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eBay Business & Revenue Model

Ever heard of the phrase, “there’s an app for everything?” well it’s true. According to a report…

October 12, 2021

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Table of Content

eBay – A Platform to Buy and Sell Anything

Key Stats and Facts About eBay

The success timeline of ebay.

eBay Story: What’s the Reason Behind Its Success?

eBay’s Customer Segments

Value Propositions Offered by eBay

The eBay Business Model Explained

The eBay Revenue Model Explained

Interested in Creating Online Marketplace Like eBay?

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The E-commerce marketplace industry has seen tremendous growth during the COVID-19 pandemic. After all, the pandemic has completely transformed the way people buy – resulting in an exponential rise in usage of online shopping platforms like eBay.

As of the 2nd quarter of 2021, eBay’s revenue amounted to over  2.67 billion U.S. dollars – a 14% increase year-over-year.

So, if you’re thinking of building a platform like eBay, you’re on a right track to commence a lucrative business. That being said, it’s a must for you to have a solid understanding of eBay’s business & revenue model to kick off your venture the right way.

In this post, we’ve covered how eBay works and makes money in detail. But before getting to that, let’s first have a look at what eBay is all about and some key facts related to the platform.

eBay – A Platform to Buy and Sell Anything

ebay business model

eBay is a multi-vendor online marketplace that connects millions of buyers and sellers from all over the globe to buy and sell new or used products. It facilitates both B2C (business to consumer) and C2C (consumer to consumer) transactions via eBay’s website and app.

At present, eBay is available in 180 countries as an online shopping platform with a wide range of products along with other unique services such as online auction, stubhub.com (event ticket trading) and online classified ads.

That’s why it’s no wonder to see that eBay was the second most popular e-commerce and online shopping website based on visit share – as of June 2021.

ebay-business-revenue-model-explained

  • Year of Foundation: 1995
  • Founders: Pierre Omidyar
  • Headquarters: San Jose, California, United States
  • Industry: e-Commerce
  • Number of Funding Rounds: 2 (As Per  eBay’s Crunchbase Profile )
  • Total Funding Amount: $6.7M
  • Number of Acquisitions: 65

Here’s a quick look at eBay’s success timeline.

Also Read (That Might Interest You):  Udemy Business and Revenue Model Explained

eBay Story: What’s the Reason Behind Its Success? 

Though eBay is one of the oldest online marketplaces worldwide, it is still one of the multibillion-dollar e-commerce platforms in the industry. After all, eBay is the only platform to offer a product auction feature to both buyers and sellers in addition to buying products at a fixed price.

Thus, it’s no surprise to see why millions of buyers and sellers from all over the world prefer to trade on eBay.

Thanks to eBay’s product auction listings feature, those in possession of rare and collectable items found a platform to welcome the best offers. At the same time, collectors found a place where they could bid and purchase rare items.

Well, that’s not at all what makes eBay so successful.

eBay has a large product catalogue with thousands of products including antique Items, collectables, out-of-season, used products and the new arrivals in categories like electronics, appliances and fashion.

All in all? One can buy and sell nearly everything on eBay and no wonder – millions of transactions happened on the platform every single day.

Moreover, eBay leaves no stone unturned when it comes to delivering outstanding customer experience in the form of amazing features like eBay’s money-back guarantee, eBay Top Rated Seller program, SafeHarbor program and Verified Rights Owner Program.

eBay’s efforts through these programs have helped the company win a loyal global customer base that’s has been a significant part of its success.

eBay has a two-sided marketplace business model, with two customer segments of the platform are:

Individuals or businesses who are interested in listing products up for auction or sale.

As of now, eBay has 19M sellers worldwide and over 1 billion active listings posted by individual sellers and large or small businesses alike who create eBay stores to leverage the platform to its full potential.

Individuals who are interested in bidding on products up for auction or purchasing products via a fixed price offered by sellers. As of the 2nd Quarter of 2021, eBay had around  159M active buyers  all over the world.

Value Propositions Offered by eBay

eBay is a leading e-commerce marketplace that provides a unique set of benefits and perks to its key players – buyers and sellers. Have a look!

For Buyers: 

  • Large product catalog
  • Quality assured products
  • Free shipping & fast delivery
  • Order tracking system
  • An option to review & give feedback related to products
  • Money back guarantee

For Sellers

  • Global customer base
  • Bidding & Buy It Now feature for product selling
  • Powerful marketing & distribution channel
  • Decent customer satisfaction rating of 77% as of 2020 (As per  Statista )
  • eBay’s Top Rated Seller program

The eBay Business Model Explained 

eBay was originally merely an online auction website where sellers listed their products for bidding and the highest bidder getting the products. With time, eBay has evolved into an online e-commerce marketplace platform that enables both C2C and B2C transactions.

The platform doesn’t own any inventory. It simply acts as a mediator between buyers and sellers – enabling people to buy or sell their items.

Here’s a quick overview of how eBay works for its two key players – sellers and buyers.

Firstly, sellers will register on the eBay platform to begin listing their products on the platform. While listing, the platform enables sellers to add product images, product descriptions, price, shipping details and other related things to make products appealing to buyers.

  • Auction-Style Listings

Some listings on the platform are auction-based where the item is sold to the highest bidder. In the auction-style listing, sellers also need to mention the minimum bidding price, the duration of the bidding window and available payment options.

  • Fixed-Price Listings (Buy It Now)

The other type of product listing that exists on eBay is listing products at a fixed price. In this scenario, sellers will list their items with the “Buy It Now” option. Through available payment options, buyers can purchase the product.

In fact, eBay now provides the option to sellers to open their own stores on the platform, with some additional tools to promote your brand or business.

Like sellers, buyers will register on the eBay platform to start bidding or buying the items through the platform. eBay offers two ways to buyers for buying a wide range of products. The first one is the bidding option and the second is the Buy It Now.

  • Buying via Bidding

When it comes to buying via bidding, eBay allows buyers to bid the price they are ready to pay to purchase the product listed in auction-style listings by sellers. A buyer with the highest bidding price acquires the item through available payment gateways options.

In this option, buyers simply pay the fixed price set by the sellers to purchase the product. eBay marketplace platform also offers shopping features such as a shopping cart for buyers to store their favorite items temporarily and can buy them later.

Moreover, eBay enables buyers to keep track of their purchase history and can save their searches as well.

That’s how eBay works for both buyers and sellers – a platform business model that has made eBay a well-known online marketplace worldwide.

Also Read (That Might Interest You):  How to Build an Auction Website and App Like eBay 

The eBay Revenue Model Explained 

eBay marketplace platform makes money in several ways. Let’s have a look at eBay’s revenue model in detail:

1. Listing Fee Model

eBay enables every type of seller to list a minimum of 200 products on its online marketplace platform free of cost. Once the limit is exhausted, eBay charges a listing fee (or insertion fee) of $0.35 for each listing.

2. Commission Based Revenue Model

eBay earns a commission on every sale made by sellers on the platform. This commission is earned in the form of the Final Value Fee and is gauged as a percentage of the total amount of the sale, along with $0.30 per order.

3. Advertising Based Revenue Model

eBay doesn’t earn revenue just via listing fees or commissions upon successful sales. The platform allows sellers to advertise their products on eBay in trade for money. To advertise on eBay, sellers have to pay a fixed amount.

In addition to these revenue models, eBay brings significant revenue from international trade and through its acquisitions of leading companies such as StubHub.

While deciding to build an e-Commerce marketplace platform like eBay, there is another important decision you need to make i.e., the budget for the marketplace development.

If you want to save overall development costs,  hiring a dedicated remote development team  over building an in-house team to build an app like eBay is the way to go.

By outsourcing development to remote developers, you get to save on not just training for your team but even on infrastructure – resulting in significant cost-savings benefits.

We at InfoStride strive to help companies onboard remote developers quickly with flexible engagement models to meet the budget requirements. Our resources are available to hire on a full-time, part-time, hourly, monthly or project basis.

When you decide to hire InfoStride’s remote talent for your marketplace development needs, you can expect:

  • Pre-screened and trained experts
  • Support for end-to-end development of your eCommerce platform
  • State-of-the-art development center to empower your remote team to work on your projects without facing any hassle and securely
  • Support from onboarding to offboarding resources
  • Deployment of time zone aligned developers for your project

Still, have questions? Schedule a free consultation session with our experts to clear any  doubts you have in mind about hiring remote developers  or building a marketplace app like eBay. 

Conclusion 

One of the key reasons why eBay is one of the leading online marketplaces worldwide is its business model that’s quite different from other players in the e-commerce industry. eBay’s auction feature along with buying products at a fixed price is what sets eBay apart from others.

When it comes to building a marketplace app like eBay, it’s all about getting a solid understanding of eBay’s business and revenue model.

eBay brings considerable revenue to the table from various sources including but not limited to the listing fees model, commission on every sale, advertising, international trade and more.

If you feel we miss something crucial related to eBay, let us know in the comments below. 

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What Is C2C? How Does the Customer-to-Customer Model Work?

ebay business model c2c

Yarilet Perez is an experienced multimedia journalist and fact-checker with a Master of Science in Journalism. She has worked in multiple cities covering breaking news, politics, education, and more. Her expertise is in personal finance and investing, and real estate.

ebay business model c2c

Investopedia / Jiaqi Zhou

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.
  • C2C can be contrasted with B2C and B2B business models.

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. This platform requires the seller to deliver items directly to the buyer in person.

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.

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.

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, eBay, and Craigslist appeal to customers who can locate mostly any product or service at a price they are willing to pay.

What Are Some Examples of C2C Companies?

In e-commerce, some big names in C2C include eBay, Etsy, Craigslist, Ali Express, and Amazon Marketplace. Some C2C payments companies include Venmo, Paypal, and Zelle.

How Does C2C Differ From P2P?

C2C stands for customer-to-customer; P2P stands for peer-to-peer . Both concepts involve consumers or individuals dealing with one another. The main difference is that with C2C, there is a company or other third party in between the buyer and the seller (or sender and receiver). In a P2P platform, counterparties transact directly with one another without that intermediary.

What Is a B2C Company?

Most companies around are B2C (business-to-consumer). This means that a business produces and markets a product for household consumption. This differs from B2B ( business-to-business ) or C2C (customer-to-customer).

Etsy. " About ."

Etsy. " The Sell on Etsy App for iPhone and iPad ."

eBay. " How Buying Works on eBay ."

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eBay Business Model: A Detailed Exploration

eBay’s remarkable success story, which began in 1995, rests primarily on its innovative business model. By harnessing the power of the internet, eBay has created a global marketplace that accommodates anyone and anything.

eBay’s platform operates based on a business-to-consumer (B2C) and consumer-to-consumer (C2C) sales model, providing an online arena for buyers and sellers to interact and transact.

In essence, eBay has redefined the concept of a marketplace by eradicating geographical boundaries, enabling round-the-clock operations, and introducing the potential for rapid, high-volume transactions.

Transaction Fees

Auction-style listings, fixed price listings, trading formats, ebay’s additional services and revenue streams, the network effect explained, increased variety of goods, enhanced potential for sales, self-perpetuating growth cycle, utilizing the network effect, ensuring customer satisfaction: key to ebay’s model, leveraging technology: the key enabler, evolution of ebay’s business model, ebay’s business model: strengths and challenges, how does ebay make money, what are the primary trading formats on ebay, how does ebay ensure customer satisfaction, what is the network effect in the context of ebay, how has ebay’s business model evolved over time, primary revenue sources.

eBay generates its revenue primarily through transaction fees and listing fees. These revenue streams play a crucial role in sustaining the platform’s operations and profitability. Let’s take a closer look at each of these revenue sources:

  • Transaction Fees: Transaction fees are charges imposed on sellers for every item sold through the eBay platform. These fees, known as “final value fees,” are calculated as a percentage of the total sale amount. The specific percentage varies depending on the category of the item sold. On average, the final value fee ranges from 10% to 12%;
  • Listing Fees: eBay also charges fees for listing items on its platform. The first 50 listings per month are free for sellers, which encourages individuals and businesses to list their products on eBay. However, once the initial quota of free listings is exceeded, a fee per listing applies. The listing fee varies based on the category of the item and whether the seller has an eBay Store subscription.

Trading Formats: Auction-style and Fixed Price Listings

eBay’s business model offers two distinct trading formats: Auction-style listings and Fixed Price listings. These formats cater to different buyer preferences and allow sellers to choose the most suitable option for their products. Let’s explore each trading format in detail:

Auction-style listings were the foundation of eBay when it first launched. In this format, sellers list their items with a starting price and a duration for the auction. Potential buyers place bids on the item, and as the auction progresses, participants can increase their bids until the auction ends.

The highest bidder at the end of the auction duration wins the item.

Auction-style listings are particularly well-suited for unique or rare items, as they create a competitive environment that can drive up the final price. This format allows buyers to determine the value of an item based on their willingness to bid and compete with others.

Auction-style listings also generate excitement and a sense of urgency among buyers, as they have a limited time to place their bids.

Recognizing the need for a more streamlined and predictable buying experience, eBay introduced the “Buy It Now” feature, which enables Fixed Price listings.

With this format, sellers set a specific price at which buyers can purchase the item instantly, without going through an auction process. Buyers have the option to click “Buy It Now” and complete the purchase immediately.

Fixed Price listings are advantageous for sellers who prefer a more straightforward and time-efficient approach. They are suitable for products with a set value or in high demand, where buyers are willing to pay the listed price without engaging in a bidding war.

This format provides buyers with the convenience of making an immediate purchase, ensuring they secure the item without waiting for an auction to conclude.

Diversified Revenue Streams: Additional Services

Over the years, eBay has expanded its business model by introducing new services and diversifying its revenue streams. These additional services have contributed significantly to eBay’s overall revenue generation. Let’s take a closer look at some of these services:

  • eBay Classifieds: eBay Classifieds is a platform that enables users to post local classified ads. It offers a wide range of categories, including jobs, real estate, services, and more. By providing this service, eBay has created a marketplace where individuals and businesses can connect and transact in their local communities. This has not only enhanced eBay’s offerings but also opened up new revenue opportunities through advertising fees and premium listings;
  • StubHub: Originally acquired by eBay in 2007, StubHub is a ticket exchange and resale platform that allows users to buy and sell event tickets. While eBay sold StubHub in 2020, it was a significant addition to eBay’s revenue streams during the time of its ownership. StubHub provided a platform for users to access tickets for various events, including sports games, concerts, and theater performances. eBay benefited from transaction fees and commissions earned from each ticket sale;
  • Advertising: eBay offers advertising services on its platform, allowing sellers to promote their listings and gain more visibility. This additional revenue stream provides sellers with an opportunity to reach a larger audience and increase their chances of making a sale. eBay offers sponsored listings, where sellers can pay a fee to have their products prominently featured in search results. Furthermore, eBay also allows external advertisements to be displayed on its platform, further contributing to its revenue generation.

The Network Effect: A Growth Catalyst

An instrumental factor behind eBay’s success is the network effect. As more sellers join the platform, it attracts more buyers due to the increased variety of goods available. Similarly, as more buyers use the platform, it attracts more sellers due to the increased potential for sales.

This self-perpetuating growth cycle has allowed eBay to amass a vast user base, enhancing its platform’s value.

The network effect, also known as network externality, is a concept wherein the value of a product or service increases as more people use it. In the context of eBay, the network effect manifests itself in two key ways:

As more sellers join eBay’s platform, the variety and selection of goods available for purchase also increase. This attracts more buyers to the platform, as they have a wider range of options to choose from. Buyers are naturally drawn to marketplaces that offer a diverse inventory, as it increases their chances of finding the exact products they desire.

The increased variety of goods available on eBay makes it an attractive platform for buyers, thus fueling its growth.

Conversely, as more buyers flock to eBay, the potential for sales and profits for sellers also rises. Sellers are more inclined to join a platform where they can reach a larger customer base, increasing their chances of making sales.

The more buyers there are on eBay, the higher the probability that sellers will find interested customers for their products. This increased potential for sales acts as an incentive for sellers to join and remain active on the platform, further amplifying eBay’s growth.

The network effect creates a self-perpetuating cycle of growth for eBay. As more sellers join the platform, the increased variety of goods attracts more buyers. In turn, the influx of buyers entices more sellers to join, resulting in an even greater selection of products.

This positive feedback loop continuously strengthens eBay’s position as a leading online marketplace.

eBay has strategically leveraged the network effect to solidify its competitive advantage. By actively fostering an environment that encourages both sellers and buyers to participate, eBay has been able to amplify the network effect and maintain its dominant position in the e-commerce industry.

Below is a table summarizing the key elements of eBay’s utilization of the network effect:

A vital element of eBay’s business model is its focus on customer satisfaction. The company strives to provide a secure platform for transactions, a robust seller rating system, and an effective dispute resolution process. These customer-centric initiatives have significantly contributed to eBay’s credibility and user retention.

  • Security Measures: eBay has implemented multiple security measures to protect its users. These include data encryption, secure payment methods like PayPal, and stringent policies against fraudulent activities;
  • Seller Rating System: Buyers can rate sellers based on their experience. This creates a transparent environment and encourages sellers to provide excellent service. The rating system includes aspects like item description accuracy, communication, shipping time, and shipping charges;
  • Dispute Resolution: eBay offers a Money Back Guarantee program. If an item doesn’t arrive or isn’t as described, buyers can report the problem. eBay then facilitates a resolution process between the buyer and seller.

