Market Overview

CtoC or Customer to Customer business is selling and buying of possessions of individual people, or of providing skills and services directly between the individuals. The CtoC market of both the product sales and service provision has kept on growing, because of increasing awareness and improved convenience as various CtoC services including flea-market apps have become widely accepted.

Particularly, in the service category, Minpaku or private lodging which lets tourists to stay in a private residence has attracted attention. With increase of foreign tourists arriving in Japan at prominent level, the awareness of Minpaku has been increasing. Driven primarily by the companies that have developed globally such as Airbnb, the domestic CtoC market is rapidly expanding. In recent years, there are some domestic companies launching CtoC services in an attempt to enter the market.

With increased attention to CtoC services, while those companies developing comprehensive CtoC services regardless of product or genre like Mercari or coconala became known to consumers, there emerged smaller-scale businesses specific to some types of products and services, or those dealing with specific user population. After 2018, however, many of such small-scale vendors that had entered the market withdrew from the market. This brought about the market to consist of small number of major providers of products and services.

The tendency of the market mentioned above is likely to continue for FY2019, with the sales of products occupied by Mercari, the accommodation service by Airbnb, etc., indicating that the large-scale service providers becoming stronger to drive the market expansion.

Noteworthy Topics

Revision and Application of Laws to CtoC Business Being Discussed

With CtoC business growing in every aspect, such as product sales, services for rental or finance, etc., the attention has been paid not only to the advantage of using CtoC and its future, but to the problems such as those occurred during the trading or those of malicious use by the users which have begun recognized socially. This resulted in vigorous discussion on how to suppress the problems such as by revising or applying the laws to the services.

Though the private lodging business has shown continuous expansion in recent years, the revision of the law enacted in 2018 regulated and affected the individual owners of private lodging. In addition, the CtoC business users, especially those who sell their possessions have become required to register and to be qualified for using such services by the new law, a result against the initial advantage of CtoC business being easy to earn side-income. The private lodging business market size diminished from the previous year for the first time, because the registration by private owners of the lodging did not increase, and because there were some cases of confusions such as CtoC business vendors that had at first accepted the private lodging service forcibly cancelled the accommodation at an illegal private lodging upon the request from the local government.

Since the current discussions over regulating the individuals taking part in CtoC business aim to reduce malicious transactions, the regulation to CtoC business, other than private lodging business, is to be suspended, as of the summer of 2019, in order to watch over the efforts by the market players for the future.

The above decision, however, is not intended to discontinue the discussions over regulations, but rather to encourage the self-help efforts such as to expose malicious users of CtoC businesses, or to prohibit fraudulent resale of tickets by managing the autonomously set rules to conform to the current regulations. Such efforts are likely to contribute to prevent from losing the advantages of CtoC business and eventually to keep the entire CtoC business market from declining.

Future Outlook

Rising tendency of the domestic CtoC business market has kept being the same for 2018, with Mercari, the largest CtoC product-sales business, continuously recording double digit growth in the number of users as well as the total amount dealt in, according to financial results for the 2019 April-June quarter.

Meanwhile, oligopoly by just two or three platforms occupying each category of the CtoC market has been shown recently, with product sales occupied by Mercari, Lakuma, and Yahoo auctions, with private lodging services dominated by Airbnb, and space sharing by SPACEMARKET. Because CtoC business affects largely by the business scale, indicating that acquiring of as many users as possible is the most significant business foundation, from the both viewpoints of suppliers and demanders.

According to the companies developing CtoC business, now that both CtoC product sales and services have overall pervasive among young users, the annual growth of the business is likely to be on the decline. This may cause increasing number of companies to aim at the users in older age group not satisfactorily participated in the market yet, despite its large population.  

The CtoC market for the future is likely to expand by taking a step forward, such as to try to acquire new users primarily among the major market players by introducing the payment platform common to various types of retailers.  

Research Outline