In our series on the Dutch Digital Economy we have so far analyzed the Dutch B2B and B2C e-commerce market. The total business conducted in the B2B and B2C commerce in 2014 equaled € 1015 billion of which 8,7% can be attributed to e-commerce. But when analyzing e-commerce there are a few other markets that needs to be considered. One them being Consumer to Consumer (C2C) e-commerce.
C2C commerce is hardly a new phenomenon. Transaction between consumers have been going on for ages. Selling ones car to another person through an ad in the paper was pretty common in the 1900’s. But in those days transactions between people were limited as only more expensive items (cars, electronics, household equipment, furniture, etc) were worth advertising for. The widespread adoption and use of the internet rendered existing barriers to C2C trade almost non-existent. Now, an internet device and connection is enough to buy from or sell to other people, just like in a B2C environment. But while B2C e-commerce is a hot topic, C2C e-commerce is hardly discussed.
However, C2C e-commerce platforms such as Marktplaats and eBay are proof of the growing success of C2C e-commerce. In a research paper from Blauw on behalf of marktplaats it was estimated that Marktplaats facilitated €9.2 billion in 2014 in pure C2C commerce (so excluding B2C e-commerce). This would suggest that total C2C e-commerce is possibly even larger than Dutch B2C which we estimate to be € 13.5 billion in 2013. While Marktplaats is regarded as by far the largest Dutch C2C marketplace, it is not the only one out there. Other companies that offer C2C e-commerce facilities are giants such as eBay (owner of Marktplaats since 2004), Bol.com and Amazon. But it is difficult to separate Amazon’s and Bol.com’s C2C transactions from it’s B2C transactions. The same goes for transactions on Marktplaats which over time has become a marketplace for both B2C and C2C transactions. If we want to size the C2C e-commerce volume we clearly need to set the B2C e-commerce apart from the C2C e-commerce.
In an earlier analysis of the Dutch Digital Economy we defined e-commerce as the trading in products or services using computer networks, such as the Internet. This clearly also covers C2C e-commerce. So first of all we need to define C2C e-commerce as e-commerce between consumers. This is in fact a subset of what is generally referred to as People to People e-commerce (Person to Person, P2P). P2P is e-commerce between individuals and can be regarded as either B2C or C2C e-commerce depending on the role of the seller. If both buyer and seller are acting in a consumer role the transaction we can characterize as C2C. If the seller sells to consumer for a living it can be viewed as B2C. Another characteristic of a C2C transaction is that it does not require Value Added Taxes (VAT).
Measuring C2C e-commerce is not easy. A research executed by the Dutch Bureau of Statistics (CBS) tried to quantify the C2C volume by examination of advertisement, pricing and bidding data from a large Marktplaats data set but concluded this was not possible. As it is assumed that a C2C transaction does not add value to a product or service charging VAT is not required. As a consequence C2C transactions do not add anything to the official economy in terms of GDP and therefore completely escapes official statistics. There are just a few snippets of information that can be used to estimate the size of the C2C transaction volume. According to Blauw research Marktplaats’ C2C volume in 2010 was estimated to be € 7 billion and €9.2 billion in 2014. But now it is 2016 and Marktplaats is not the only show in town so how do we get a feel for the current Dutch C2C e-commerce market? We have to make a few assumptions:
- Assumption 1: Let’s assume that the C2C transaction volume in 2010 was indeed € 7 billion. Marktplaats claimed to facilitate 125000 pure C2C transactions per day. The resulting average transaction value of € 153 does not seem outrageous. According to Thuiswinkel.org the average on-line order value in 2014 was € 123.
- Assumption 2: Let’s assume that 66% of C2C transaction volume is facilitated by Marktplaats. Amazon, Bol.com and eBay are also well known marketplaces in the Netherlands and also offer their infrastructure for C2C transactions. It may not be large yet but their large scale operations could certainly facilitate a lot of C2C transactions. AirBnB, Uber, Snappcar, Thuisafgehaald and Peerby are also examples of P2P marketplaces while the latter two are pure C2C marketplaces. Nevertheless they are add to the total C2C e-commerce volume. There are many more marketplaces that offer C2C facilities such as: Gratis Markt, Koop je spullen, Marktnet, Marktplaza, Speurmarkt, Speurders, Openhandel, Tweedehands.net, Tweedehands.nl. Of course there are sites which specialize in trading second hand cars such as Autoscout 24, Autotrack, Autotrader, Gaspedaal, Verkoop uw auto, Zomoto. In fact assuming Marktplaats to cover 66% of all C2C transactions might even be too high given the fact that over the last couple of years it has been focusing more on becoming the marketplace for Small and Medium Business than to push for C2C. It is even more likely that this percentage will further drop as new C2C initiatives continue to emerge and Marktplaats continues to focus more on selling ads to SMB’s.
- Assumption 3: Let’s assume that C2C e-commerce is growing in volume at the same rate as B2C e-commerce. The average growth rate of online B2C commerce over the last 4 years according Thuiswinkel.org was 8,5% until 2014. This is a conservative estimate as there are indications that C2C commerce is growing faster than B2C as trends such as sharing, sustainability, social responsibility, cradle-to-cradle and re-use are favoring ongoing growth of C2C e-commerce. Last year Accenture found that 29% of the Dutch consumers is willing to buy via C2C channels for housing, transport and finance; services that are not yet part of C2C offerings.
From the assumptions above we can conclude that pure C2C e-commerce is worth least €14 billion in 2014 and €15 in 2015. But since we were very conservative with our assumptions the current C2C volume could easily be worth €20 billion which makes it the proverbial elephant in the room. Fact of the matters is that pure C2C e-commerce is very hard to track. The financial part of a C2C transaction is usually handled off-line and in cash. But what we do know is that C2C e-commerce is of the same magnitude as B2C with which it also directly competes. With technology available to virtually everyone, a trading culture as backbone and surfing the tide of the sharing economy Dutch C2C e-commerce could very well become a very serious contender for ‘traditional’ online businesses.