Technology plays a crucial role in eBay’s business model. Its sophisticated platform manages millions of listings, transactions, and users. The various technological facets include:

  • Data Management: With millions of listings, eBay uses data management solutions to organize, categorize, and search through the listings efficiently;
  • Payment Systems: eBay offers multiple payment methods and a secure transaction platform, PayPal, to facilitate smooth transactions;
  • Artificial Intelligence: eBay employs AI to enhance search functionality, personalize user experiences, and detect fraudulent activities;
  • Mobile Applications: eBay’s mobile apps provide accessibility to users, allowing them to browse, buy, and sell on the go.

eBay’s business model has evolved over the years. From being an auction-only platform, eBay introduced the fixed-price model to accommodate more types of sellers and goods. Here’s a timeline showing eBay’s business model evolution:

  • 1995: eBay founded as AuctionWeb, an auction-only platform;
  • 1998: Introduction of “Buy It Now,” the fixed-price model;
  • 2002: Acquisition of PayPal to facilitate secure transactions;
  • 2008: Introduction of “Best Offer” to negotiate prices;
  • 2012: Introduction of the managed returns process;
  • 2013: Introduction of eBay’s Global Shipping Program;
  • 2015: PayPal spins off into a separate company;
  • 2020: eBay sells StubHub.

The strengths of eBay’s business model lie in its scalability, network effect, and diverse revenue streams. However, eBay also faces challenges, such as competition from other online marketplaces like Amazon and Alibaba, dealing with counterfeit products and fraudulent activities, and ensuring user data security.

By delving deep into eBay’s business model, it’s clear that the company’s success has been largely due to its ability to innovate, adapt, and cater to the needs of its vast user base.

Despite challenges, eBay’s commitment to providing a secure and efficient online marketplace has cemented its place as a leader in the e-commerce industry.

eBay makes money primarily through transaction and listing fees. They also earn from additional services like eBay Classifieds and advertising.

eBay offers two trading formats: Auction-style and Fixed Price listings.

eBay prioritizes customer satisfaction by offering a secure platform, a seller rating system, and a comprehensive dispute resolution process.

The network effect refers to the principle that the value of eBay’s service increases as more people use it. More sellers attract more buyers, and more buyers, in turn, attract more sellers.

eBay has evolved from being an auction-only platform to introducing a fixed-price model, acquiring and spinning off PayPal, selling StubHub, and introducing various services to enhance user experiences.

What is C2C?

Table of contents.

ebay business model c2c

C2C stands for “consumer to consumer” or “customer to customer”; it’s a business model that fosters commerce between private individuals, usually in an online environment. C2C companies act as intermediaries to foster engagement and help consumers reach bigger audiences. 

Whether a C2C platform focuses on goods or services, this e-commerce category facilitates transactions between people. We’ll look at C2C commerce and explain how this business model operates. 

Did you know? Other typical business models include business-to-business (B2B) , consumer-to-business (C2B) , and business-to-consumer (B2C) .

What is C2C commerce?

In the C2C model, a consumer – not a business – sells goods or services to another consumer. 

Today, the C2C business model is typically associated with e-commerce and online selling platforms like Craigslist or Etsy. Some C2C platforms, including OfferUp, prioritize mobile commerce via apps. However, C2C can refer to any business that creates a market between consumers. A newspaper’s classified ads section or an in-person auction house are also examples of C2C businesses. 

C2C companies facilitate consumer relationships, helping buyers and sellers locate and engage with each other. They’re especially useful for niche markets. For example, if you’re selling a used car, you may not know anyone interested in its specific make and model. However, a C2C marketplace can help you connect with your target customer and make the sale. 

The C2C model allows customers to access hard-to-locate products and find the best price among competing sellers.  

Did you know? Some sellers use C2C platforms as an arbitrage opportunity, buying goods, such as high-quality used clothes, for their online resale business . 

How is C2C different from B2C?

While C2C platforms help consumers sell to other consumers, business-to-consumer companies sell directly to consumers. Today, B2C typically refers to online retailers, but traditional retailers like mall stores also follow a business-to-consumer model.  

Here are some characteristics of the B2B business model: 

  • B2B organizations typically offer various products or services they develop or purchase from a manufacturer or originator.
  • B2B companies make money by selling directly to their customers.
  • To succeed, B2B companies must understand what customers want and how to motivate them to purchase. 
  • B2B companies usually have control over their products’ quality. 
  • B2B companies must offer excellent customer service to stand out and build customer loyalty and repeat business. 

In contrast, a C2C business’s primary service is helping sellers reach larger audiences. They make money from fees or commissions they charge sellers in return for listing items for sale. 

Additionally, since C2C websites are intermediaries that match buyers to sellers, they have little control over product quality. 

Money-transfer platform PayPal is often used to facilitate transactions for C2C sales, usually with a small transfer fee. But this market is also evolving, thanks to the rise of C2C payment platforms like Venmo , Google Pay, and Zelle .

What are the advantages of the C2C model?

C2C companies and participants enjoy several benefits from the business model. 

  • C2C has minimal costs . Since C2C platforms don’t have to provide products, minimal costs are involved. This keeps margins higher for sellers and prices lower for buyers. 
  • C2C is convenient for sellers . Sellers enjoy the convenience that C2C marketplaces provide. For example, if someone wants to sell a collection of old books, they don’t have to deal with the hassle of locating potential buyers. Instead, they can join a C2C marketplace and access many potential buyers. 
  • C2C is convenient for buyers . Buyers also find the C2C model convenient. They don’t have to research offline and drive around to visit stores searching for an item they want. They can access a C2C site and easily search for even hard-to-find items.

What are the disadvantages of the C2C model?

C2C businesses also create challenges for participants. 

  • Credit card payments can be challenging . Credit card transactions can be difficult on some C2C platforms. Some platforms may not support or be able to process credit cards. However, options like PayPal and Venmo are mitigating these challenges.  
  • Lack of quality control . C2C transactions may lack quality control. Since the sellers are consumers, there is often little recourse for poorly made or misrepresented products. Additionally, because the buyers are also consumers, payment guarantees can be hard to enforce.
  • C2C platforms can be vulnerable to scams . C2C platforms can be rife with scams as opportunists find ways to take advantage of others. Buyers must be wary of sellers who can’t answer detailed questions about items for sale. They should also avoid any seller that pressures them to buy immediately. C2C platforms must enforce rigorous policies to ensure buyers and sellers feel safe using their C2C marketplace. Many platforms implement comprehensive selling policies that, if violated, result in the users being banned. 

What are examples of C2C companies?

Thanks to the internet, bigger and more powerful companies are fostering C2C interactions. Here are some examples: 

  • eBay . eBay is a prominent example of a C2C intermediary. It includes fixed-price and auction items and appeals to customers seeking good deals and hard-to-find products.
  • Amazon . Amazon is both a B2C and C2C platform. Its Amazon Marketplace focuses on third-party sellers offering new and used items. Selling on Amazon requires creating a seller account, listing products, and shipping directly to the consumer or Amazon.
  • Craigslist . Craigslist is another well-known C2C marketplace where people can buy and sell goods and trade services. Craigslist’s localized sites for cities worldwide create a community feel. Craigslist focuses on facilitating relationships. For example, property owners can reach potential renters, and experts can reach people who need their services.
  • Etsy . Etsy began as an online community for artists, crafters, and vintage fans. It’s now an established marketplace for unique, handmade, original items.
  • Facebook Marketplace . Facebook Marketplace connects buyers and sellers in specific locations. All transactions are free, unlike eBay, which takes a transaction fee on sales. 
  • Airbnb . Airbnb allows users to post their residence for short-term lodging to other users for a nightly rate.
  • Fiverr . Fiverr enables users to post a personal for-hire service for as low as $5. These services range from giving financial advice to graphic design.

While similar, C2C differs from the P2P (peer-to-peer) model. P2P transactions are directly between consumers, while C2C typically has an intermediary platform.

C2C commerce has a bright future

The internet has enabled companies to create C2C marketplaces on an unprecedented scale. In Europe, the pandemic accelerated the C2C trend , consultancy McKinsey found, since so many people took the time to get rid of unwanted possessions. Additionally, since customers prefer sustainable products , sustainability concerns could drive further C2C growth. 

One thing to note: creating a C2C platform is often unrealistic for SMBs since the business model often requires having or building a huge audience.

Alex Halperin contributed to the reporting and writing in this article.

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Updated for 2024: C2C Meaning and Marketplace Tips

Table of contents, what is c2c ecommerce a marketplace, c2c ecommerce examples, the advantages of c2c for the marketplace owner, pros and cons of c2c for buyers and sellers, finding the right c2c platform, a robust c2c business model, integrated c2c payment processing, capturing niche markets with c2c.

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Crowdfunding C2C Sites

What is c2c meaning to modern businesses.

C2C, meaning  consumer-to-consumer commerce , is a business model often defined as one consumer selling goods or services to another consumer. When done online, C2C becomes a type of eCommerce. This C2C sale is often facilitated by a third party that takes care of the transaction details for a commission for bringing the parties—direct sellers and potential customers—together while offering quality control that is acceptable to both.

C2C business examples include eBay, Amazon Marketplace, and Etsy , which all work as online intermediaries. While one person might technically be the seller in such a situation, it's considered consumer-to-consumer business model (and known by some as the customer-to-customer business model) because that seller isn't a traditional business.

You (Yes, You!) Can Start Your Own C2C Marketplace

Niche marketplaces are taking off as entrepreneurs take advantage of markets underserved by the big guys. 

The purpose of business strategy and accompanying  eCommerce platform  is to enable one party to sell directly to potential buyers without spending a considerable amount of money building and maintaining an online storefront. This allows the seller to keep more of their profits because they aren't expending the capital to create infrastructure associated with a traditional business. Of all business models, C2C most closely resembles a marketplace , where a business can be started with minimal costs.

The buyer may also get more competitive prices if sellers on the same C2C platform compete. The most common term for these types of eCommerce platforms is “marketplace.” The idea of a marketplace mirrors real-world examples like flea markets, where a building owner will offer booths to sellers in exchange for a percentage of the profits.

Clarity's own  online marketplace platform  creates these marketplaces for clients who want to take full advantage of C2C opportunities. We can build them from the ground up or combine them with other selling models, such as a single online store, multi-store (i.e., many franchises connected to a single product database), global multi-currency market, global auction platform , customer-to-business eCommerce, and much more.

As you'll see, the C2C business model provides a way to sell products via online auctions or classified advertisements, offering a platform and facilitating credit card transactions . But there are other ways to create a C2C online environment.

  • EBay is an excellent example where consumers sell items to other consumers online, starting as a true customer-to-customer environment. It was the first customer-to-customer  auction site  on the web, even though Buy It Now listings currently eclipse those of timed auctions. EBay makes money by charging sellers fees for the privilege of connecting them to potential buyers, so it works as both online auctions and classified advertisements C2C platforms.
  • Buyers have multiple options for paying such as credit card, PayPal, or bank debits that buyers and sellers can link to a bank account. This ability to accept a variety of payment options is one reason sellers choose eBay over other sites. The seller then utilizes eBay's shipping software to create labels and then ships using one of the three major package carriers.
  • Craigslist takes a much more altruistic approach. In most cases, it works as a free marketplace for consumers to connect with other potential consumers at the local level via a third-party business. Craigslist charges to post job ads to cover its expenses, but its primary purpose is to create a free C2C eCommerce marketplace.
  • Amazon offers the largest marketplace on the web. Buyers pay via credit card or PayPal, and sellers receive payments facilitated by Amazon to their own bank account or PayPal account. Amazon charges one of the highest rates of any C2C site on the web, but sellers continue to use it because of Amazon's reach and promotional features.

C2C eCommerce websites are a specialized type of eCommerce platform with several advantages over the traditional B2C marketplace eCommerce models. A C2C business:

  • Needs no inventory – Since a C2C platform is just the intermediary taking a cut of the C2C transaction, inventory is a non-issue. This avoids tying up capital in inventory and eliminates the need for storage and shipping facilities. It also does away with shipping costs associated with a B2B business model. (Get a better B2B eCommerce definition here.) Just charge a listing and/or final value fee without the risk of having inventory like when they sell products on brick-and-mortar stores.
  • Needs fewer staff – A business without inventory needs no packers, shippers, or drivers.
  • Creates sellers out of buyers – Buyers who become familiar with a website as a buying platform may recognize it as a legitimate place to become a seller. This is when it becomes a true customer-to-customer experience, where consumers sell products to other customers when once they were simply the buyer.
  • Gets to choose their level of involvement – User agreements dictate just how involved a C2C platform is involved with the customer-to-customer business transaction. For example, Kickstarter's user agreement states that it cannot be held responsible for the contract between the creator and their backers.
  • Isn’t responsible for forgeries – Tiffany and Co. took eBay to court, claiming that eBay profited from forgeries of their high-end merchandise. Courts decided that C2C sites like eBay are not legally responsible for forgeries sold on their site.

Now it's time to take a look at C2C eCommerce's pros and cons for the users of the platform.

Advantages for Sellers

C2C platforms give sellers the ability to list an item for sale without additional advertising, marketing costs, or legwork. The platform owner takes care of things like quality control and promotional features.

A seller is also able to take advantage of the marketplace's web presence to put them at the top of many search engine results. Not only can this type of eCommerce help sellers reach a larger audience than they could independently, but they can do it faster as well.

Sellers also benefit because they can change their level of involvement from day to day, where a traditional business would keep them busy day in and day out. In other words, C2C creates an excellent opportunity for “side hustles,” much like running ongoing garage sales in an online environment. 

Advantages for Buyers

Buyers also benefit from C2C websites. Because the seller controls the pricing and can avoid the overhead costs associated with traditional retail companies, buyers can take advantage of this lower price that a retail company might not provide. They also get the promise of quality control that you impose on the sellers.

C2C commerce also offers shopping-from-home comfort for buyers. When done well, a well-designed C2C marketplace is a win-win for both buyers and sellers alike.

The most challenging thing about customer-to-customer eCommerce is finding a platform that can handle all the functionality of a robust marketplace yet not cost millions of dollars to purchase and take years to set up. Clarity eCommerce offers such a platform, one that costs a fraction of what most global marketplaces cost.

It can also be set up in weeks or months instead of the years you might spend waiting on other C2C software platforms, all while handling millions of SKUs and tens of thousands of buyers and sellers.

It allows sellers to set up and brand their stores, upload and customize their pricing for both products and services, report on sales, track shipments, and much more. If needed, our platform can provide a multilingual, multi-currency model as well.

What is C2C doing for our clients? Clarity created goAfrica.com, a marketplace similar to Alibaba but serving Africa. Within the first few months of being set up it had thousands of sellers and hundreds of thousands of SKUs…all being set up by the sellers themselves.

Overcome C2C Roadblocks

Clarity can help you face these disadvantages and find the best solutions possible. Tell us about the roadblocks in your C2C business model, and we'll get you on the right track to success.

A single person can create a basic storefront for their traditional small business in a matter of hours with simple website-building software. This just isn't an option when building a custom customer-to-customer business platform.

Off-the-shelf software and cheap websites simply can't handle the traffic, the customer interface, and the millions of SKUs associated with C2C needs.

Clarity is ready to build your  C2C platform  to perfectly fit your business needs. We've built over 1,500 custom sites for companies across the country, providing robust security and top-tier interaction to help you realize your C2C needs. Our experience building other customer-to-customer software has also shown us what works—and what doesn't work—in C2C business plans. Let us know what you want, and we'll make it happen.

The ability to process payments has scared away more than one person who had a good idea for a business. They might be experts in their field but still be intimidated by the options and complexities of accepting payments, especially when there is an international element involved and no payment guarantees.

If your only familiarity with online payment systems is with the Cash App, PayPal, or Venmo, Clarity can help you choose a much better payment processing option for your C2C platform to facilitate transactions. Best of all, these payment methods are seamlessly integrated into the C2C software itself so that you can focus on growing the business. You'll be able to handle credit card transactions, ACH transactions , and any other payment methods you choose.

Don't worry about security or pay guarantees when it comes to online payments. Clarity only uses payment processing programs that utilize the highest level of payment security so that you, your buyers, and your sellers feel confident using your platform. The best security builds trust in your customers so that they keep coming back.

Want to know just how secure we can make your C2C platform? Let us show you in a free demo.

Many people wonder why they should consider C2C commerce when certain companies dominate the market. Large companies often run into the problem of spreading themselves thin as they get too big. eBay might facilitate selling everything, but they are an expert on nothing. Similarly, Etsy started as a site for artists to sell handmade items; sellers now use it to sell mass-produced trinkets and “vintage” tube televisions. This dilutes the brand and presents an opportunity for those seeking to enter the C2C market.

C2C commerce opens the door for anyone wanting to be the go-to site that specializes in a particular interest or industry. It doesn't matter whether it's industrial shelving or comic books, boats, or camera equipment. You will run into competition, but you can dominate if you do it better than anyone else. Make the site more attractive, improve the checkout feature, and create a community. In other words, make your site so much more inviting that you become the default C2C facilitator for a particular industry or interest.

