C2C Marketplace Development: Why Invest in Your Own Platform

With customers increasingly relying on e-shopping, C2C websites offer near-endless opportunities. It is expected that 95% of purchases will be made via e-commerce by 2040.

Some players rode the wave and came out on top. For example, Amazon’s first-quarter profit came ahead of analysts' forecasts, reaching $108.5 billion. That is more than tripled from what we saw a year ago.

Usually, the C2C model is discussed from customers' perspective. But what makes it appealing to a marketplace founder? In this article, we will bring five reasons why it is worth launching your C2C marketplace. And whereas a future for C2C is bright, there are several pitfalls to be discussed.

What is a C2C marketplace?

A customer to customer (C2C) marketplace website is a business model where customers can trade with each other. eBay with 185 million active users is a popular example of a C2C site.

Let’s briefly discuss major differences between C2C and other types of marketplace business models.

The difference between C2C, B2C, and B2B platforms

  • Consumer-to-consumer (C2C)
    No middlemen involved. A C2C marketplace serves as an intermediary, matching one client to another. While shopping at a mall, you see limited stock. Oftentimes, on a C2C platform, you order an item directly from a warehouse and, in some cases, with same-day shipping. The important thing is that one person can be a consumer, but they can later switch their role to a provider.

  • Business-to-consumer (B2C)
    Products or services pass directly from the business to the customer who has purchased them for personal use. For example, a B2C retail experience can be shopping for clothes, and service can be an Uber cab calling.

  • Business-to-business (B2B)
    Unlike B2C platforms aimed at end customers, B2B websites target other companies. This type of marketplace is noted for high investment required. Some examples of common items involved in B2B transactions are fuel, vehicles, medical equipment, etc.

Take a look at one of the service marketplace websites that Codica team successfully delivered recently.

Codica's example of how to start a C2C website

To figure out how to start a C2C website, define the type of your future platform: vertical or horizontal. Which will suit you best? Let’s find out by comparing marketplace types.

Vertical e-commerce

This type of platform covers a particular category of products or services. Therefore, such marketplaces have a narrow client base.

Etsy is probably the most popular example that follows the vertical type. Focusing on a niche of handmade and vintage items, the company provides an easy-to-use platform for craftsmen.

Vertical type example of C2C platform

One more example is Preply, a marketplace for online tutoring. You can find tutors for a range of subjects, most of which are languages.

C2C marketplace with online tutors

Horizontal e-commerce

Unlike vertical e-commerce, this type offers a broad spectrum of various products. It's not specialized in a particular category but includes widely used and salable items.

Classic example of horizontal C2C platform

The classic example is Amazon which maintains its position to be on the top of the largest e-commerce companies.

Related reading: How Much Does It Cost to Create a Website Like Amazon?

Must-have functionality for C2C marketplace

Let’s find out how to build a customer to customer online website by delivering a first-rate experience. To begin with, let’s define common challenges that C2C marketplaces face. Keep them in mind when defining the features of your future platform.

  • C2C platform is only an intermediary and not liable for product quality.
  • Systematic feedback is required. Before clicking the "Buy" button, 92% of users check the reviews.
  • Order cancellation and return are huge trouble your customers may be drawn into.
You may also like: How to Build a Review Website Like Yelp

The functions that a customer to customer website must have:

  • Account management
    Split user accounts into two types: sellers and buyers. Let them both receive email notifications, including messages, complete transactions, applying new settings, etc.

  • Search and filters
    Let your site visitors be specific about a product they are looking for. Create a tool that allows filtering search results by features and pricing options.

  • Ratings and feedback
    Build a product rating system that can be modified by buyers. Let them share their feedback, report violators of site rules, and add them to a blacklist.

  • Buyer-seller communication
    Let buyers and sellers communicate to reduce the order cancelation and return rate. Ensure that all communication channels can keep users within your website.

  • Payment gateways
    Provide multiple payment solutions (such as PayPal, Stripe, WePay, etc.) that enable transactions directly on your platform.

  • Advanced product pages
    Build trust in your website. A full product description is only half of it. Each offer must be accompanied by multimedia. Typically, US shoppers expect to see from 5 to 8 pictures per product

Recommended reading: Key Trends in Digital Marketplace Industry in 2021

How product page on C2C website may look like

5 reasons to launch a C2C marketplace

1. Growing popularity of online marketplaces

Today an online marketplace is the most preferred method for e-shopping. The C2C model has gained popularity with the advent of companies like Amazon, eBay, Airbnb, and others. Social media boost recent innovators such as Facebook Marketplace.

