Consumer-to-consumer (C2C) businesses, in which individuals buy and sell goods and services to each other, are steadily expanding in Japan. All around us, applications that allow people to list and purchase items are growing easily, with these exchanges becoming very common.

Maybe you’ve wondered what benefits C2C platforms offer, the challenges they face, and whether they can truly succeed as businesses.

This article provides easy-to-understand explanations of how C2C marketplaces function, their advantages and disadvantages, how to build one, and main success factors, illustrated with case studies from Japan.

What’s in this article?

• What is C2C?
  
• The market size of the C2C business
  
• What are C2C platforms?
  
• Specific examples of C2C platforms
  
• Advantages of a C2C platform business
  
• Disadvantages of a C2C platform business
  
• How to build a C2C platform
  
• Key points for succeeding with a C2C platform business
  
• How Stripe Connect can help
  

What is C2C?

C2C refers to a type of transaction where shoppers directly buy and sell goods or services among themselves. Concrete examples of C2C ventures include buying and selling used merchandise on flea-market apps and peer-to-peer (P2P) sales via social media.

How they differ from other business models

In addition to C2C, there are also business-to-business (B2B) and business-to-consumer (B2C) models.

B2B refers to business-to-business deals where enterprises trade goods and services. Some instances include a restaurant buying ingredients in bulk or a company commissioning a website from a design firm.

B2C refers to a commercial approach in which a company sells products or services to individual consumers. People encounter this type of operation in everyday life. For instance, a person purchasing items on an ecommerce site or at a store.

The market size of the C2C business

According to a 2024 market survey conducted by the Ministry of Economy, Trade and Industry, the C2C segment—where individuals buy and sell products and offerings—reached approximately ¥2.53 trillion. The sector grew by roughly 1.82% year over year. While this is not significant growth, the market continues to expand, indicating that C2C is still rising in Japan.

What are C2C platforms?

A C2C platform is a system that enables people to safely and smoothly buy and sell goods and services with others online. In Japan, flea market apps such as Mercari and various online auction sites are prime illustrations.

A major characteristic of these platforms is that both sellers and buyers are private individuals, and the marketplace operator does not own or retain any inventory.

These operators primarily generate revenue by charging transaction fees when users complete exchanges. Once the marketplace launches and runs smoothly, operators can further monetize it through advertising, such as promoted search results, or alternative means.

Specific examples of C2C platforms

Some notable C2C services include Mercari, Rakuten Rakuma, and Yahoo! Flea Market.

Mercari

Mercari operates as Japan’s largest C2C platform and leads the resale app sector. The company builds its service around the idea of “creating a global marketplace that creates new value.” It accomplishes this by providing a system that circulates unwanted or unnecessary items from person to person.

To reduce concerns about person-to-person dealings, they have an escrow settlement system, identity verification, transaction monitoring, and rating and review features.

Creating this secure and trustworthy trading environment is one of the major factors that helped establish C2C exchanges as common behavior.

Rakuten Rakuma

Rakuten Rakuma is a C2C platform operated by the Rakuten Group. Fril was launched in 2012 as the country’s first flea market app and rebranded as Rakuma after Rakuten acquired it in 2018. Listing something for sale is effortless: individuals take a photo of the product with their smartphone and post it, making it straightforward for newcomers to start selling. Furthermore, because it integrates with Rakuten ID and Rakuten Points, it is exceptionally user-friendly for those already familiar with Rakuten’s additional offerings.

Yahoo! Flea Market

Yahoo! Flea Market (also called Yahoo! Furima in Japanese) is a C2C marketplace operated by LINE Yahoo that uses the resale format. Yahoo! Flea Market offers simple transactions based on fixed prices, not bidding. The platform makes it quick to begin selling: members take photos of items with a smartphone and list them.

Advantages of a C2C platform business

C2C platform businesses offer benefits to both service operators and users. Let’s take a closer look at the advantages for each.

Advantages for businesses

From the perspective of running a C2C marketplace, the advantages include the following:

No need to maintain inventory

On C2C platforms, since people list products, the service operator doesn’t need to purchase or manage stock. Running and developing the business without holding inventory represents a major upside.

Monetization methods can expand incrementally

In the early stages of operation, the business runs primarily on transaction fees. As the platform gains traction, operators can expand incrementally by adding advertising and paid options.

Advantages for users

Next, let’s examine the advantages of using a C2C platform from the user’s standpoint.

Lower costs than selling on an ecommerce mall

C2C marketplaces often impose no initial or monthly listing charges. Accordingly, people can start selling at a lower cost than opening a storefront in an ecommerce mall. A core feature is that individuals can access the service conveniently, as it collects fees solely when items sell.

Secure transactions between individuals

C2C platforms have features such as payment intermediation, rating systems, and fraud prevention measures. Compared to conducting personal transactions without a dedicated service, there are fewer problems, and they are simple to use, especially for people engaging in P2P trades for the first time.

Disadvantages of a C2C platform business

There are also multiple factors to keep in mind when considering a C2C platform venture. It is important to recognize the drawbacks that both the business and participants encounter.