What is C2C doing for crowdfunding? Platforms like Kickstarter, Indiegogo, and Patreon might not have buyers and sellers like traditional C2C websites, but each still brings people together with a web-based platform to facilitate an exchange. Many crowdfunding sites work on a rewards system, where consumers pledge money in exchange for physical or digital perks once certain funding is reached. The primary difference between these  marketplace business models  is that the exchange might never happen if the funding goal isn't reached.

Which crowdfunding platform is best? It all depends on the needs of the “sellers” and the kind of “buyers” it attracts. Specialized crowdfunding platforms show up to cater to specific markets and particular tasks. Much like the niche markets mentioned above, opportunities abound for crowdfunding C2C platforms that focus on underserved online communities.

Now that we've discussed the foundations of C2C eCommerce, what's next when you want to create a marketplace website ? If your business is looking to expand its reach with a consumer-to-consumer eCommerce marketplace, Clarity can build you a C2C platform in an online environment that matches your business model and needs.

We'll provide a user-friendly C2C experience with a seamless process from start to finish, including the platform, shipping,  web design for startups  and established businesses, and payment processing options.

Whether you want to create an eBay-toppling auction site or help direct sellers find their buyers for goods and services, you'll get a better return on your investment when you work with us. We've built more than 1500 custom websites to satisfy every need.

Discover Your C2C Solution

We offer a complimentary discovery session where our experts go over your business needs with you and then provide expert advice on what solution and features would be the best fit. There's no obligation to work with us afterward; you can take the information with you anywhere. We're here to help businesses like yours grow and advance even further.

What does C2C mean?

C2C means "consumer-to-consumer" eCommerce, which is when one consumer sells goods or services to other consumers online—similarly to how eBay, Etsy, or Craigslist works. It is a type of trade relationship where both the sellers and buyers are consumers instead of businesses. Essentially, this business model helps sellers locate other customers to sell products and to facilitate transactions.

The marketplace owner brings these buyers and sellers together to conduct business. The owner may charge the seller listing fees or a final value fee for them to sell goods on the platform. It will most likely handle necessary credit card transactions as well.

C2C platforms are differentiated from other business models such as business-to-consumer (B2C) and business-to-business (B2B) business models.

What is an example of a C2C eCommerce model?

Two great examples of the C2C business model are eBay (an online auction site) and Amazon Marketplace (a marketplace that acts as both a B2B and C2C solution).

Consumer-to-consumer eCommerce (sometimes known as customer-to-customer or peer-to-peer) enables the building of relationships between end-users, where the website acts as a platform where consumer correspondence occurs in order to sell products or services.. C2C platforms will facilitate transactions by creating shipping labels and taking credit card payments.

Other models of business also conduct business to sell goods to different types of potential buyers, including business-to-business (B2B) and business-to-consumer business models (B2C).

What is a C2C business, and who uses them?

A C2C business acts as a medium for consumers to conduct business with each other. Examples of this business model that comes to mind is eBay, Amazon, Etsy, etc. These online marketplaces are a facilitator for buyers and sellers to connect, whether it's via online auction sites or a standard eCommerce platform.

Ranging from C2C platforms (often tied to brick-and-mortar stores of a traditional small business) to freelance services like Fiver, the consumer to consumer business model (sometimes called customer-to-customer) is a versatile and rapidly growing industry.

Is C2C customer-to-customer or consumer-to-consumer?

C2C typically stands for "consumer-to-consumer" in the context of commerce and online marketplaces. It refers to transactions that occur directly between individual consumers, where one consumer sells a product or service to another consumer.

This term is often used to describe online platforms, online marketplaces, or online auction sites that facilitate transactions between individuals, allowing them to buy and sell goods or services to one another. As consumers are often customers themselves, the term "customer-to-customer" is completely valid.

Business-to-business (B2B) and business-to-consumer model (B2C) are different models to connect buyers and sellers, where one party is always the seller.

What is the difference between the business-to-consumer and customer-to-customer business models?

The business-to-consumer (B2C) and customer-to-customer (C2C) models represent two distinct approaches to commerce. (C2C can also stand for "consumer-to-consumer" or "peer-to-peer"

B2C refers to transactions between a business and individual consumers. In this model, companies produce goods or offer services directly to end-users. The primary relationship is between the business and the customer. This is the most common form of commerce and includes retail stores, e-Commerce platforms, and service providers like restaurants or subscription services.

On the other hand, C2C e-Commerce centers around transactions between individual consumers. Platforms or marketplaces facilitate these exchanges, but the goods or services originate from other consumers. Websites like eBay or classified ads exemplify the C2C e-Commerce model. It enables individuals to sell directly to each other.

One key distinction lies in who owns and controls the products or services. In B2C, businesses maintain ownership until the point of sale. In C2C e-Commerce, individuals possess the items and determine their pricing. Trust and reputation mechanisms are crucial in C2C models to establish credibility among users.

Each e-Commerce business model offers unique advantages and challenges. B2C often offers greater scalability and marketing resources, while C2C e-Commerce can foster a sense of community and personalized interactions. Understanding these differences helps businesses choose the most suitable approach for their offerings and target audience.

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C2C e-commerce: Could a new business model sell more old goods?

Countless headlines have marked the meteoric rise of e-commerce during the COVID-19 pandemic. As the disease took hold, digital adoption in Europe  jumped nearly 14 percent—a rise that would have taken two to three years in most industries at prepandemic growth rates. And it is still growing fast. We estimate e-commerce will rise between 2020 and 2024 by at least 8 to 9 percent a year in France and Germany, 6 to 7 percent a year in the United Kingdom, 10 to 12 percent a year in Italy and Spain, and more than 20 percent a year in Asia. 1 Figures are for B2C and C2C, not B2B, e-commerce.

B2C marketplaces have fared particularly well. Many retailers with a foot in the physical world struggled when sales suddenly pivoted to their online channels during crisis-related lockdowns, often finding themselves short on stock, slow to deliver, and overwhelmed by the volume of calls and online queries. In contrast, Amazon and other seasoned B2C marketplaces shone thanks to their more advanced operations. In 2020, Amazon sales soared in the United Kingdom by 51 percent, to a record $26.5 billion, and in Germany by 32 percent, to a record $29.5 billion.

Yet there has been another e-commerce success story much less commonly told: the growth of C2C marketplaces. Transaction volumes of what are largely secondhand goods have climbed both on horizonal sites (such as Germany’s eBay Kleinanzeigen and Facebook Marketplace, which offer a broad range of categories) and on vertical sites (such as Lithuania’s Vinted, a pan-European C2C site for used fashion items). Exhibit 1 shows how listings have gathered pace on a range of popular European horizontal sites that disclose transaction volumes. The United Kingdom’s Gumtree and France’s leboncoin have seen growth of more than 50 percent since the start of 2020, for example.

The surge has been driven by the millions of people who spent time during lockdowns clearing out wardrobes, lofts, and garden sheds and selling their unwanted goods online.

The surge has been driven by the millions of people who spent time during lockdowns clearing out wardrobes, lofts, and garden sheds and selling their unwanted goods online. But this is no short-term trend. Trade will continue to expand on the back of consumers’ growing concern about sustainability. In addition, our research and work with C2C platforms in Europe suggest there may be room to encourage further growth and to monetize it by switching away from the traditional C2C business model, which charges sellers for listing items, to charging buyers instead.

Where growth lies

Twice over the past year and a half, we surveyed a total of more than 3,000 consumers who use C2C marketplaces in Germany, the Netherlands, and the United Kingdom. One of the things we found was the most popular C2C categories traded during the COVID-19 pandemic (Exhibit 2).

In all three countries, respondents report fashion and family items (such as toys) as the biggest secondhand category. Across Europe, we estimate that the category is already worth as much as €6 billion, having doubled in 2020. But the growth is not entirely related to the COVID-19 pandemic. As Exhibit 3 shows, we forecast continued annual growth of around 35 percent in the next four years. Consumers of all ages will trade more, but the youngest consumers (those from Generation Z, largely 15- to 24-year-olds) will lead the way. They account for some 43 percent of market volume today—a figure that could rise to 47 percent by 2025.

An average of 30 percent of respondents say they were buying more secondhand fashion items online than before the pandemic. The main reason they cite was to save money. However, an average of 38 percent say it was because they were keen to create less waste (Exhibit 4).

A new model

A shift to a model that charges the buyer could further fuel growth in C2C transactions. C2C sites have traditionally been free to buyers—a model established in California by eBay’s founder, Pierre Omidyar, when he set up a private online auction in 1995. (He was reportedly astonished when the first item sold, a broken laser pointer, fetched $14.83. 2 Sebastian Rupley, “Meet the buyer of the broken laser pointer,” eBay, September 11, 2015, ebayinc.com. ) Traffic volumes on the site quickly became so brisk that Omidyar’s internet provider hiked up its fees, at which stage the entrepreneur began charging sellers a listing fee. 3 “The history of eBay,” History Computer, July 15, 2021, history-computer.com.

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Many more C2C platforms have since emerged, using various business models. Most of them, including eBay Kleinanzeigen, Facebook Marketplace, and Gumtree, largely target transactions among people in the same local community and are entirely free to sellers. They rely on the revenue generated from third-party advertisers attracted to high-traffic sites. Some, such as eBay, charge the seller a listing fee on the value of the goods sold. And some, such as Vestiaire Collective (a site for higher-value used clothes), go deeper into the value chain and even offer authenticity checks for some branded items. But common to all has been that the platform has been largely free to buyers—until recently.

As the C2C sector has matured, a few innovators have begun to monetize their platforms by charging fees to buyers.

As the sector has matured, a few innovators have begun to monetize their platforms by charging fees to buyers. The fashion site Vinted and Spain’s horizontal C2C site wallapop are examples. By making the sites free to sellers, the companies flip the traditional e-commerce model, which focuses on attracting the most possible buyers to a site. The assumption is that by removing supply hurdles, there will be more sellers and hence more inventory, which will in turn attract more buyers and still more sellers. (Note that an average of 26 percent of respondents in our survey say they were buying more secondhand goods because a wider selection of products had become available.)

Monetization then stems from charging a commission on the back of the transaction or, more commonly among the newcomers, arbitrage opportunities associated with the offer of additional services. Several players in Asia, such as Mercari in Japan, are making significant pivots to transaction-based monetization using escrows. Often, such commissions can be as high as 10 percent of the transaction value.

Winning formula: How Europe’s top tech start-ups get it right

Winning formula: How Europe’s top tech start-ups get it right

In addition, our survey results suggest that buyers value additional services (Exhibit 5). Respondents rank buyer protection, in which funds are refunded in the event of nonshipment or poor-quality goods, as the number-one factor that would encourage them to buy more secondhand goods. Integrated payments and shipping ranked fourth and fifth. The respondents also value the authenticity certification of niche products (for example, Buddhist amulets that are assessed by providers such as Kaidee in Thailand). Players such as Carousell monetize those value-added services and charge a protection fee to secure the buyer. C2C marketplaces are also evolving their seller propositions by offering marketing, customer-insight, and pricing tools; payment platforms; and sales building and training.

The opportunity is sizable. Assuming a commission of 2 to 3 percent, offering buyer protection through an escrow service (in which payment is made to the platform provider, which transfers the funds to the seller once the goods have been received) would represent revenue of between €80 million and €120 million in today’s online market for secondhand clothes and family goods. More revenue could be raised by offering shipping services, also an opportunity for sites currently focused on local markets to extend their platforms’ reach. Some sites offer shipping services at or below retail rates but still make a margin because shipping providers are willing to offer the companies a discount.

New C2C sites that have implemented such a model have gained traction. For example, in February 2021, Vinted was among the top five shopping apps downloaded in France, Germany, Italy, the Netherlands, Poland, and the United Kingdom. Poland’s OLX now has close to 15 million active users—one in two Poles over the age of 14 use the site. And the biggest German C2C site, eBay Kleinanzeigen, has more than 28 million users, representing roughly 40 percent of Germans who are more than 14 years old.

The buyer-fee model has attracted considerable investor interest too. The valuation of Vinted, for example, increased from more than $1 billion after a successful round of funding in November 2019 to more than $4.2 billion after its latest funding round, in May 2021. 4 Ingrid Lunden, “Vinted raises $303M for its 2nd-hand clothes marketplace, used by 45M and now valued at $4.5B,” TechCrunch, May 12, 2021, techcrunch.com; Ingrid Lunden, “Vinted, the second-hand clothes marketplace, raises $141M at a $1B+ valuation,” TechCrunch, November 27, 2019, techcrunch.com. As another example, wallapop was reportedly valued at €690 million in February 2021, having raised €157 million in new funding. 5 “Online marketplace wallapop collects €157M series G,” PitchBook Data, February 26, 2021, pitchbook.com. And Sweden’s Yaytrade, a platform for trading secondhand fashion and accessories, has recently listed on the Nordic region’s Nasdaq First North Growth Market. 6 Daniel Jacobs, “Yaytrades erbjudande kraftigt övertecknat” [Yaytrade’s offer strongly oversubscribed], Dagens PS, February 24, 2021, dagensps.se.

Whether the new business model in the C2C trade will prevail is yet to be seen. But three things seem clear:

  • C2C platforms will not be competing only among themselves. All manner of companies are responding to the growing appetite among younger people to recycle. Online fashion companies such as ABOUT YOU, ASOS, and Zalando have started to explore the recycling space, as have those with retail stores. The outdoor-gear manufacturer Patagonia, for example, has recently launched a site for secondhand Patagonia garments. Customers receive a credit note for their unwanted Patagonia goods, which the company resells.
  • In a competitive secondhand market, C2C companies that choose not to charge fees to sellers for what are relatively low-value goods may be best positioned to gain an edge in the industry.
  • Buyers of secondhand goods often value the same service offerings that they are accustomed to when buying new items online—security, payment and shipping options, and ease of use, for example.

Our work suggests that C2C platforms that offer such services, all smoothly integrated, could be best positioned to gain an edge in the industry. To date, very few C2C platforms offer such a complete package. When more do, secondhand will no longer be second best.

Vanessa Goddevrind is an associate partner in McKinsey’s London office, Thomas Schumacher is a partner in the Düsseldorf office, Ramdoss Seetharaman is a partner in the Mumbai office, and Dennis Spillecke is a senior partner in the Cologne office.

The authors wish to thank Robin Katzenstein for his contributions to this article.

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E-Commerce C2C, C2B, B2C and B2B business models differences

-->The development of Information and Communication Technologies (ICT) and the growth of the Internet in recent years has changed the life and economy of society, and today, e-commerce business models are moving the world.

ebay business model c2c

The major changes in sales and marketing models are a response to new needs and consumption habits, which year after year have been adapting to faster and easier for consumers.

According to Statista , by 2020, almost 90% of the world’s population will have made purchases on the Internet , reflecting the growing importance of technology for business, driving a significant change in the organization of companies and promoting their participation in the digital era.

The development of technologies such as process automation, cloud computing and the Internet of Things (IoT) brings significant benefits to companies such as cost reduction, optimization of operations and improved customer experience.

In this way, technological advancement drives greater operational efficiency in companies and enables experimentation with new eCommerce business models , here we will explore each of these.

Learn how to maximize eCommerce success via operations monitoring and support .

Table of Contents

What are e-commerce business models?

E-commerce business models explain the relationship between companies and their direct customers for the purchase and sale of products remotely over the Internet:

  • Mobile applications : Apps specifically designed for mobile devices to facilitate shopping. Examples include the Amazon shopping app, the eBay app, and brand-specific apps like the Nike or Adidas apps.
  • Online stores : Websites set up by businesses to sell products or services. Examples include BestBuy.com, Zara.com, and countless others.
  • Social networks : Platforms like Facebook, Instagram, and Pinterest where businesses can set up shops or run ads to direct users to their online stores.
  • Email Marketing : Businesses send promotional emails to subscribers or potential customers, often with links to purchase products or special offers.
  • Chatbots and Virtual Assistants : Automated systems or AI-driven helpers on websites and apps that assist users in shopping, answering queries, or directing them to purchase pages.

As eCommerce business models leverage the advantages of the Internet to boost sales beyond the physical limitations of traditional commerce, they also face the challenges associated with security and quality assurance.

Thus, the two major drivers of eCommerce businesses are trust and customer loyalty.

C2C Model: Consumer to Consumer

The C2C e-commerce model allows consumers to conduct buying and selling transactions directly with each other, without business intermediation, through digital platforms.

It has established itself as one of the most popular eCommerce business model s because it is simple and low-cost, and it allows for the sale of used products such as clothing, electronics, and furniture. This channel is also used for promoting services, exchanges, and product auctions.

In this business model, logistics and customer service are generally managed by the seller independently, which has driven the rise of some C2C platforms such as:

  • eBay : One of the most well-known online auction and shopping websites where individuals can buy and sell a variety of goods and services worldwide.
  • Craigslist : A classified advertisements website with sections dedicated to jobs, housing, for sale, items wanted, services, and more.
  • Etsy : A platform focused on handmade or vintage items and craft supplies. It’s a favorite among artisans and crafters.
  • Facebook Marketplace : A feature on Facebook that allows users to list items for sale, and potential buyers can browse these listings and contact sellers.
  • Poshmark : A social commerce platform where users can buy and sell new or used clothing, shoes, and accessories.
  • OfferUp : A mobile-first platform that allows users to buy and sell items locally.
  • Vinted : A platform dedicated to second-hand fashion, allowing users to sell, buy, or swap clothing items.
  • Depop : A social shopping app where individuals can buy and sell unique fashion items, often vintage or second-hand.