E-commerce share of total global retail sales

Source: Statista

But there's more to come. COVID-19 has shaken up the way established markets have been existing so far. As pandemic continues to shift shopping habits, foot traffic in physical stores is diminishing. Tremendous amounts of customers are consequently choosing to purchase online.

Related reading: How Much Does It Cost to Build a Website Like Airbnb?

2. Scalable business model

Speaking about a marketplace, what comes to your mind? A bunch of buyers crowding around their beloved stands? If so, you’re not far from the truth.

Even in today’s Internet-oriented age, there’s a point in the classic view of the marketplace. Long-term partnership still plays a major role.

To expand your business without falling apart, you have to take consistent small steps. As your marketplace grows, you embrace the appropriate tools for a greater audience.

Airbnb is one rich C2C example of performing such a tactic. To compete against hotels, the company even took high-quality pictures of users’ apartments. Another case is Etsy which invited the best vendors offline to pitch them on the site they were launching.

Some tools are better for the beginning, some are better when you are bigger. - Tami Teixeira, Airbnb Sr. Global Quality Manager

Ready to scale means getting a proven track record and a reputable product. The rule is simple: top sellers attract more buyers, while a growing number of buyers attracts more sellers.

Take a moment to process the growth of Airbnb and Etsy, and you will not find a magic trick. Buyers and sellers are equally vital to these companies. So, you should also avoid prioritizing one side over the other.

It is highly beneficial that vendors recommend your C2C website in their networks. Thus, you boost transactions and cut off expenses related to vendor outreach.

Related reading: 7 Smart Ways to Solve Chicken and Egg Problem for Online Marketplaces

Inexperienced sellers do prefer to start out on a C2C site before creating their own stores. For them, you can provide a fair chance to verify how valuable their offers are. Importantly, by creating a C2C website, you help the vendors reduce marketing costs without any legwork.

3. Easy management

Since you already have more clarity on how to build a C2C website, it’s time to dive into management. Below you can find several pros a C2C model offers.

  • Minimum legwork
    Being the owner of a C2C marketplace means you don't have to acquire inventory nor cover the costs of packaging and shipping items. Consequently, this model requires a smaller investment than an e-commerce store.

  • Warehouse management
    Warehousing helps you monitor the items within storage facilities instead of storefronts. Fortunately, supply chain management has evolved. The right warehouse management system improves tracking and prevents the loss of items. Just automate several warehouse management tasks and keep your records accurate.

  • No large workforce
    If you don’t have a physical storefront, there’s no need for sales staff. As sales grow, you can scale up the operations without hiring a large workforce.

  • Fast-generated traffic
    With buyers increasingly relying on online reviews, growing C2C website attendance is simple to do. Apart from user-written feedback, you can benefit from built-in wishlists. Once users share wishlists, the site gets extra traffic.

  • Social omnichannel
    Advertising a C2C marketplace is easy when effectively utilizing social platforms' user bases. For example, 83% of Instagram users discover new products and services on the platform.

Perhaps the most obvious advantage relevant to both buyers and sellers is price cuts. Therefore, the main challenge before a marketplace owner is to balance supply and demand.

4. Variety of monetization models

As a marketplace owner, you must ensure the long-term viability of your business. Here are several ways a C2C platform can use in the pursuit of bringing in revenue.

Subscriptions. Let the sellers select the plan type in exchange for upgrades (e.g., Amazon & eBay). VIP subscribers may use advanced reports, customizable selling tools, storefronts, and more. This usually requires a monthly payment.

Related reading: How to Create a Bidding Website Like eBay

Commissions. Applying this approach makes sellers pay fees only when they sell an item or a service (e.g., Shopify & Airbnb). It is one of the most reasonable monetization models for a C2C marketplace.

Listing fee. The point is you charge the vendors for listing the products on the website (e.g., eBay & Etsy), this model certainly has both pros and cons. In case your marketplace is launched recently, it certainly can push away potential users.

Premium listings. Sellers occasionally need to increase their chances of a speedy sale. Premium listings exist so vendors can place their offers highly on the search results (e.g., Craigslist and OLX). It is especially a good option if your marketplace provides a free service.

