Pandemic accelerates customer-to-customer trade

The COVID-19 pandemic has set a new baseline for e-commerce in Australia, with online predicted to hold a 15% share of the retail market by the end of 2020.

Customer-to-customer (C2C) trade has accelerated during the pandemic. According to McKinsey and Company, transaction volumes of what are largely second-hand goods have climbed both on horizontal sites (such as eBay and Facebook Marketplace), and on vertical sites (such as Vinted, a pan-European C2C site for used fashion items). In the global C2C segment, it is expected that North America, Canada, Japan, China, and Europe will drive growth. According to the ‘Global Social Commerce Industry’ report, published by Report Linker, the C2C market is expected to reach $280bn by 2026.

According to Masterclass, there are three core advantages of a C2C business model:

  • Higher margins and lower prices. Eliminating the middleman lets sellers earn higher margins, and buyers can find lower prices.
  • A larger selection of goods and services. The C2C model is ideal for those dealing in rare collectibles or second-hand items that would be difficult to find from traditional businesses.
  • Convenience for both parties. The C2C model removes many of the barriers that prevent consumers from using other business models. For example, the costs associated with starting a traditional small business are too high for many sellers, and some sellers don’t even want to sell as their primary source of income.

C2C growth can be linked to several factors. Research conducted by eBay in March 2021 highlighted two thirds of UK sellers started to sell pre-owned goods during the pandemic to earn extra money. Younger consumers especially are becoming increasingly concerned with sustainable purchases; platforms such as Depop and Vinted offer a secure environment within which consumers can purchase second-hand, ethically sourced goods such as clothing.

Growing C2C trade is also partly behind the growing number of parcel locker networks. InPost announced its plans to continue expanding its alternative delivery network; the company plans to have the largest automated parcel machine network in the UK, with over 10,000 lockers available by 2024. In November 2021, eBay announced a partnership with InPost, allowing the marketplace to access InPost’s 2,500 parcel lockers. According to InPost, the partnership signals the company’s commitment to providing “flexible solutions for a growing C2C e-commerce market”.

The success of e-commerce C2C marketplaces does not seem to be disappearing anytime soon. According to research published by McKinsey & Company, in Europe the fashion segment of C2C doubled to a value of €6bn in 2020, and is projected to grow by 35% between 2020-2025. It is expected that youngest consumers will lead growth, due to their increased comfort with digital tools and their concerns with sustainability.

Shifting C2C models may contribute to fuelling the markets growth. C2C sites have traditionally been free to buyers, however as the sector has matured, some sites have begun to monetise their platforms by charging buyer fees. According to McKinsey, the buyer-fee model has attracted considerable investor interest too. The valuation of Vinted, for example, increased from more than $1bn after a successful round of funding in November 2019 to more than $4.2bn after its latest funding round, in May 2021.

With the increasing popularity of online payment systems and the growing popularity of smartphone and internet use, there may be room for sizeable growth within this market.  

Source: Transport Intelligence, January 11, 2022

Author: Nia Hudson 

 

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