These platforms have made it easier for individuals to connect with potential buyers, facilitating peer-to-peer transactions and promoting a more circular economy.

C2C Advantages and disadvantages

eCommerce business models are most commonly used by retailers, entrepreneurs or for those who have limited merchandise and do not manage a brand.

Here are some advantages of C2C business:

  • Ability to sell products that are no longer needed or used.
  • Allows to generate extra income.
  • Lower prices.
  • Possibility of getting discontinued, old or unique products.
  • Can be started with little capital.
  • Direct communication and transactions.

Some disadvantages of C2C businesses are:

  • Credibility, since the customer may or may not have a guarantee or support during the transaction.
  • Increased competition.
  • It is a business model susceptible to scams.
  • Difficulty in resolving disputes.

Some valuable tools for e-commerce, learn how to boost your business with CommerceTools and ChatGPT .

C2B Model: Consumer to Business

Unlike the traditional B2C model, the C2B business model allows consumers to offer their products and services directly to companies . In this scheme, it is the consumers themselves who dictate the commercial conditions such as price, terms and form of payment.

A common modality is where professionals such as designers, illustrators, programmers or even influencers use C2B platforms to offer their services independently to support specific needs that companies may have.

Although it is not limiting, it is common for this business model to work through platforms that function as intermediaries. Some C2B platforms are:

  • Upwork : One of the most popular platforms where freelancers from all over the world, including designers, programmers, and writers, offer their services to companies and entrepreneurs.
  • Fiverr : Similar to Upwork, Fiverr allows professionals to offer their services in packages or “gigs”. It’s especially popular among graphic designers, musicians, and voice-over artists.
  • 99designs : Specifically for designers, where companies post their design needs and designers submit their proposals. In the end, the company chooses the design they like the most and pays the selected designer.
  • Influencity : A platform that connects influencers with brands. Influencers can register, showcase their stats, and be contacted by companies looking to promote their products or services.
  • C2B Solutions : A platform that focuses on connecting consumers who have innovative solutions with companies seeking those solutions.
  • Kickstarter : Although it’s better known as a crowdfunding platform, it allows inventors and creatives to present their projects to a global audience, and companies often back projects they find interesting or useful.

These platforms have revolutionized the way professionals and consumers interact with businesses. The C2B model has empowered individuals, allowing them to set their own terms and conditions, and has provided companies with a wide range of talents and solutions to their specific needs.

C2B Advantages and disadvantages

The C2B business model has gained popularity as the demand for remote work increases, making it an attractive model for small businesses and new professionals.

Before starting in the C2B business, its advantages and disadvantages should be known.

Advantages of the C2B model:

  • Viable option to generate extra income.
  • Possibility to trade products or services without forming a business.
  • Access to a global network of professionals and companies.
  • Improved value for money.
  • Savings in fixed contracting costs.

Disadvantages of the C2B model:

  • Risk of non-compliance.
  • Dependence on intermediary platforms.
  • No control over the process, deadlines and quality.
  • Greater competitiveness.
  • Problems for the integration and follow-up of tasks.

B2C Model: Business to Consumer

Of the e-commerce business models, B2C, from business to consumer, is the most common and is used by companies, from the smallest to giants like Amazon and Netflix.

Given its characteristics, the B2C business is usually focused on the mass consumer market . Therefore, the priority is to work based on new needs and ensure that the product purchase and delivery process is increasingly fast and effective.

According to Investopedia , there are 5 B2C business models:

  • Intermediaries : Where a company acts as an intermediary between consumers and product or service providers.
  • Community-based B2C : Here, companies use communities to build relationships with consumers who share interests, sharing relevant content, promoting interaction, and obtaining feedback.
  • Subscription : The company charges consumers a fee to access its products or services.
  • Direct : Where companies sell their products or services directly through their website.
  • Advertising-based B2C : This is a type of marketing where ads are used to direct traffic to the landing page. Its goal is to increase brand awareness, generate leads, and drive sales.

B2C Advantages and Disadvantages

For companies looking to reach a large number of consumers, the B2C model may be the right choice. However, factors such as audience, budget, and inventory must be considered.

Here are the advantages of B2C business models:

  • Convenience and speed for consumers.
  • Reach a wide audience.
  • Adaptation of products and marketing to consumer preferences.
  • The B2C model is efficient for achieving business growth.

Among the disadvantages of B2C business models are:

  • It may require significant costs and investment.
  • B2C companies are subject to regulations.
  • Consumer mistrust regarding data security and privacy measures.

Intelligent search and optimization technology can do a lot for your digital business. Here’s the basics on e-commerce search technology, AI, and ChatGPT. How can they benefit your business?

B2B Model: Business to Business

B2B e-commerce business models refer to commercial transactions that are conducted directly from business to business, without intermediaries.

Participants in B2B eCommerce typically include:

  • Wholesalers : Businesses that sell products in bulk to other businesses, which then resell to the end consumer.
  • Manufacturers : Companies that produce goods and sell them to retailers or other businesses.
  • Distributors : Entities that buy products from manufacturers or wholesalers and distribute them to retailers or other businesses.
  • Software and Technology Providers : Companies that offer software solutions, platforms, or tech services to other businesses.
  • Supply Chain Management Companies : Businesses that manage or provide logistics, transportation, and supply chain solutions for other businesses.
  • Bulk Raw Material Suppliers : Entities that provide raw materials, such as metals, chemicals, or agricultural products, to manufacturers or producers.
  • Industry-specific Equipment Providers : Companies that sell machinery or equipment tailored for specific industries, like construction or manufacturing.
  • B2B Marketplaces : Platforms like Alibaba or ThomasNet where businesses can list and sell their products to other businesses.
  • Consultancy and Business Services : Firms that offer expert advice or services in areas like management, finance, or marketing to other businesses.
  • Service Providers : As you mentioned, these are businesses that offer specialized services to other businesses, which can range from IT services to HR solutions.

Companies engaged in B2B e-commerce provide services or goods that other businesses use as inputs for their operations, such as: raw materials, logistics, software, human capital, and consultancy.

Transactions in B2B commerce do not involve consumers or the general public. Moreover, the companies that participate in this trade operate on a large scale, so B2B transactions tend to have higher value and complexity.

B2B Advantages and Disadvantages

According to Shopify , by 2030 the B2B e-commerce market is expected to grow by 20%, creating more opportunities for businesses worldwide. This growth will be driven by several factors, such as the adoption of digital technologies, globalization, and the increasing demand for specific products and services.

B2B e-commerce offers a number of advantages for businesses, including:

  • Long-term business relationships.
  • Greater efficiency by implementing automation in management and business processes.
  • Streamlining the purchasing and shipping process of products.
  • Higher transaction volume.

Disadvantages of B2B e-commerce:

  • Requires initial investment, personnel, and web development.
  • May involve multiple parties for the negotiation process.
  • Companies may need to use advanced technology and integrated systems.
  • Transactions are subject to regulations.

E-commerce Models: Understand the differences between C2C, C2B, B2C, and B2B

Each of the e-commerce business models has its own peculiarities. In the following comparative table, we will describe the main differences of the four most commonly used models today: C2C, C2B, B2C, and B2B.

Source : NULogic

Did you know that ChatGPT is impacting digital commerce? Here are the details.

E-commerce Business Models – Conclusion

E-commerce is transforming the way individuals and businesses exchange products and services. Its evolution is due to the integration of processes into the digital ecosystem through emerging technologies such as blockchain , artificial intelligence, machine learning, and virtual reality.

This evolution has given rise to a new industry with new types of jobs and disruptive ways of marketing. Although its importance is implicit, we list 3 reasons that have led eCommerce to transform the world :

  • It offers businesses a new way to reach consumers.
  • Consumers have greater convenience and flexibility during the purchasing process.
  • E-commerce helps businesses reduce costs and improve efficiency.

Given its growing global adoption, it is essential for companies to adopt technological solutions that put them at the forefront of digital transformation because the future of commerce is increasingly anchored to platforms, applications, and digitized business models.

At NULogic , we are committed to boosting the growth of your eCommerce. We have a multidisciplinary team that will guide you in implementing technological solutions for your business.

Reach out to us at NULogic , and let’s take your eCommerce to the next level together! -->

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How Ebay Works: Business & Revenue Model

B2C and C2C multinational e-commerce online marketplace Ebay based in California started their operations in 1995 and went public in 1998. With over $9.6 billion annual revenue and 170 million active users as of quarter 4th of 2017, Ebay is well accepted e-commerce online marketplace .

Ebay sell their products either via a silent auction where users can submit the maximum price they are willing to pay for the product or via buy it now where user buy products at the listed price. As of 4 th quarter of 2017, 39% of buyers were female and likewise 44% of sellers are female. Over 65% of Ebay’s revenue generates from Ebay online marketplace transactions and only 10% revenue comes from StubHub which is online ticket marketplace acquired by Ebay in 2007.

Ebay is an online marketplace for buying and selling of new and used products. Online marketplace deals in both B2C and C2C marketplace. Ebay is available in 180 countries for buying and selling of wide variety of goods. Ebay revenue comes from seller for listing of products and commission on sale of product. Buyers need to pay the product price only to buy products on online marketplace. Sellers can list first 50 items on the Ebay online marketplace free of cost every month. After that company charges the listing fee depending upon the product category. Company also charges commission fee on sale of products. Over 90% gross merchandise volume generates from Ebay’s marketplace.

Ebay Founders, Funding received and Timeline:

Founders : Pierre Omidyar

Founded Date : September 1, 1995

Headquarter : San Jose, California, United States

Number of Funding Rounds : 1

Total Funding Amount : $6.7M

Number of Acquisitions : 62

IPO Date : September 24, 1998

IPO Share Price : $18.00

Timeline of Ebay:

Timeline of online marketplace Ebay

Ebay Revenue generation Model:

First online marketplace Ebay is known for huge variety of products. Websites similar to Ebay are doing well but Ebay business model is way different to its competitors. Ebay offers buyer and seller an online marketplace platform to buy and sell products. Ebay don’t store the inventory of products rather directs the order directly to the seller.

With over 1.93 million (as on 2017) active sellers on Ebay, Ebay allows sellers to list first 50 products on the online marketplace platform free of cost. After that Ebay charges listing fee on each item. Additionally, Ebay charges upto 10% commission on sale value pre-tax including shipping charges. Online marketplace Ebay offer two ways to sellers to sell and buyers to buy wide variety of products. Buy it Now and bidding option are made available to users. In bidding option, buyer has an option to bid the price they are willing to pay to buy the product. Buyer with highest bidding price gets the product and in Buy it Now option seller update the price of product.

Other revenue generation model on websites like Ebay is Advertisement. Online marketplace websites like Ebay sells advertising on their websites that go on external websites. Ebay also own some classified ads that generate some revenue for the online marketplace platform. Other revenue souce is giving license of their in-house technologies to other companies. Online marketplace like Ebay generate revenue from various sources but the major chunk of revenue comes from online marketplace.

Features of Online Marketplace Ebay:

Return policy of product with 100% money back gaurantee.

Ebay accepts all the online payment options with EMI payment method with allow buyer to pay in monthly installments.

Ebay authentication policy for all the products and product verification by experts.

Bidding option to buy products. At least 30% price difference in lowest bid price and buy it now price.

Product wishlist and product feedback & review via catalog on the website.

Report link to buyers for fake and unauthenticate product.

Value Proposition of Online Marketplace Ebay:

  • Large product catalogue
  • Quality assured products
  • Free shipping
  • Fast Delivery
  • Review and Feedback of products
  • Order tracking
  • Product return policy with 100% money back guarantee
  • Global online audience
  • Good customer satisfaction
  • Bidding and buy it now feature for selling of product
  • Effecient marketing and distribution channel
  • opportunity to enhance sale

Why Ebay is successful

Ebay has a large list of competitors. Even with first player to enter in online marketplace domain around the world, Ebay is facing a huge competition. Ebay is the only place to offer auction of products that attract large set of audience around the world. No other online marketplace is able to offer auction feature to buyer and seller both. Rare collectable items and huge toy collection along with auction listing appeal to buyers.

Ebay online marketplace is successful with its unique interface. Ebay offers search algorithm unlike of search engine which search information, but Ebay search for physical products around the world. Online marketplace Ebay retains their market share of audience and safeguard Ebay from large set of online marketplace competitors. Number of products &services offered, price and quality are most important aspects for Ebay that makes Ebay different and successful in online marketplace world.

Ebay is an online marketplace for buying and selling of products around the world. Ebay is quite different from other players. Ebay core offering is better services to buyers and sellers. Other online marketplace competitors focus more on products. Auction feature of Ebay along with buy product at fixed price is a unique offering to engage buyer and sellers.

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ebay business model c2c

ebay business model c2c

what is c2c (consumer-to-consumer) ecommerce | A complete guide

What is a consumer to consumer ecommerce.

c2c ecommerce

Examples of A C2C commerce:

eBay is a great example of a consumer-to-consumer (Consumer-to-consumer commerce) business where people may sell to other people online. Even though buy-it-now listings now outnumber timed auctions, it was the first customer-to-customer auction platform on the internet. eBay earns money by charging sellers a fee for connecting them with buyers. Buyers can pay using a credit card, PayPal, or bank debit. One of the reasons sellers prefer eBay to other sites is taking a range of payment methods. The seller then creates labels with eBay’s shipping software before shipping with one of the three major package carriers. Craigslist, on the other hand, is far more forgiving. It primarily serves as a free marketplace for customers to connect locally. Craigslist makes money by charging for job advertisements, but the company’s ultimate goal is to provide a free Consumer to consumer commerce marketplace. The largest marketplace on the internet is Amazon. Sellers receive payments facilitated by Amazon to their bank or a PayPal account, while the buyers pay with a credit card or a PayPal account . Even though Amazon has one of the highest commission rates of any C2C site on the internet, vendors continue to utilize it due to Amazon’s reach. The Consumer-to-consumer ecommerce websites are a category of ecommerce stage that varies in numerous ways from ordinary B2C models. A firm with a customer-to-customer (Consumer-to-consumer commerce) model:

  • No inventory is required  Inventory is not required because a C2C platform is simply a middleman taking a share of the Consumer-to-consumer commerce transaction. It removes the need for storage and transportation facilities and tying up capital in inventories. It also eliminates the B2B shipping fees.
  • The requirement fewer employees  A company with no inventory does not require packers, shippers, or drivers.
  • Turns buyers into sellers  Buyers accustomed to using a website as a purchasing platform may regard it as a credible place to sell.
  • User agreements determine how involved a C2C platform is in a customer-to-customer commercial transaction. The user agreement for Kickstarter, for example, stipulates that it is not liable for the contract between the author and their backers.
  • Is not liable for forgeries  Tiffany & Co. sued eBay, alleging that eBay benefitted from forgeries of their high-end goods. Courts have ruled that C2C websites such as eBay are not liable for forgeries sold on their platform.

The C2c Ecommerce’s Benefits

What are the capabilities of consumer to consumer e-commerce? The C2C platforms allow sellers to post an item for sale without spending money on additional promotion, marketing, or legwork. A vendor can also use the marketplace’s web presence to boost its search engine rankings. This form of eCommerce not only allows vendors to reach a bigger audience than they could on their own, but it also allows them to do so more quickly. The Sellers gain as well since they can vary their level of commitment from day to day, whereas a traditional firm would keep them busy 24 hours a day, seven days a week. To put it another way, Consumer to consumer commerce provides a great opportunity for “side hustles.” The Consumer-to-consumer websites also help buyers. Buyers can take advantage also of this lower price that a retail firm might not supply because the seller controls the pricing and can eliminate the overhead costs associated with typical retail enterprises. Buyers can also purchase from the comfort of their own homes via Consumer to consumer commerce. A well-made C2C marketplace is a win-win situation for clients and brokers when done properly. Finding a platform that can manage all of the features of a sophisticated marketplace while not costing millions of dollars and taking years to set up is the most difficult aspect of customer-to-customer e-commerce. Clarity eCommerce provides such a platform at a fraction of the cost of typical international marketplaces. It may be built up in weeks or months rather than years like typical C2C software systems, with millions of SKUs and tens of thousands of buyers and sellers. It allows sellers to create and brand their businesses, upload and configure product and service prices, track shipments, and much more. Our platform can also provide a multilingual and multi-currency model if necessary. What services does C2C offer to our customers? Clarity founded goAfrica.com, a similar-to-Alibaba marketplace that focuses on Africa. It had thousands of vendors and hundreds of thousands of SKUs within the first few months of its launch , all of which were set up by the merchants themselves.

The Drawbacks Of A C2C Ecommerce

Payment processing is one of the most complex components of C2C transactions. It can be difficult for a seller to make a customer pay for an item that has already been shipped if there is a problem with the buyer’s funds. On the other hand, a seller may refuse to offer a refund if a buyer receives damaged or subpar products, effectively alienating the client from the C2C market. In this case, the marketplace is not to blame for shipping or product quality, but it suffers from the seller’s actions. Sellers must agree to these terms or risk losing their selling ability on the site. When a client seeks a refund, eBay reserves the right to deduct funds from a seller’s bank account. Amazon provides rules for sellers if a buyer has a valid reason for returning an item. Many of these problems can be resolved using an escrow agreement. Payoneer, a payment platform Clarity has previously utilized, works. A portion of the purchase price is deducted and immediately paid to the seller, while the remainder is held in escrow. Once the item has been delivered, and the customer has approved delivery, the remainder of the payment is issued. It safeguards both parties involved in the transaction, which is particularly crucial when dealing with overseas payments, large purchases, and shipping. Clarity can help you address these flaws and discover the best possible remedies. Tell us about the difficulties you’ve had with your C2C business model.