Advertising. Ads can be viewed as a secondary option to diversify your monetization model. An uncontrolled amount of advertising, however, will scare off many users. The best way here is to make these ads limited and personalized (e.g., Rakuten, Facebook Marketplace).

Business models widely used by C2C platforms

Normally, the C2C platform gets money from commissions charged for each sold item. A helpful tip for you is that such an approach can work well at the platform's early existence. Successful marketplaces combine various business models to achieve the highest profit possible.

Learn more: 6 Best Monetization Practices to Build a Successful Online Marketplace

5. Quick transaction means quick revenue

Not less appealing is a C2C advantage to shrink customer journey and provide transactions quickly.

  • Best price satisfaction
    Having many vendors to choose from, the ability to compare, and in some cases, negotiate a price lead to the “best value for money” effect. Thus, on average, C2C sites offer comparatively cheaper products.

  • Quick visitor-to-customer conversion
    С2С marketplace has a wide range of visitors regardless of where they are. So, the chances to convert more of them into customers are higher — especially when compared to those physically walking in a mall to browse.

  • Fewer user data required
    As we pointed out earlier, there are no middlemen. The listing process takes only a few steps. Oftentimes, online transactions require some amount of financial information. This, however, is not always implied within C2C transactions.

Overall, it is all about customer empowerment and understanding motives around their behavior. Let us bring some winning tips that will boost the sales on your C2C site:

  • Convenience in use
    Nothing should destruct users from searching and buying goods. This is a reason behind the simple design of many C2C websites, including Amazon. Also, save customers’ time greatly by making a shopping cart accessible from any page on your site.
Related reading: How UX Design Solves Online Marketplace Issues
  • Personalized discounts
    Everyone appreciates a good deal on their favorite products. Research indicates personalized homepage promotions impact over 80% of customers to buy. Besides, 48% of consumers expect specialized treatment for being a good customer.

  • Bundles
    Many of us are familiar with such a tactic. You can show a user what product might be tied alongside those already kept in the cart (e.g., monitor + cable organizer).

Further reading: How To Start Your Own Online Marketplace Website: 5 Useful Tips

C2C website development approach

As for approaches to build C2C marketplace software, we want to highlight the two most applicable options.

Out-of-the-box solution

There are plenty of SaaS tools you can use immediately. So, it’s easy to start a marketplace platform in a matter of days. Also, there's no need to worry about updates. Software providers tend to maintain their products' relevance.

However, such software can miss valuable functions that may turn out to be crucial in the long run. If you pick a customizable template, it will leave you only a little room for maneuver.

At some point, you will have to scale your business to compete effectively. So a ready-made solution is not enough to meet each customer's needs in the future.

Custom solution

In contrast, you can build your C2C website with up-to-date and extended features. This option can be fairly pricey, but it will meet your concerns, as it is not just a necessary minimum.

As a result, you will get a rich featured web application free of licensing fees. An additional benefit is that software developers have vast experience in creating custom C2C marketplace websites. Such a team will bring domain expertise to your project, which will help you avoid common marketplace development mistakes. Consequently, you will be able to save time and budget.

Today’s harsh competition in the C2C market makes customer experience a top priority. It is reported that 48% of consumers, for example, expect specialized treatment for being a good customer.

Recommended reading: How Much Does it Cost to Build an Online Marketplace in 2021?

Successful project: C2C (multivendor) vehicle marketplace

Codica Team has vast experience in building custom marketplace platforms, including C2C website.

For one of our clients, we have delivered a multi-vendor online marketplace for the automotive domain. The marketplace allows buyers and sellers to seamlessly communicate and hold transactions within the platform.

Codica's popular example of a C2C site

Learn more about the project we delivered in the multi-vendor marketplace case study.

Since you’re here

A core idea of a C2C business isn't about the volume of different transactions made online. Initially, it's about forming сlose ties with existing users. On top of that, an ability to reach a large audience remains.

On average, C2C sites offer comparatively cheaper products. But since a third party brings together vendors and buyers, its reputation is found to be crucial.

Thus, building a successful C2C marketplace takes careful planning. To keep your business afloat, your site features must differ from what you see day-to-day. Fortunately, Codica team has a proven record in building marketplace websites. If you need help with starting your own, feel free to contact us.