, ticket sales for the 2020 Tokyo Olympics and Paralympics also fall under the GtoC service.
C2C Business Challenges
C2C is a business model that has evolved with the spread of the Internet, but since products are bought and sold between individuals who do not have a trusting relationship, there are concerns among traders in terms of product quality assurance, payment, etc. Is an issue.
Therefore, as a service to solve such problems, “escrow service” in which a corporation mediates payment as a third party, “C2B2C service” in which an individual on the seller side outsources sales to a corporation, etc. Was born.
The escrow service is an intermediary (third-party deposit) service that guarantees the safety of transactions, and when a transaction is completed on the Internet, a third-party escrow service is provided between the seller and the purchaser. By mediating by the company, it is possible to prevent troubles such as “I paid the price but the product did not arrive”, “The product was a fake / defective product”, “I sent the product but the price is not paid”. I can do it.
The C2B2C service is a mechanism that solves problems such as quality assurance and payment by a corporation that not only sells and delivers on behalf of the seller, but also assesses the quality of the products to be sold. is.
C2C is an expanding market
Among the markets with many business models, C2C is a market that continues to grow significantly. With the increasing number of people using major flea market services since the spread of smartphones, it is expected that the market will continue to expand in the future.
Since the C2C business model is to provide a platform for ordinary consumers to buy and sell products, they do not need to have products to sell. One of the merits is that you can concentrate on improving your business foundation because you do not have to pay attention to inventory management.
However, since it is necessary to carry out marketing measures in-house to increase the number of users, it is important to make sufficient advance preparations when entering the market with the C2C business model.