C2c commerce Business Model Stability

A single person may create a traditional storefront for their small business in a couple of hours using basic website-building software. It is just not an option when building a custom C2C business platform. C2C demands have too much traffic, too many user interfaces, and too many SKUs for off-the-shelf software and low-cost websites to handle. Clarity is prepared to tailor your C2C platform to your individual needs. We have generated over 1,300 irreplaceable sites for businesses around the country, all with top-tier security and interaction to assist you in attaining your Consumer to consumer commerce objects. Our experience designing customer-to-customer software has taught us what works in C2C commerce business models   and what does not.

Payment Processing Integrated

The capacity to collect payments has scared away more than one entrepreneur with a great business idea. They may be experts in their field, but the possibilities and complexities of accepting payments, especially when there is an international component, can be overwhelming. Clarity will assist you in choosing from dozens of better payment processing solutions for your Consumer-to-consumer commerce platform if you’re only familiar with online payments through the Cash App, PayPal, or Venmo. The best part is that these payment options are fully integrated into the Consumer-to-consumer commerce platform, allowing you to focus on growing your company. Don’t be concerned about security when making online payments. Clarity only partners with payment processors that offer the highest level of payment security, ensuring that you, your buyers, and your vendors are safe when using your platform. The best security builds client trust and encourages them to return.

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What is C2C: Customer-to-customer model definition, benefits, tips

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You’re probably familiar with B2B (business-to-business), B2C (business-to-consumer), and D2C (direct-to-consumer) business models. But what is C2C e-commerce? C2C is customer-to-customer, or consumer-to-consumer business model.

Early forms of C2C business took the form of flea markets and garage sales. Today, C2C is primarily an e-commerce business model hosted on platforms that facilitate business transactions between buyers and sellers of goods and services.

E-commerce continues to evolve and adapt after the pandemic forced the world online to do business even more than it had been, and the C2C e-commerce model has experienced exponential growth over the last couple of years.

In Europe, according to McKinsey research , 30% of respondents said they’ve used C2C platforms to buy secondhand clothes.

With many people changing careers or building side businesses, C2C platforms are likely to continue growing and connecting people who sell their goods and services to those who wish to buy them.

E-commerce trends 2023: 15 stats + aspects shaping online shopping

What is c2c.

C2C means consumer-to-consumer or customer-to-customer business model, where individual consumers transact goods or services directly with other individual consumers using online marketplaces or platforms like eBay, Etsy, or Craigslist.

Most platforms also provide ways for sellers to offer shipping options and buyers to select their preferred shipping and handling speed and price point. C2C e-commerce platforms offer varying benefits and incentives for sellers and buyers, like discounts for selling in bulk and prompting sellers to offer deals for customers who buy multiple items at the same time.

C2C e-commerce has been popular for well over a decade, but saw massive growth when the pandemic forced many customers and companies to take their business online.

What is C2C e-commerce?

C2C e-commerce is a type of e-commerce where consumers can sell items they no longer need or want directly to other consumers, without the involvement of a business or intermediary.

C2C e-commerce platforms like Craigslist, eBay, and Facebook Marketplace started out like online garage sales or a table at a craft show, but have evolved to include many actual businesses with digital storefronts either in place of or in addition to a brick-and-mortar presence.

Many individuals sell products part time or full time on C2C platforms, while some use the platforms to sell items very rarely.

The primary function of C2C e-commerce platforms is to facilitate the transactions between buyers and sellers. At a minimum, this includes providing a space for sellers to list goods and services for sale, and often includes payment services like PayPal, Venmo, Apple Pay, Amazon Payments, and other convenient methods that allow buyers to make purchases and sellers to collect payments.

The history of e-commerce: A long and winding road

How does c2c e-commerce work.

Every platform has its own features, but here’s a general outline of how C2C e-commerce works:

  • Registration
  • Listing items for sale
  • Searching and browsing
  • Making a purchase

Step 1: Registration

Buyers and sellers must register for an account by providing their name, email address, and other relevant information to get started buying and selling. This often includes connecting or setting up a method for paying sellers or collecting and processing payments from customers, which may include registering for additional payment services like PayPal, Venmo, Apply Pay, and CashApp. For sellers, the more payment options available, the more convenient it is for potential customers to make purchases.

Step 2: Listing items for sale

As a seller, a crucial part of the process is listing your items with a description, photos, and video of what you’re selling. Research your competitors on the platform and other similar platforms to find out how they describe and price items similar to what you’re offering. Improving on descriptions, images, or videos can help a listing stand out from the competition.

Step 3: Searching and browsing

Each C2C platform has its own internal search engine driven by algorithms to display items most relevant to the user’s search intent, just like Google and Bing, except on a narrower scale. As on search engines like Google, users enter keywords or phrases for what they’re looking for, and the platform returns results that it hopes will eventually lead to a transaction between a seller and a buyer.

Step 4: Making a purchase

Most platforms allow customers to make purchases by clicking a “buy now” button or by adding items to a cart and then completing a checkout process. Some C2C sales proceed as auctions, as on eBay. However, eBay also allows sellers to simply list items with a fixed price or as a hybrid listing that begins as an auction, then allows customers to “buy now” if they don’t want to wait for the auction to end, or if they don’t want to compete in an auction and potentially pay more for the item. The customer then chooses shipping speed (if multiple options are offered) and payment method to complete the sale. Typically, C2C e-commerce platforms allow buyers to use services for free while earning revenue through fees collected from sellers for each sale. Additional revenue often comes from advertising.

Step 5: Shipping

Options for shipping often range from the speediest “expedited” offering—which usually has the highest price—to possibly a mid-range speed and price or a standard shipping rate and speed. Some platforms offer local pickup as an option, and sellers on some sites like Craigslist and Facebook Marketplace tend to offer local pickup as the only option.  Shipping options will depend on the item size and weight as well as the distance—whether the package is going across town or to another continent.

Step 6: Feedback

Customers tend to feel confident when buying from a well-known brand that has a strong reputation and a customer service department. However, finding trustworthy information about an individual seller on Amazon or Etsy can be hard. Feedback left by previous customers often provides a sense for what it’s like to deal with the seller, if the products are described accurately, what the packaging is like, and how easy it is to resolve any issues that may come up. To gain customer trust, platforms also have an interest to make sure the feedback is fair and accurate, but they also want to focus on positive comments to encourage sales. So, it’s important as a buyer to learn to read between the lines and read reviews with a grain of salt. It’s also important for buyers to do their part by leaving fair and accurate feedback.

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What factors impact c2c e-commerce.

One of the biggest hurdles in the early days of C2C e-commerce was convincing customers that their information was safe when paying online. Services like PayPal helped get buyers and sellers both used to and comfortable with paying online with a credit card or bank account.

Today, it’d seem absurd to mail a personal check or money order for everything (or anything) we buy online—then to wait for it to reach the seller, wait for the seller to cash the check and make sure it clears before actually shipping the item.

But paying safely is only one aspect of the trust and safety customers expect from C2C platforms. Buyers and sellers alike must trust that the platform can and will mediate and safeguard against fraud or a deal gone sour so it doesn’t become the digital Wild West.

After trust and security, user experience is a top factor in C2C e-commerce success. If the platform is difficult to use in any way, people will simply go somewhere else. Everything must be as intuitive and user friendly as possible:

  • Listing items
  • Searching for items
  • Making purchases
  • Tracking sales and purchases
  • Returns and refunds
  • Dispute resolution
  • Sharing items with others across social media, email, and text

Other factors that impact C2C include:

Pricing and fees. If prices and fees are unreasonable or there’s a lack of transparency or consistency, sellers will find other platforms where they can predict and earn wider profit margins. Fewer sellers means fewer items for customers means fewer customers means fewer sellers, becoming a catch-22.

Competition. Keeping sellers and a greater selection of products on the virtual market keeps competition among sellers healthy and prices down, which attracts more customers, making it worthwhile for sellers to do more business there.

Customer service. One of the most important parts of any business is ensuring exceptional customer service. Although platforms urge both parties to resolve any conflicts amicably, some buyers and sellers just aren’t going to be able to work things out on their own. A C2C marketplace like Amazon has its own customer service policies and procedures in place to step in and resolve conflicts when necessary.

Marketing and promotion. Word of mouth and loyal customers only happen after marketing and promotion have brought them to an online store in the first place. Listing items is a start, but driving traffic, sales, and revenue requires getting the word out about your products and where people can find them. The right kind of marketing for your business will be different from the next person’s, but doing nothing is not an option. Even optimizing your listings for search can go a long way.

What is recommerce: Definition, benefits, examples

What are advantages and disadvantages of the c2c model.

As with any business model, C2C has its pros and cons for both buyers and sellers. Here are some of the main advantages of the C2C model:

  • Zero to minimal set-up costs . Startup costs can add up quickly for other business models, often taking years to recover and become profitable. C2C platforms provide the space and most of the tools for getting your goods and services in front of your target audience.
  • Higher margin for seller . Lower startup costs and overhead means wider profit margins for sellers.
  • Lower prices for buyer. Competition among sellers keeps prices down, benefitting buyers looking for great deals.
  • Access to large customer base. For sellers, when so much of the startup cost is marketing and reaching customers, having immediate access to people who are there to buy is a huge advantage.
  • Access to a large selection of products & services. For buyers, large C2C e-commerce marketplaces like eBay, Amazon, and Etsy mean they can find almost everything they want and more. Have you read about what people buy when they’ve been drinking ? “Large selection” hardly begins to describe it.
  • Convenience . There’s no question that convenience is worth a lot to everyone when time is at a premium and stress is everywhere. The convenience of a solid C2C platform reduces friction, making a great experience for buyers and sellers alike.

And some top disadvantages of the C2C model:

  • Lack of quality control. The C2C platform does not inspect the items listed for sale, which can lead to lower-quality products being sold to unsuspecting buyers and hurting buyer trust and confidence.
  • Scams. Unscrupulous sellers can register and sell fakes or misrepresented items, potentially scamming buyers until removed from the platform.
  • Competition undercutting prices. Sometimes the competition gets a little too intense and, well, ruthless, when sellers undercut each other’s prices until there’s no profit margin left. Eventually, customers get used to a price point and it becomes difficult to raise the price to make a profit.

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How can i succeed with my ecommerce business on a c2c platform or marketplace.

As with any business, whether B2B, B2C , D2C, or any others, sticking to the fundamentals should serve you well and help build a strong foundation for a successful C2C e-commerce business. Here are a few suggestions to keep in mind:

  • Understand your target audience. Selling to everyone can be selling to no one. Know who you’re selling to and understand what they want, how your products serve a need and/or help them solve a problem. Understand what’s important to them and their pain points. Meet customers where they are with the right message and the right product at the right time and in the right place.
  • Provide high-quality products or services. Not only does this mean customers are more likely to return to buy again, but you can believe in what you’re selling and stand by it. Seeking cheaper, lower-quality goods and services to sell is likely to backfire in the form of dissatisfied customers, more complaints and refunds, less profit, and more headaches to deal with.
  • Price competitively . Although you want to sell high-quality products, customers still want a good deal. And the competition will keep trying to undercut you anyway.
  • A professional profile goes a long way toward establishing your credibility, trustworthiness, and the value of the products you offer. Authenticity and transparency are virtues.
  • Use high-quality images & videos where possible. As part of your professional profile, high-quality images and videos speak to the quality of your business and the products you offer.
  • Offer excellent customer service . As always, customer service can make or break a business. Exceptional customer service can bring customers back even after a less than exceptional experience.
  • Stay active on the platform. Being visible and responsive is another way to gain customer trust and keep your products and business top of mind for customers on the platform.
  • Continuously seek feedback. Improving and innovating requires the capacity for taking feedback and using it to meet customer needs and grow the business.

The C2C business model is a form of e-commerce that will continue to grow as digital tools and cloud computing enable greater capabilities and open new opportunities for where and how sellers can reach consumers and customers can pay for and consume goods and services.

Entrepreneurs from all over the globe and in areas previously out of reach will find increasing business opportunity through C2C platforms.

Shifting retail landscapes. Varying buying behavior. What makes people click “buy”? We’ve got the answers HERE .  

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C2C eCommerce: Definition, Benefits, Examples, and More

There was a time when C2C ecommerce platforms almost didn’t exist. Buyers used to doubt the quality they might receive online and sellers weren’t sure if they would be able to make a sale online. But during the pandemic, C2C ecommerce has made a global impact in the ecommerce world.

Nowadays, millions of people sell their unwanted goods online. And to enable them to sell directly to buyers, more and more entrepreneurs are creating C2C ecommerce stores.

However, there are a lot of business owners who still have no idea about the benefits of this business model and the best C2C ecommerce platforms out there. In this blog, Techosquare will tell you everything about launching a C2C ecommerce store in 2022.

From meaning to benefits, and examples to popular ecommerce platforms, we will cover all important aspects. Let’s start with the meaning first!

What is C2C eCommerce?

Consumer-to-consumer (C2C) ecommerce is a commerce model in which one consumer sells his goods or services to other consumers online. It is one of the four pivotal ecommerce business models, the other three being B2B (business-to-business), C2B (consumer-to-business), and B2C (business-to-consumer).

transaction that is made between two customers is led by a third party, basically by online actuation, social media platform, or ecommerce website, that looks after transaction status, payments, and other aspects. It helps sellers as well as buyers to find each other by charging a small fee or commission.

ebay business model c2c

What are Benefits of C2C eCommerce Business Model?

The digital shift in the consumer buying and selling process is very real and businesses who are not already online will need to act fast and enter the C2C ecommerce scene soon.

If your motive is to provide consumers a platform to buy and sell goods in all segments or a specific segment, generate max sales and give a boost to your market share, you need to understand the value of C2C ecommerce.

So, why exactly should you be starting a C2C ecommerce store? Here are the reasons:

#1 Huge profits

W. Edwards Deming - a famous American engineer - once said, “Profit in business comes from repeat customers; customers who boast about your product or service and bring their friends along.” By providing a good online C2C platform to buy and sell, your business will gain their trust.

Also, they are likely to recommend your C2C ecommerce marketplace store to their friends which in turn will increase profitability for both sellers and your business. And do you know what else will boost profit? Zero involvement of intermediaries! It will lower the cost of the product or service being offered, thus, increasing business profitability.

#2 More savings

Earlier, C2C used to occur mostly at flea markets, through the classified section of a newspaper, at a garage sale, or thrift stores. Sellers had to secure their stall in the market area in order to sell products. They also had to pay for taking space outside the shop or at a specific spot in the flea market, electricity, and staff.

As if these weren’t bad enough, the COVID-19 pandemic has limited physical buying-selling interaction to a great extent. Meaning, sellers aren't making enough profits to easily pay those additional costs.

*Enters C2C ecommerce model*

Starting a C2C ecommerce marketplace provides sellers a platform to sell their products to online buyers and lower operational costs by a long chalk and that too while sitting at home.

Benefit for you? You will make money from fees or commissions charged to sellers for listing items for sale or on making a sale. And those commissions will be way more than commissions you used to make in the physical world.

70 e-commerce features to include in your C2C ecommerce store.

#3 Increased customer base

One of the biggest advantages of the C2C ecommerce model. With a physical marketplace, the number of visitors and potential customers walking in depends on chance, store location, and marketing. With a C2C ecommerce store, the chances of getting visits by customers (both sellers and buyers) and transactions are much higher.

C2C ecommerce also increases your access to a worldwide audience. Meaning, customers will be able to come to your platform and sell their products, that too while sitting in different corners of the world. They will increase the chances of conversion.

#4 Convenience for both parties

Okay, this benefit is not for C2C ecommerce platform owners but customers (sellers and buyers). The C2C ecommerce business model removes most barriers that prevent people from using virtual of business models. Meaning, it provides convenience to both buyers and sellers.

The costs involved in starting a traditional small business or thrift store to sell products are too high for many sellers. In fact, some sellers don’t even want to sell their products as their main source of income. Similarly, it is difficult to find and buy goods at services at reasonable prices for buyers in their cities.

C2C ecommerce model will sweep away these inconveniences and make it easy to conduct business from your own home.

ebay business model c2c

What are Best C2C eCommerce Business Examples?

There are many C2C ecommerce business examples already involved in several different industries. Here are the popular ones:

Are you a huge fan of handmade or vintage products as well as unique factory products? If yes, you must have heard about Etsy . It is a very popular multivendor C2C ecommerce store that allows customers (especially those independent artists and crafters) to sell their goods to other customers.

Etsy focuses on handmade toys, collectibles, art, home goods, vintage furniture, clothing, and jewellery.

We bet you guys know this C2C ecommerce website very well. Who doesn’t? eBay is a popular shopping website in which customers buy and sell a large variety of goods and services worldwide. And do you know this website is not only built for customers? Businesses can also enjoy the great benefits of eBay.

