By Ashley Ow
Have you or someone you know recently bought or sold something on Carousell? How often do you shop online from individual sellers, such as on Shopee, Carousell, and Facebook Marketplace, instead of physical stores and established companies? These are C2C platforms, which basically means consumer to consumer or peer to peer, meaning you’re not buying from a big company.
According to McKinsey and Company, the annual growth of e-commerce is estimated to rise until 2024 by at least 8 to 9% in France and Germany, 6-7% in the United Kingdom, 10-12% in Italy and Spain, and more than 20% in Asia. To take it a step further, the consumer to consumer (C2C) business is estimated to grow by 25% in the next four years on C2C platforms.
How it works, examples, and platforms
So what exactly is the consumer to consumer (C2C) business model? It’s when consumers buy directly from another individual who both sells and shops on platforms. Some familiar examples include AirBnb for holiday rentals, Fiverr for freelance services, Carousell for pre-loved products, as well as Facebook Marketplace, eBay, and Shopee for many other things.
These platforms commonly act as mediators for buyers and sellers to connect and perform transactions. It allows the seller to set up their e-commerce shops and start putting up listings and services with ease, without paying hefty rental fees for the physical store. For example, platforms like Shopee take a 2% transaction fee from the final amount from sellers, while Carousell collects a 2.5% of the item and delivery amount from their buyers as protection fees.
This ease of accessibility also in turn allows buyers from all over the world to shop at lower prices with the reduced business cost.
Singapore’s biggest C2C platforms: Shopee and Carousell
Singapore is no stranger to shopping online. The most famous local shopping platforms that started out as C2C marketplaces in Singapore include Shopee and Carousell. According to Similarweb, in May, these two sites were ranked locally at number 1 and 2 respectively under the e-commerce category. They launched initially as C2C platforms, before partnering with brands and companies a few years later to also include the B2C (business to consumer) business model to expand their reach.
Shopee has since grown to make $1.0B in annual revenue, and Carousell’s annual revenue is estimated to be up to $50.0M. Both platforms boast an average of 13 million to 13.8 million local monthly site visits in the last month, from both mobile and desktop. Both sites, especially Carousell, are still quite known to be very C2C-focused platforms, especially for reselling items.
It’s not just the sale of new and secondhand items (like watches or furniture) that can be lucrative. Trading valuable, limited-edition items can be great business too. Singaporean teen sneaker reseller Remus Er proves this theory. He rakes in as much as $20,000 to $30,000 per month reselling limited-edition sneakers, sometimes even collecting a 300% profit margin through Carousell.
Pros and Cons for C2C Sellers and Buyers
With the seemingly straightforward consumer-to-consumer business model, it comes with its pros and cons for both the seller and buyer as well.
Pros for Sellers
- Potential to attract buyers and sellers from all over the world
- Easy and reduced cost to set up businesses for individual sellers
- Generally high profit margins
- Easily sell both first and second hand items
Pros for Buyers
- Reduced purchase costs for buyers
- Usually has no hidden costs
- Wider range of choices
- Easy to compare products and prices
Cons for Sellers
- Payments may not always be secure, scammers can still appear
- Platform fees are charged typically to sellers
- High competition, since more people are doing it
- Reviews can impact sellers on varying degrees
Cons for Buyers
- Lack of quality control since platforms are merely mediators
- Handling of service and quality of products from may vary across sellers
- Lack of secure payments via credit cards
- Items could be lost or damaged during shipment
Cashing in on a lucrative platform
The C2C business model is a lucrative market. Even with companies like Shopee and Carousell incorporating B2C to adopt a hybrid business model, many sites including AirBnb, Fiverr, Etsy, eBay, and Craigslist remain popular.Homegrown brand Carousell was inspired by 3 people wanting a platform that could sell their pre-loved items.
Even Facebook launched Facebook Marketplace to tap into this growing market. Other factors include the increasing trust in e-commerce, the rise in online shopping, and the pandemic which forced many to turn to purchasing cheaper, pre-loved items. When these factors come into play, it’s no doubt that C2C businesses will continue to grow.