Meaning, apart from using C2C ecommerce model, eBay also utilizes B2C business model. This website has been in the industry for a long time and has great market acknowledgment.

ebay business model c2c

One of the greatest C2C ecommerce platform examples to emerge from India. OLX is almost similar to eBay. OLX has made it so easy for people to buy, sell, and exchange new as well as used goods and services online. One major difference between these two websites is that it doesn’t use a B2C business model.

Another difference is that unlike eBay, which asks you for an insertion fee when you create a listing, and a final value fee when your item sells, OLX is mostly free. This C2C ecommerce website also has its own mobile application

Another great C2C ecommerce platform example. Alibaba allows customers to sell their products to other customers worldwide. Also known for using the B2C ecommerce model, this giant trading platform is built specifically for Chinese customers who want to sell and ship their products outside of China. AliExpress has over 150 million customers all over the world including US, Canada, India, Russia, UK, and other countries.

Okay, it seems like we have covered all important aspects of the C2C ecommerce store. That said, we are…

Wait, aren’t we forgetting something?

Oh, we didn’t tell you about the C2C ecommerce platform!

Which is the Best Platform for Building a C2C eCommerce Store?

SwiftKart is one of the finest self-hosted C2C e-commerce software solutions that can be used to launch fully functional and aesthetically pleasing C2C stores. The self-hosted solution is loaded with powerful features that simplify the digital transformation for offline C2C businesses.

Online customer-to-customer stores, especially marketplaces, built using SwiftKart bring the best of both worlds by guaranteeing quick turnaround, low cost, and future scalability.

The following are the reasons why SwiftKart has captured the fancy of C2C business owners in 2022:

  • Multilingual capabilities.
  • Airtight security
  • 100% scalability
  • Multi-vendor capabilities
  • One-time fee starting at US$999
  • All core e-commerce features
  • Mobile-friendly design

Learn more about the best C2C ecommerce store builder .

C2C eCommerce: Final Words

C2C ecommerce industry is a flourishing and rapidly developing industry of 2022 that has made the process of buying and selling for customers as easy as ABC. Also, keep in mind that the beginning of a C2C ecommerce store can be quite difficult.

Make sure to do thorough research, give your C2C business some time, and use proper planning and tools. We have now told you everything about C2C ecommerce.

Got any queries to ask? Send them to [email protected] and have them answered by our ecommerce experts.

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eBay Business Model | Is eBay B2C or C2C? |eBay vs Amazon Selling Vs Postmark

Ebay business model.

eBay is a website that sells used and new goods. It is very easy to use and you will find some really unique items. You can also buy and sell goods. The business model is called a “marketplace.” This means that it is open to anyone to sell anything. They have had a very diverse marketplace. It is one of the major places that most people go-to for buying and selling.

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eBay is a giant marketplace that allows people to trade with each other online. The website has been around for a while and it attracts millions of buyers and sellers around the world.

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The company was founded back in 1995 by Pierre Omidyar, a French-American, and founder of the first Internet company. eBay has been marketed as an online auction site. In fact, it’s the largest one in the world. It doesn’t trade in any goods or services but instead facilitates the process of trade between buyers and sellers.

What is the eBay Revenue Model?

The eBay revenue model is to offer a two-sided marketplace that (1) connects buyers and sellers, and (2) provides the platform. As such, eBay earns most of its revenue from fees charged to the participants on each side.

One thing that makes eBay different from other auction sites is that it charges a commission to the seller for every sale. The company has been regularly changing its policy over the last few years.

For instance, it had been allowing just about anything to be sold, except for trademarked items. Now, it bans firearms and other dangerous weapons, but after a huge outcry from the users, it has changed its decision. It still allows the sale of these items but it is done through private sale channels.

The old policy was known as “any tool, any time.” Another important change in policy was that the company did not allow any kind of financial service to be sold on its site. For example, you could not sell stocks or bonds on eBay.

However, it is now adding the option to buy and sell these types of financial instruments. The company’s policy allowed almost anything on eBay. As a result, many people resorted to setting up their own websites as an eBay competitor.

These new sites usually offered lower prices for buyers so that they could attract more sellers to their site in order to reach the same amount of traffic as eBay. However, thanks to the marketer hype it attracts on a regular basis, these new sites fail soon after.

Is eBay B2C or C2C?

eBay is a buyer-to-seller platform with an auction element, in which bidders win the eBay item or make other arrangements with the seller at end of the auction.

eBay is a C2C marketplace, meaning that a buyer will purchase an item directly from a seller. When the transaction is complete, eBay acts as the middleman. eBay is also B2B, which means that the seller is working directly with a buyer. In this scenario, eBay acts as the facilitator in the transaction.

eBay vs Amazon Selling

Amazon’s business model is more diversified than eBay’s. Amazon has retail, services, content production, and electronic commerce, while eBay has primarily focused on retail. Amazon has higher revenue and is a more diversified company, but eBay has higher growth rates than Amazon .

The company is known to have a lot of different aspects to it. It has many different categories of products, there are different payment methods, and it has customer service representatives. On the other hand, Amazon does not have as many payment methods as eBay and they do not offer customer service.

The employees there are all non-union and often work hard long hours for minimum pay. Once you sell an item through Amazon or eBay, you ship it to the buyer using the company’s shipping program.

eBay vs Poshmark

Poshmark is another auction site much like eBay. It’s a pretty good choice for people who want to get rid of their used clothes.

On the other hand, for people who want to buy new clothes or work out some unique designs, then Poshmark might not be the best choice because the items on Poshmark are usually second-hand items that are in good condition but not brand new.

The items that you sell on Poshmark are usually brand new but in poor condition. Most of the people who go to Poshmark are people who already have good coupons and want to get the best bang for their buck.

eBay vs Overstock

Overstock is a great resource for shopping. You can find just about anything that you are looking for. The website also offers discounts that are better than most websites. Overstock is based on the idea that there is always someone who is looking for something second-hand or even new but cheaper than its original price.

Though overstock offers new products , most of the products are second-hand. This is the main reason it’s cheaper than other websites selling the same products. However, it has a reputation of being one of the greatest places to buy computers, clothing, and other items.

Overstock is known for its excellent customer service as well as its no-questions-asked returns policy. It’s also known for its excellent shipping times and customer support service.

eBay vs Craigslist

Craigslist is another website that you can use to buy and sell items. It offers the same services as eBay, but it’s not as well known as eBay. The website has been running for more than 20 years, but they haven’t gained a lot of popularity until recently.

This is mainly because their services are very similar to that of eBay’s and most people feel that it’s easier to just buy or sell things on the eBay website than on Craigslist because of the difficulty in navigating the website.

Craigslist is not known for its friendly customer service either. However, just like eBay, CraigsList does have an excellent reputation and a lot of loyal customers.

In fact, most people say that Craigslist has better customer service than eBay. There are also a ton of different payment methods like PayPal, Checks, and wire transfers available on Craigslist as well which is not usually the case with eBay.

eBay vs Amazon vs Etsy

Etsy is one of the biggest websites that deal in handcrafted products. The website allows sellers to sell their handmade products. It’s a great place for artists who are looking to showcase their skills.

The website has a lot of loyal users and it’s known for its excellent customer service which is not usually the case with most other online shopping websites.

Etsy is also known as being one of the most environmentally friendly websites as the products sold on this website are usually made from recycled materials or natural fibers like cotton and hemp.

Amazon.com is the biggest online retailer and the largest internet company in the world. It’s one of the most popular online shopping websites in America. It has a wide variety of products for sale including books, music, videos, electronics, and much more.

The website has a huge customer base and most people feel that it’s easy to navigate through Amazon’s huge database of products and services they offer.

Amazon’s customer service is also reportedly excellent. However, many people feel that their “big brother” type of database monitoring can get a bit unnerving at times. Many people also feel that the prices on Amazon are ridiculously high.

Amazon also has an  affiliate program which actually makes it a pretty good website to buy products from if you’re into affiliate marketing. Generally, Amazon has a very large customer base and it’s guaranteed that you’ll find exactly what you’re looking for on this website.

Amazon Prime is Amazon’s premium service that people can subscribe to for   $119  for an annual membership or  $12.99  per month. This service offers a lot of incentives like free two-day shipping on most of their products, unlimited streaming of movies and TV shows, unlimited access to Kindle books, and so on.

Some people also feel that Amazon Prime’s customer service is really better than any other website’s customer service department. This is definitely something you should consider if you’re planning to shop numerous times on Amazon.

eBay has a huge variety of products for sale. The great thing about eBay is that you can find a rare or uncommon item for sale here. A lot of people also sell their items on eBay because it’s pretty widely known and easy to use. There’s also an affiliate program with which you can earn commissions.

You can earn up to 5 percent from buying and selling products sold on eBay.

etsy.com is another website that’s popular with goods sold or shared. The website has about 45Million listed items,  “handmade” ones. On this website, you can easily find handmade items as well as custom artworks such as paintings, ceramics, and so on.

Some people don’t trust the authenticity of sellers unless they are verified ones. Etsy has a process in which a seller is verified. This is very difficult to do in India, so it’s not a big deal for me to not have verified sellers. If I want to buy something from Etsy, I would look at the picture and description given and if found interesting, I would place an order.

You can also check the seller’s feedback comments and if many people say the product is fake or of poor quality, then it’s better to stay away from that particular seller.

eBay Vs Etsy

Etsy is another site that is similar to eBay. Again, as with eBay, sellers do not need to pay a fee to list their items. There is no information on the company’s website on how they make money in terms of profits and sales growth. However, the company has been doing well and it appears that they are a profitable business.

The company believes that buyers care about products made by companies or individuals that have values and principles. They want quality products from sellers who care about the environment and people in their community. Etsy is a place for people to find unique handmade items and products that they can only buy from that person.

As with eBay and Amazon, you are able to be both a buyer and a seller. You can also sell vintage , handmade, or other types of goods. They also offer digital goods but mostly sell things that are handcrafted or handmade.

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Q&A with eBay: How it’s building B2B ecommerce

Q&a with ebay: how it’s building b2b ecommerce, marni levine, vice president of merchandising, discusses how ebay is working with buyers and sellers to expand in a market important to the marketplace’s growth—b2b ecommerce sales..

To get an in-depth look at how eBay is involved with helping buyers and sellers engage in B2B ecommerce, B2BecNews interviewed Marni Levine, vice president of merchandising. Levine oversees eBay’s B2B business as well as its Electronics, Automotive Parts & Accessories, Home & Garden, and Business & Industrial categories. She drives strategic partnerships and strategy as they relate to procuring inventory to be sold on the eBay ecommerce platform.

MarniLevine_eBay

Marni Levine

Before joining eBay in 2017, Levine worked for major retail brands including Macy’s, Gap and Zulily. Overall, she has more than 25 years of experience in merchandising, planning, ecommerce, business development and strategy.

Q: How important is B2B ecommerce to eBay, and why?

Levine: In 2018, e-commerce B2B sales totaled $1.1 trillion in the U.S. and are forecasted to reach $1.8 trillion by 2023, according to Forrester Analytics. Business buyers are looking for better value and price transparency, are purchasing more frequently, and are spending more annually in comparison to general consumers. This makes them an important customer segment for eBay. Regardless of their industry or need, buyers can turn to eBay’s marketplace to find a huge selection of electronics, equipment, tools and business supplies at an affordable price.

Q: At last count eBay was doing about $4 billion annually in B2B gross merchandise volume. What was B2B gross merchandise volume in 2018 and what’s the projection for 2019?

Levine: While we don’t break out our reporting in this segment, B2B continues to grow and is a bright spot in our business. We can share that the business customer’s annual spend is 10 times more than that of the consumer customer.

Q: Are all B2B sales done through the eBay Business & Industrial section of eBay, or also in other sections?

Levine: We see a significant amount of sales across all verticals, not just Business and Industrial. Other categories include Automotive Parts & Accessories, Electronics, Collectables and Fashion.

Q: Is your B2B business profitable? If so, how was profitability attained and how are you maintaining it?

Levine: Yes, the B2B buyer segment is profitable. We serve this B2B audience by understanding that their behavior differs from our consumer customers’ behavior. They are less inclined to make an impulse purchase or wait for a specific deal price because they’re shopping more based on need. We also see more loyalty from this user segment, knowing that if they have a positive experience, they’ll continue to come back to eBay for our product selection.

Q: Amazon Business is aggressive in the B2B marketplace and some analysts suggest it could do north of $20 billion next year. What does eBay Business see as its competitive advantages in the B2B marketplace segment?

Levine: The number one reason shoppers come to eBay is to find value and wide selection, both of which make us a convenient destination for B2B buyers and sellers alike. Our wide array of inventory and spectrum of value are important purchasing incentives; shoppers can browse new, refurbished and used items from trusted sellers that can only be found on our marketplace. And when customers find that hyper-specialized piece of equipment they’ve been looking for, they pay the price they want while supporting the small businesses that make eBay so diverse. Finally, we don’t compete with our sellers, and we continue to see growth as they add their inventory to our marketplace.

Q: How many B2B sellers currently sell on eBay and what measures are eBay taking to grow that number?

Levine: We have millions of B2B sellers with listings across a variety of categories. More broadly, there are millions of small businesses buying and selling on the eBay platform across the globe in more than 100 countries.

EBay cultivates this community by acting as a partner to our sellers, and giving our merchants the opportunity to manage their brand and run a successful business. For example, sellers can feature promotions on eBay in conjunction with those they are running on their own websites. Our merchants trust us to be a cost-effective channel that provides significant traffic, incremental sales, international expansion capabilities, mobile commerce and B2B expertise.

This part of the business is important, and eBay continues to invest in its growth through partnerships, customer programs and targeted marketing campaigns that enable us to deliver an enhanced customer experience.

Q: How many B2B SKUs are currently listed on eBay and eBay Business and what new B2B categories have you most recently added? What other categories are planned?

Levine: While we don’t break out listings specifically to B2B, there are tens of millions of listings on eBay. Our inventory covers a wide range of industries and categories including Electronics, Fashion, Collectibles, Automotive, Healthcare, Dental and Construction.

Q: What new website features have been added to eBay Business in the past year and what new features are in the works for 2019?

Levine: We continue to make strides in discoverability, including search optimization and personalization. For example, our buyers have the option to self-select into the inventory they find most relevant, ensuring eBay surfaces items that are in-line with what shoppers want. Further, we’ve made the shopping experience seamless across all platforms and continue to make refinements across web and mobile.

Q: What are the three biggest challenges eBay Business sees in growing its B2B marketplace and how are you overcoming them?

Levine: As a marketplace with millions of sellers, we strive to deliver a seamless shopping experience regardless of the merchant customers purchase from. To do this, we consistently work with our sellers to optimize the end-to-end experience through programs like fast and free shipping.

We are also focused on honing discoverability so the inventory we present to customers is continuously tailored to their needs. And finally, we’re simplifying the checkout flow, which has become a priority amid changing Internet sales tax laws here in the United States that impact the purchasing process for buyers with tax-exempt status.

Q: B2B e-commerce is complex and specialized, but buyers say they want an easy and personal purchasing experience. How is eBay addressing these B2B buyer expectations from a website feature and customer service perspective?

Levine: EBay has been optimizing the consumer customer experience for more than twenty years, and we’re applying that experience and technology to the B2B buyer segment. We are constantly evolving to make purchasing simple and easy, which comes as a pleasant surprise to those in the B2B space who are familiar with traditional procurement methods and more complexity.

To further deliver an intuitive and efficient experience, we offer a concierge customer service program with which many business buyers are actively engaging. EBay has also implemented an exclusive loyalty program, giving B2B buyers access to special promotions, and we connect with our buyers and sellers to understand and adapt to their needs.

Q: Is B2B ecommerce a global market for eBay? If yes, how do U.S. buyers differ from non-U.S. buyers, and what makes the purchasing experience of each group different?

Levine: EBay is a global marketplace and the B2B strategy is a global initiative. Each country has unique needs in the B2B space, but top categories vary across regions. For example, we see U.S. buyers purchasing heavy equipment more frequently than those in other parts of the world.

Q: How is eBay marketing eBay Business, and what are some of the newest ways eBay is marketing it?

Levine: EBay looks at marketing holistically and with experts leading our strategy in paid search, social, display, and even traditional methods like print. Later this year, marketing will expand to a broader category mix and utilize different channels for specific business buyer segments within the restaurant, dental, electronics and manufacturing industries.

Q: Can you provide a specific example that’s delivered results? What are those results?

Levine: We saw increased category traffic in both search and social for our targeted marketing program. Looking ahead, we will continue to build on these programs, and explore additional channels for future Marketing efforts.

Sign up for a  complimentary subscription to B2BecNews , published four times per week, covering technology and business trends in the growing B2B ecommerce industry. B2BecNews is a publication of DigitalCommerce360.com , whose titles also include Internet Retailer and Internet Health Management. Contact Mark Brohan, director of B2B e-commerce research, at [email protected] and follow him on Twitter @markbrohan.

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How Does eBay Make Money? eBay Business Model In A Nutshell

eBay’s core business is a platform business model that makes money from transaction fees through its marketplaces. In short, eBay primarily makes money by charging fees on successfully closed transactions. For instance, in 2022, on a $73.9 billion worth of gross merchandise value sold on eBay, the company generated $9.79 billion in revenues at a 13.25% take rate (fee).

Table of Contents

eBay origin story

At the end of 2021, eBay had 147 million active buyers and 17 million sellers, which drove over $87 billion in Global Merchandise Volume (the volume of successful transactions that happened on the platform). 

eBay Inc. was formed as a sole proprietorship in September 1995 by Pierre Omidyar.

Before that, on Labor Day of 1995, eBay was called Electronic Bay, then Auction Web eBay, and it had no guarantees, no fees, or any mechanism to moderate disputes on the platform, nor payments platforms integrate (eBay would, later on, purchase PayPal, that would be then spun-off in 2015).

As the story goes, cheques would start to pile up so much on Pierre Omidyar’s desk that he had to move those to a business account finally and scale what would become one of the most valuable internet companies, which would IPO by September 1998 (about three years after its launch).

Back in 1998, that is how the company would get described in its financial prospectus:

eBay is the world’s largest and most popular person-to-person trading community on the Internet. eBay pioneered online person-to-person trading by developing a Web-based community in which buyers and sellers are brought  together in an efficient and entertaining auction format to buy and sell  personal items such as antiques, coins, collectibles, computers, memorabilia, stamps and toys.

ebay-revenues-1997-1998

eBay Financial Prospectus of 1998

By 1998 eBay was growing at a staggering rate. 

eBay business overview

eBay Inc. is a global marketplace platform, which today primarily consists of transaction revenues and marketing revenues: 

  • The core Marketplace platform includes the online marketplace, like ebay.com, and its mobile apps.
  • Other services offered on top of its platforms: those are services meant to support the activity of third-party sellers on the platform.

What’s eBay’s unique business advantage?

We are fiercely loyal in protecting eBay’s unique advantage as a true marketplace in service of small independent businesses, consumer sellers, and buyers, and working to dramatically simplify the buyer and seller experience.

As the 2018 Shareholders’ Letter mentioned, eBay highlights its crucial strength of empowering independent sellers and businesses.

That is a crucial point to emphasize, as it enables us also to understand why eBay is at its core platform business model , and how it is different from other companies like Amazon.

What are the core value propositions of eBay?

As a platform business model eBay has two core players:

  • And sellers

They both enable the platform to be successful. Indeed, to offer great value to the buyer, the platform is centered on great variety.

And to be valuable to sellers, it has to attract a broad range of buyers willing to buy any object on the platform.

The company is focusing in the coming years toward:

  • Evolving to a managed marketplace.
  • Building a foundational product catalog.
  • Managing the end-to-end payment process.
  • Offering great selection and value .

Great selection and value are at the core of the eBay business model , which includes “new, everyday items as well as rare and unique goods.”

What value does the platform drive for each of its key players?

eBay value propositions for buyers

For buyers, eBay offers:

  • Expansive inventory at a usually good value .
  • Multiple delivery options.
  • eBay’s 110% Best Price Guarantee (in the US for certain categories of products).
  • Offerings below $10.
  • Money-Back Guarantee and eBay Authenticate (a mechanism checking the authenticity of certain categories of products).

eBay value propositions for sellers

For sellers, eBay offers:

  • The choice to list products and services through fixed-price listings or an auction-style format.
  • Ability to list items that are newly refurbished, used, and rare.
  • Promoted Listings.
  • eBay’s Top-Rated Seller program.
  • Insights on optimal listing and pricing through the Seller Hub portal.

How is the eBay business model different from Amazon? A platform business model at its core

Unlike other digital commerce businesses, we don’t compete with our sellers and we refuse to compromise the shopping experience to push “house brands” and irrelevant posts. Millions of small businesses and consumers sell only on eBay. I believe it’s because of our purpose and policies — this matters to customers. We fundamentally object to unnaturally bundling services to overcome barriers to competition. At eBay, we empower third party sellers to thrive, which actually serves consumers seeking value and selection. We are a benchmark on this. We always have been.

In its 2018 Shareholders’ Letter, eBay emphasizes the fact that the platform doesn’t compete against its third-party sellers, as it happens instead on a platform like Amazon, which, while enabling third-party sellers to host their products on top of Amazon e-commerce, it still also features its own branded products.

This is a key difference between eBay and Amazon.

In addition, where Amazon takes the money from transactions, then pays a fee to third-party sellers. eBay, instead, primarily takes a fee on a successful transaction.

In short, Amazon’s key strength is managing the cash generated through the platform.

EBay’s primary strength is its ability to connect buyers and sellers on various items not necessarily available elsewhere.

How does eBay make money?

eBay makes money in three ways:

  • Primarily through fees collected on successfully closed sales on eBay.
  • And other seller services are offered on top of its marketplaces.

eBay made over $9 billion in transaction revenues from marketplace fees in 2021. At the same time, it made around $650 million in marketing services in the same year. 

What are the key metrics to understand eBay’s business model?

Each company’s business model has its logic, and as such, it measures its success through a set of metrics.

For eBay, those are:

  • Gross merchandise volume.
  • And transaction take rate.

Gross merchandise volume

Gross Merchandise Volume (“GMV”) is defined as the volume of successfully closed transactions between users on eBay Marketplace and StubHub platforms.

This is a useful metric to understand the volume of transactions happening on the platform.

In 2021, the GMV was over $87 billion.

Transaction take rate

The transaction take rate is given by the Marketplace net transaction revenues divided by Marketplace GMV.

For instance, the transaction take rate in the eBay marketplace was around 11.9% in 2021.

The ability of the platform to increase its transaction rate over time while keeping its buyers and sellers community thriving is a signal of the platform’s strength.

It means the platform has become more valuable for both sides of the marketplace.

Thus, monitoring the increased take rate, over time, together with the growing community of buyers and sellers, is a crucial way to understand whether eBay’s marketplace becomes more or less valuable. 

How does eBay primarily spend money to make money?

To make money, companies must spend money.

Depending on the business model you might also be running, the essential expenses to make the bottom line work out might change.

In eBay, those key expenses can be summarized as customer support, site operations, and payment processing, which amounted to over $2.3 billion, or over 22% of its total revenues in 2018.

ebay-operating-expenses

eBay Annual Report 2019

Other key expenses are related to sales and marketing (32% of total revenues in 2018), primarily consisting of advertising and marketing program costs (both online and offline), employee compensation, user coupons and rewards, contractor costs, facilities costs, and depreciation on equipment.

Other key expenses related to product development and other general and administrative expenses.

eBay spin-off of PayPal

I covered in the PayPal business model how the company acquired at a certain point by eBay in 2002 for $1.5 billion.

At the time, PayPal needed a strong payment processing system within its core platform.

As the years went by, PayPal’s growth went far beyond eBay, which had worked as a primary growth driver for the company in the first years of operations. Until PayPal itself became more valuable than eBay.

paypal-revenues-2015-2018

Indeed, by 2018 PayPal made over $15 billion in revenues and over $2 billion in net income. In October 2018, PayPal’s market cap passed $120 billion, compared to eBay’s $32 billion.

Key takeaways from eBay’s business model

  • eBay, at its core, is a platform business model , or two-sided marketplace (with buyers and sellers as the two sides) measuring its growth based on the volume of successful transactions closed on its marketplaces.
  • It makes money primarily through transaction fees on its core platform.
  • Where business models like Amazon are still a hybrid between e-commerce and platform business, the company offers branded Amazon products, de facto, in some circumstances operating in conflict with third-party sellers.
  • eBay’s strength is that the company is aligned in doing its independent sellers’ businesses.
  • eBay bought PayPal for $1.5 billion back in 2002; then, it spun it off in 2015.
  • In the first years of operations, eBay was the primary platform driving the growth of PayPal.
  • As PayPal scaled, the company’s growth went far beyond eBay.
  • eBay remains a core e-commerce platform where the value of its operations is driven by its ability to empower third-party sellers by offering a wide variety of goods and merchandise.

Read next: PayPal Business Model

Key Highlights

  • eBay’s Core Business Model: eBay operates as a platform business model , connecting buyers and sellers in a marketplace. Its revenue primarily comes from transaction fees on successfully closed sales.
  • Origin Story: eBay was founded in 1995 by Pierre Omidyar and quickly grew into a platform for online person-to-person trading. It went public in 1998.
  • Platform Advantage: eBay’s unique advantage lies in its commitment to being a true marketplace that supports small independent businesses, consumer sellers, and buyers. Unlike some competitors, eBay doesn’t compete against its third-party sellers.
  • Value Propositions for Buyers: eBay offers expansive inventory , multiple delivery options, a Best Price Guarantee, items below $10, and authenticity checks for certain products.
  • Value Propositions for Sellers: Sellers can list products through fixed-price listings or auction-style formats, list refurbished and rare items, participate in the Top-Rated Seller program, and gain insights through the Seller Hub.
  • Differences from Amazon: Unlike Amazon, eBay doesn’t compete with its third-party sellers and doesn’t promote house brands. eBay’s revenue comes primarily from transaction fees, while Amazon also sells its own products.
  • Revenue Sources: eBay generates revenue through transaction fees on successful sales and additional seller services. Marketing services also contribute to its revenue.
  • Key Metrics: Important metrics for eBay include Gross Merchandise Volume (GMV), representing the total value of successful transactions, and the Transaction Take Rate, which indicates the percentage of revenue earned from GMV.
  • Spending Priorities: eBay invests in customer support, site operations, payment processing, sales and marketing , product development, and general administrative expenses.
  • PayPal Spin-off: eBay acquired PayPal in 2002 and later spun it off in 2015. PayPal’s growth exceeded eBay’s, and it became a valuable independent entity.
  • eBay’s Strength: The strength of eBay’s business model lies in its ability to empower third-party sellers and offer a wide variety of products. It prioritizes the success of independent businesses on its platform.

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What Is the Meaning of the C2C Business Model?

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C2C is the common acronym used to describe a relatively new business model known as consumer-to-consumer. Other prominent industry models include business-to-consumer, or B2C, and business-to-business, or B2B. The C2C market has evolved since the late 1990s in large part because of the Internet and e-commerce. In a C2C market, one consumer buys goods from another consumer using a third-party business to facilitate the transaction.

Online auction sites and other e-commerce platforms provide a third-party marketplace where consumers can buy and sell goods. EBay and Amazon.com are two prominent third-party C2C providers. EBay is a top auction site where individuals can list goods for customers to bid on. Amazon.com is the world's largest online retailer. The company operates as both a B2C and a C2C market, meaning it markets goods directly to customers and allows users to sell goods themselves. These C2C facilitators earn fees or commissions by allowing sellers to list and sell goods through their websites.

  • Society of Quality Assurance: Consumer to Consumer (C2C)

Neil Kokemuller has been an active business, finance and education writer and content media website developer since 2007. He has been a college marketing professor since 2004. Kokemuller has additional professional experience in marketing, retail and small business. He holds a Master of Business Administration from Iowa State University.

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eBay’s Business Model and How It Makes Money

eBay

eBay’s Background

eBay started in the mid-1990s as a platform to connect buyers and sellers. At that time, the concept of the internet and online shopping was unique to most users. The founder, Pierre Omidyar, started the company for his personal transactions. However, it grew to become a household name across the US and several other countries worldwide.

Several factors played a role in eBay’s popularity. Being one of the first few online platforms that facilitated both sellers and buyers added its growth. The company also invested in various other ventures early in its lifetime, increasing its impact significantly. The company has had an active investment portfolio buying companies quite often.

One of eBay’s top acquisitions came in the form of PayPal in 2002. The company purchased PayPal for $1.5 billion at the time and benefited significantly from it. PayPal became the world’s largest online payments and receipts solution, even doing more business compared to eBay. However, both companies have parted ways recently.

eBay is also a highly financially successful company. The company has had growing revenues for several years, except in the last 5 out of 6 years. eBay made total revenues of $10.8 billion, which was an increase of 0.50% from the $10.746 billion it made in 2018. The company also had total assets of $18.174 billion and total equity of $2.87 billion at the end of 2019.

eBay’s Business Model

eBay’s business model has been its primary source of success. It combines the company’s strengths to generate a substantial amount of revenues each year. While most experts believe it was eBay’s timing that allowed it to capitalize on the early online platform, there are several other factors that also played a crucial role in its financial growth.

As mentioned, eBay’s business model has allowed it to expand its services into various other business ventures . These ventures have generated a significant amount of revenue for the company. Through its online platform, the company provides buyers with a great alternative to buying in person. Its platform has a wide selection of products from which buyers can choose.

However, eBay’s business model also attracts high expenses. The company has had variable net incomes throughout the years that don’t reflect growth in its profits. For example, the company made its highest net income of $7.266 billion in 2016, although its net sales were $9.927 billion. The company generated its highest revenue of $14.072 billion in 2012. However, it only made a net income of $2.609 billion.

How Does eBay Make Money?

eBay makes money from several segments and countries. The company’s primary source of revenue comes from its online platform eBay.com. Similarly, its primary market is the US market. However, there are also other markets and segments that produce decent profits and revenues for the company. Therefore, it is necessary to look at its performance through its segments and countries of operations.

eBay’s Segments

eBay generates a significant amount of its revenues from its online marketplace. However, it also makes a decent amount of money from StubHub and classified platforms.

Marketplace

eBay’s online marketplace is a substantial source of income. The company generated almost 80% of its revenues in 2018 and 2019 from its online marketplace. In its marketplace, the company offers two different types of services. The first type of service comes from its transactions between sellers and buyers. The second type of revenue comes from its marketing services and other services from the platform.

From its primary selling activities, the company made total revenues of $7.578 billion in 2019. It was an increase of 2.14% from the $7.416 billion the company generated in 2018. Similarly, these made 70.04% and 69.01% of eBay’s total net sales for 2019 and 2018.

From its marketing and other services, the company generated revenues of $1.060 billion and $1.225 billion for 2019 and 2018. Similarly, the company suffered a decrease of 15.57% in revenues in this category for 2019. These activities accounted for 9.80% and 11.40% of eBay’s total revenues in 2019 and 2018.

Overall, eBay generated $8.638 billion and $8.641 billion in 2019 and 2018, respectively. Overall, there wasn’t a significant increase or decrease in the revenues. It only suffered a drop of 3 billion, attributable to its bad performance in the marketing and other services category. Overall, revenues from the segment amounted to 80.41% and 79.83 of the company’s revenues for both years, respectively.

The second highest source of revenue for eBay is its StubHub segment. StubHub is an online ticket reseller company. eBay acquired StubHub in 2007 for $310 million. However, in 2020, Viagogo acquired the company from eBay for $4.05 billion. However, it contributed to eBay’s income in 2019 and the years before.

eBay won’t make any more money from this segment. However, in 2019, the company generated total revenues of $1.121 billion from the segment. It was an increase of 3.39% from the $1.083 billion the company made from StubHub in 2018. eBay also divided revenues from the segment into the net, and marketing, and other revenues. The segment accounted for 10.36% and 10.08% of the company’s revenues in both years.

Classifieds

eBay also has several classified platforms in various countries. These include a collection of brands such as mobile.de, Marktplaats, eBay Kleinanzeigen, Kijiji, Gumtree, eBay classifieds, and others. It is the company’s third-largest segment in terms of revenues.

The classifieds segment generated revenues of $1.061 billion and $1.022 billion in 2019 and 2018. The revenues increased by 3.68% in 2019. Similarly, they accounted for 9.51% and 9.81% of the company’s total revenues in both years.

Intersegmental revenues

eBay also had $20 million in intersegmental revenues, which the company canceled from its consolidated revenues. However, the company did not specify to which segments these revenues relate.

Given below is a summary of eBay’s total revenues from its various market segments.

eBay’s Markets

eBay operates in several countries around the world. Its primary market has always been the United States. However, it also generates significant revenues from Germany, the United Kingdom, and South Korea. Apart from these countries, the company also operates in various other locations.

eBay generated total revenues of $4.337 billion and $4.373 billion from its US market. The market experienced a 0.83% decline in 2019. However, it also accounted for 40.16% and 40.69% of the company’s total revenues in both years, respectively.

eBay made total revenues of $1.506 billion and $1.591 billion from its German market. It suffered a 5.64% decrease in 2019. It also accounted for 13.94% and 14.81% of the company’s total revenues in both years, respectively.

United Kingdom

eBay made total revenues of $1.441 billion and $1.481 billion from its UK market. Like the above two segments, the UK segment also suffered a drop in 2019. For this segment, the decline was 2.78%. The UK segment accounted for 13.78% and 13.34% of the company’s revenues for both years.

South Korea

The South Korean market experienced an increase of 2.13% in 2019. The market generated revenues of $1.221 billion and $1.195 billion in 2019 and 2018, respectively. Similarly, this segment accounted for 11.31% and 11.12% of eBay’s total revenues in both years.

Rest of the World

eBay classifies all its other markets under the ‘Rest of the World’ category. The company operates in 32 countries. Therefore, all other countries come under this category. From the rest of the world, eBay generated $2.295 billion and $2.106 billion in revenues in 2019 and 2018. It experienced an increase of 8.24% over the year. Similarly, it accounted for 21.95% and 19.60% of the company’s total profits.

Given below is the summary of eBay’s profits from its various markets.

eBay is among the world’s largest online platforms that facilitate interactions between buyers and sellers. The company has had a successful business history. Its growth and expansion have been possible due to its business model. eBay’s primary source of income is from its online marketplace. Similarly, it generates a substantial amount of its revenues from its US market.

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How eBay Works: Understand eBay Business Model & eBay Revenue Model

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eBay is an online shopping platform which is popular for auctions and C2C (Customer to Customer) sales. The company was founded approximately 25 years ago on September 3, 1995 by Pierre Omidyar and is one of the pioneers in ecommerce industry. As of 2019, the net worth of eBay was reported to be $18.174B.

Over the past recent years, eBay has experienced increase in revenue even after COVID-19 onset. The shift of consumer behavior towards online shopping during restricted movement during COVID-19 has played a major role in this growth.

As per a report by eMarketer , ecommerce market is expected to grow by 17.9% in 2021, reaching a value of $933.30B. This growth is expected to transcend into the future and resultantly, its expected that ecommerce sales will make up to 23.6% of total retail sales by 2025 as opposed to mere 19% in 2019.

Such amazing future forecast has drawn interest towards the history of eBay and entrepreneurs are trying to understand how eBay works, what is eBay business model and how does eBay earn money. As professional experts in ecommerce mobile app development, we are here to answer these questions to set the stage for you to launch your ecommerce online marketplace like eBay.

See Also: Aggregator Marketplaces: How B2C Aggregators Work?

History Of eBay

The journey of eBay started when AuctionWeb was founded in 1995 as a sole proprietorship. However, the name was changed to eBay in 1997. The company expanded its operations and acquired PayPal and iBazar in 2002. The ecommerce online marketplace continued with its success and acquired rent.com, Craigslist and Skype in 2004 followed by acquiring StubHub in 2007. In 2008, the online marketplace eBay launched its mobile app. To continue with its success story, eBay launched a Global Shipping Program in 2012 and a 3 day or less delivery initiative in 2017.

eBay success timeline

eBay Growth Timeline

What Is eBay Business Model?

Initially, eBay was launched as an auction platform. The platform offered sellers a space to list their items for bidding. The customer with the highest bid could keep the listed item. However, eBay business model has evolved to become an online retail marketplace over the years.

Here is an insight into eBay business model to help you launch an online marketplace like eBay :

Key Customers: Key customers of eBay can be divided into three major segments namely Global Mass Market, shoppers and sellers. The platform attracts sellers who want to sell their products at a fixed price and the ones who want to bid off their products.

Key Channels: eBay has four key channels to reach its customers – mobile app, eBay website, social networks, and its digital stores.

Key Activities: As an online marketplace, eBay has four key activities. To start with, it facilitates B2C and C2C transactions. The company focuses on the customer experience and offers round the clock customer support. The third key activity performed by eBay is web development and server maintenance. It is essential to provide a smooth experience to its customers and ensure minimal downtime in the services.  Last of the key activities of the online marketplace is logistics. The logistics activities help in ensuring timely and efficient delivery of products to its customers.

Value Proposition: The success of every business is defined by the value it adds to the life or buying journey of its customers. For the buyers, eBay is an online marketplace that offers an inventory of a wide variety and category of products. It’s a global ecommerce hub that connects buyers and sellers from across the world.

Cost Structure: When understanding eBay business model to launch your own online marketplace, it is of immense importance to understand the expenses or cost structure of the company. The cost structure segment of eBay business model involves four main expenses. The first major expense of the online marketplace includes paying employee wages. The second expense is made to pay maintenance costs of the website, mobile app platform and other digital stores. Third element in the cost structure of eBay business model is logistics and marketing costs. The last element is marketing and developmental costs targeted at customer acquisition.

The essence of eBay business model lies in facilitating interaction between the sellers and buyers. So, how does the online marketplace work?

  • Sellers can list their products on the online marketplace platform with necessary details such as product images, description, price and shipping details. In case the seller wants to list a product for bidding, he can list it on the platform with the minimum bid value, available mode of payments and bidding window.
  • The online marketplace offers a fixed number of free listings to the sellers per month. For any additional listing, the seller has to pay a fixed price to the company.
  • The buyers can easily login to the online marketplace via the website or mobile app. Buyers can search for products from different categories and compare the prices offered by different sellers to make a suitable purchase.
  • The online marketplace also offers a Deals option to showcase the active deals available at the time for the buyer.

See Also: How to Start a Successful Multivendor E-commerce Marketplace?

How eBay Makes Money – An Insight Into eBay Revenue Model

eBay revenue model has different revenue streams:

  • The first revenue channel of the online marketplace revenue model consists of the listing fee and final value fee charged to the sellers. As stated earlier, the sellers are offered a fixed number of free listings per month, beyond which the seller has to pay a fixed fee for every product listed on the online marketplace. For every successful sale, eBay charges a final fee to the sellers. However, any seller that is registered with eBay is offered a concession on the final fee.
  • The company also generates revenue from online ticket trading via its acquired subsidiary StubHub.
  • International trade is another major revenue generating stream for eBay.

Online marketplaces have become a popular shopping platform among users and the popularity is expected to rise after COVID-19. So, if you want to launch your ecommerce app like eBay , it is imperative to have detailed information about the business model and revenue model of eBay. As professionals in online marketplace app development, Code Brew Labs focuses on educating the entrepreneurs on requirements of app development, features and cost of developing ecommerce app like eBay. Let’s connect now!

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eBay Business & Revenue Model Explained

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E-commerce was on the rise even before COVID-19 turned the world upside down. But the pandemic accelerated the growth by pushing more consumers to shop online.

In 2020, as per recent studies, U.S. e-commerce sales grew more than 30% from the last year owing to the pandemic. It came to light that Americans spent a whopping  $791.7 billion online in 2020 , up 32.4% in the prior year.

eBay is one of the oldest yet most influential e-commerce platforms around the globe. It was even regarded as the  second most popular e-commerce platform  as of June 2021.

Whether you’re interested in building your own e-commerce platform like eBay or just wondering how eBay works, this post is for you.

Here, we’ll help you give insight into eBay – its business model and revenue model to generate millions of dollars in revenue.

So, let’s begin with a quick introduction to what eBay is all about.

A Quick Overview to eBay 

Ebay marketplace

eBay is a prominent online marketplace platform for buying and selling a wide range of new as well as used products. It engages in both consumer-to-consumer (C2C) and business-to-consumer (B2C) transactions.

At present, eBay has a presence in more than 100 countries with  17M sellers  and 147M active buyers from all over the world.

Know more: What Type of Platform is eBay? 

How Does eBay Work?

eBay has evolved from an online auction platform to a true marketplace platform that focuses on the consumer-to-consumer (C2C) and business-to-consumer (B2C) model.

The platform doesn’t maintain inventory. Instead, it acts as a middleman connecting buyers and sellers in one place to buy and sell items.

1. eBay for Sellers

eBay enables sellers to list their items under Auction-style listing wherein sellers have to specify certain things such as the minimum bidding price. Here, the highest bidder gets the item.

There is also another type of listing on eBay for sellers i.e., Fixed-price listing wherein eBay enables sellers to list their products with the “Buy It Now” option.

In addition to that, eBay even allows sellers to open their own store on the platform.

2. eBay for Buyers

When it comes to buyers, eBay enables them to browse through a wide array of items.

Depending on the type of listing, buyers can either bid on items listed under Auction-style listing or purchase them at the set Buy It Now price.

How Does eBay Make Money?

As per Statista findings, eBay clocked over  $2.67 billion in revenue  – which is a 14 percent increase year-over-year.

So, what strategies does eBay follow to make money?

eBay makes use of the following revenue models to bring money to the table:

1. Listing Fee Model

eBay enables sellers to list a minimum of 250 items per month on the platform for free. Once the limit is consumed, the platform starts charging a listing fee/insertion fee i.e., $0.35 for every listing.

Remember: there are certain categories on which eBay charges insertion fees between $20 and $300 per listing. For more information regarding it, click  here .

2. Commission Based Revenue Model

Like most other marketplaces out there, eBay has adopted a commission revenue model wherein the platform earns a commission whenever sellers make a sale on the platform.

The commission earned by the platform is in the form of the “Final Value Fee”, which is measured as a percentage (3% to 15%) of the total amount of the sale and $0.30 per order.

3. Advertising Based Revenue Model

In addition to the Final Value Fee, eBay also makes money through its advertising services to its sellers as a way to promote their listings.

It works via the “Sell It Faster” option available in the Seller Hub that allows sellers to promote their products.

eBay empowers sellers to select an ad rate between 1% – 100%. The company has a simple rule: the higher rate of the ad, the more it will promote product listing.

eBay charges sellers the ad rate when a buyer clicks on one of their ads and goes on buying within 30 days.

4. Subscription-Based Revenue Model

Another way eBay makes money is through store subscription service to sellers who have set up their own store on the platform.

There are five tires of store subscriptions and have a look below at the fee charged by eBay per month when a seller goes with yearly renewal:

  • Starter: $4.95
  • Basic: $21.95
  • Premium: $59.95
  • Anchor: $299.95
  • Enterprise: $2,999.95

In addition to these revenue models, eBay has acquired several companies. This mergers & acquisitions model of the company is able to bring significant money to the table.

Check: Great Online Marketplace Ideas for Entrepreneurs

To build your own platform like eBay contact. Start a Conversation

What Makes eBay Different from Other Marketplaces Like Amazon?

The e-commerce marketplace industry has many strong players besides eBay such as Amazon, Etsy, Walmart – to name a few.

But eBay is more than just an online marketplace that connects millions of buyers and sellers in one place. It is also an auction house unlike other e-commerce marketplaces out there.

To put it into simple words, eBay is the only platform that provides an auction of items in addition to enabling selling and buying products at a fixed price.

Thus, eBay attracts a pretty large audience from all over the world. People in possession of rare collectible items and those interested in such items find product auction listing on eBay an appealing feature.

In addition to that, eBay has several programs for both sellers and buyers such as a money-back guarantee, Top Rated Seller program, and Verified Rights Owner Program – to name a few.

eBay’s commitment to fostering a safe place to sell and buy online has helped it build and maintain a loyal customer base worldwide.

Learn: How to Hire Remote Developers?

With that, you now know how eBay operates and makes money.

Its success today relies on various business and revenue models it has adopted: commission-based revenue model, listing fee revenue model, advertising revenue model, subscription revenue model and mergers & acquisitions (M&A) business model.

If you’re interested in building a similar online e-commerce marketplace like eBay, hire remote developers who guide you from strategy to the successful development of your product vision.

You can hire developers either from IT outsourcing companies or platforms like Upwork. If you’re serious about your venture, you should consider hiring dedicated developers from a software development company.

That way, you’ll get to work with fully managed and pre-trained developers who can give their contribution from day one. Moreover, you’ll get access to all experts – software developers, designers, and testers under one roof at competitive rates.

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  2. How to Sell on eBay in 2024: Step-by-Step Beginners Guide

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  3. eBay Business Model Canvas: How it Jumpstarted the e-Commerce industry

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  4. eBay Business & Revenue Model Explained

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  5. How eBay Works: Understand eBay Business Model & eBay Revenue Model

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  1. 36 Things we sold for PROFIT on EBAY while on VACATION

  2. Assignment 3

  3. What is B2B , B2C , C2B & C2C business model ? || Different business models in E-commerce #thehkshow

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COMMENTS

  1. eBay Business & Revenue Model Explained

    It facilitates both B2C (business to consumer) and C2C (consumer to consumer) transactions via eBay's website and app. At present, eBay is available in 180 countries as an online shopping platform with a wide range of products along with other unique services such as online auction, stubhub.com (event ticket trading) and online classified ads.

  2. What Is C2C? How Does the Customer-to-Customer Model Work?

    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...

  3. eBay's Business Model: The Key to its Global Success

    eBay's platform operates based on a business-to-consumer (B2C) and consumer-to-consumer (C2C) sales model, providing an online arena for buyers and sellers to interact and transact.

  4. What is C2C? Understanding the Customer-to-Customer Model

    C2C stands for "consumer to consumer" or "customer to customer"; it's a business model that fosters commerce between private individuals, usually in an online environment. C2C companies act...

  5. Updated for 2024: C2C Meaning and Marketplace Tips

    A Marketplace C2C, meaning consumer-to-consumer commerce, is a business model often defined as one consumer selling goods or services to another consumer. When done online, C2C becomes a type of eCommerce.

  6. C2C e-commerce: Could a new business model sell more old goods?

    C2C sites have traditionally been free to buyers—a model established in California by eBay's founder, Pierre Omidyar, when he set up a private online auction in 1995. (He was reportedly astonished when the first item sold, a broken laser pointer, fetched $14.83.

  7. E-Commerce C2C, C2B, B2C and B2B business models differences

    The C2C e-commerce model allows consumers to conduct buying and selling transactions directly with each other, without business intermediation, through digital platforms.

  8. How Ebay Works: Business & Revenue Model

    Online marketplace deals in both B2C and C2C marketplace. Ebay is available in 180 countries for buying and selling of wide variety of goods. Ebay revenue comes from seller for listing of products and commission on sale of product. Buyers need to pay the product price only to buy products on online marketplace.

  9. EBay's Business Model: Value Play or Value Trap?

    In contrast, eBay, with a streamlined business model, had achieved solid profits by that time. ... its C2C user community eyed the integration of Billpoint with skepticism since eBay was so ...

  10. what is c2c (consumer-to-consumer) ecommerce

    Consumer-to-consumer commerce, or a C2C, is described as selling goods or services to another person over the internet. The C2C solutions are Clarity's specialty. eBay, Amazon Marketplace, and Etsy are examples of a Consumer-to-consumer commerce business.

  11. eBay Business Model

    Posted on June 23, 2023 by Daniel Pereira The eBay business model revolves around a marketplace where buyers can bid on items or purchase them directly from sellers. eBay is an online marketplace that allows people to buy and sell goods.

  12. Customer to customer

    Consumer to consumer [3] ( C2C) marketing is the creation of a product or service with the specific promotional strategy being for consumers to share that product or service with others as brand advocates based on the value of the product.

  13. What is C2C: Customer-to-customer model definition, benefits, tips

    Today, C2C is primarily an e-commerce business model hosted on platforms that facilitate business transactions between buyers and sellers of goods and services. E-commerce trends 2023: 15 stats + aspects shaping online shopping E-commerce trends in 2023 reflect an always-connected society.

  14. eCOMMERCE

    eCOMMERCE - the eBAY C2C model Dragos Dimancea Digital Marketing Program Manager at Oracle Published Jan 12, 2016 + Follow For a business to survive it is necessary that potential customers...

  15. C2C eCommerce: Definition, Benefits, Examples, and More

    Consumer-to-consumer (C2C) ecommerce is a commerce model in which one consumer sells his goods or services to other consumers online. It is one of the four pivotal ecommerce business models, the other three being B2B (business-to-business), C2B (consumer-to-business), and B2C (business-to-consumer).

  16. eBay Business Model

    7 min read eBay Business Model | Is eBay B2C or C2C? |eBay vs Amazon Selling Vs Postmark eBay Business Model eBay is a website that sells used and new goods. It is very easy to use and you will find some really unique items. You can also buy and sell goods. The business model is called a "marketplace."

  17. Understanding the C2C business model

    The C2C business model describes a market environment where one customer purchases from another on a third-party platform that may also handle the transaction. Under the C2C model, both the seller and the buyer are considered consumers.

  18. Q&A with eBay: How it's building B2B ecommerce

    Levine: In 2018, e-commerce B2B sales totaled $1.1 trillion in the U.S. and are forecasted to reach $1.8 trillion by 2023, according to Forrester Analytics. Business buyers are looking for better value and price transparency, are purchasing more frequently, and are spending more annually in comparison to general consumers.

  19. How Does eBay Make Money? eBay Business Model In A Nutshell

    eBay's core business is a platform business model that makes money from transaction fees through its marketplaces. In short, eBay primarily makes money by charging fees on successfully closed transactions. For instance, in 2021, on an $87 billion worth of gross merchandise value sold on eBay, the company generated $9.77 billion in transaction revenues at an 11.19% take rate (fee).

  20. What Is the Meaning of the C2C Business Model?

    C2C is the common acronym used to describe a relatively new business model known as consumer-to-consumer. ... EBay and Amazon.com are two prominent third-party C2C providers. EBay is a top auction ...

  21. eBay's Business Model and How It Makes Money

    From its marketing and other services, the company generated revenues of $1.060 billion and $1.225 billion for 2019 and 2018. Similarly, the company suffered a decrease of 15.57% in revenues in this category for 2019. These activities accounted for 9.80% and 11.40% of eBay's total revenues in 2019 and 2018.

  22. How eBay Works: Understand eBay Business Model & eBay Revenue Model

    eBay is an online shopping platform which is popular for auctions and C2C (Customer to Customer) sales. The company was founded approximately 25 years ago on September 3, 1995 by Pierre Omidyar and is one of the pioneers in ecommerce industry. As of 2019, the net worth of eBay was reported to be $18.174B. Over the past recent years, eBay has ...

  23. eBay Business & Revenue Model Explained

    eBay has evolved from an online auction platform to a true marketplace platform that focuses on the consumer-to-consumer (C2C) and business-to-consumer (B2C) model. The platform doesn't maintain inventory. Instead, it acts as a middleman connecting buyers and sellers in one place to buy and sell items. 1. eBay for Sellers