Disadvantages for businesses

From the perspective of running a C2C marketplace, management often becomes quite difficult.

Difficult to manage transactions

Since users handle listing and shipping themselves, the condition of products and the quality of exchanges can vary significantly. While the service operator can indirectly establish regulations and rules to oversee interactions, the challenge lies in monitoring every detail.

Construction and operation costs can easily balloon

C2C platforms require establishing of payment environments and fraud countermeasures based on dealings among individuals. As a result, it tends to be more costly than forming and operating your own ecommerce site. During the initial launch phase, transaction volumes will be modest, so income from fees is almost guaranteed to be low. As such, it is fundamental to plan and work to broaden the user base and secure alternative revenue streams.

Disadvantages for users

For users, while C2C businesses offer the appeal of convenience, there are also several points to note.

Possible problems

C2C marketplaces implement safety measures, but delivery delays or misunderstandings can still arise in transactions between individuals. These issues are not unique to C2C ventures; however, users must resolve those problems themselves.

Hard to spot fakes

On C2C platforms, because sellers are regular people, it becomes challenging for buyers to determine whether the items for sale are genuine. While there are mechanisms to gauge a seller’s reliability based on ratings and past transactions, the judgment ultimately lies with the buyer.

How to build a C2C platform

The following sections present the main methods for building C2C platforms. Make sure to choose the path that best suits your goals and budget.

From-scratch development

From-scratch development is the process of designing and creating a C2C marketplace from the ground up, without relying on existing software. There are two approaches: employing in-house engineers to handle everything from design to launch, or outsourcing the project to an external developer.

Although this type of development offers a high degree of flexibility and makes it easier to implement special functionalities and UI, this is counterbalanced by the significant cost and time requirements. When starting a business from the beginning with limited resources, this option is not ideal.

Use of a package (SaaS, no-code, etc.)

Using a software package is a way for building C2C platforms by using existing software-as-a-service (SaaS) and no-code tools. If your company has engineers, you can launch offerings relatively quickly by having them handle the in-house configuration and minor customizations. On the other hand, if there are no engineers or if the group is short-staffed, outsourcing to an external developer is also an option.

When outsourcing, relying on existing systems helps keep costs down compared to developing everything from the ground up. However, customization remains somewhat limited, and compromises might be necessary to achieve unique features and detailed specifications.

Key points for succeeding with a C2C platform business

For a C2C marketplace, success hinges on systematically advancing from user acquisition to monetization while ensuring transaction security.

Initiatives to increase new users

The value of a C2C platform increases as the user count grows. For that reason, the service has to prioritize straightforward listing and a simplified purchasing process, and designers must structure the system to prevent people from encountering obstacles during their initial experience.

Especially in the early stages, drawing in a set number of users is the top priority. One way to attract people might be to use social media to showcase actual product listings and transaction details.

Marketing initiatives

After a certain number of exchanges have occurred, you can use the data you’ve accumulated to help expand the scope of your customer acquisition initiatives.

Analyze data to identify which product categories people frequently buy and sell and which traffic sources drive listings and purchases, then select marketing tactics and campaigns tailored to each.

For instance, in categories with clear search intent, search ads efficiently reach those with a strong motivation to list or purchase. When the data reveals user roadblocks, deploy solutions such as providing clear explanations via video streaming.

Depending on the characteristics of the C2C platform, incorporating affiliate marketing strategies can also be effective. For example, you can attract customers through review articles and comparison pieces by offering performance-based affiliate programs that reward media outlets or bloggers specializing in specific genres for member registrations or completed transactions.

Providing transaction security and reliability

In C2C marketplaces where both sellers and buyers are individuals, it will be difficult to sustain service use unless the platform reliably ensures transaction safety and trustworthiness. Alongside payment handling, ratings and reviews, and protective steps, it is important to define terms of service and guidelines clearly.

For example, specifying details such as “conditions for listing items,” “prohibited actions,” and “how to handle failed transactions” helps prevent misunderstandings and unnecessary disputes between users. Also, be sure to document procedures for refunds, order cancellations, and customer inquiries in case issues arise.

Implement online payment functionality

If the payment flow is confusing, shoppers are more likely to abandon transactions. Such friction can reduce exchange volume and user retention. Therefore, C2C platforms must clearly design payment intermediation and payment timing to establish an environment where people can complete purchases quickly and without hassle.

For this kind of payment setup, using online payment services tailored for marketplaces makes managing the flow of funds and payments required by person-to-person exchanges much simpler.

How Stripe Connect can help

Stripe Connect orchestrates money movement across multiple parties for software platforms and marketplaces. It offers quick onboarding, embedded components, global payouts, and more.

Connect can help you:

• Launch in weeks: Use Stripe-hosted or embedded functionality to go live faster, and avoid the up-front costs and development time usually required for payment facilitation.

• Manage payments at scale: Use tooling and services from Stripe so you don’t have to dedicate extra resources to margin reporting, tax forms, risk, global payment methods, or onboarding compliance.

• Grow globally: Help your users reach more customers worldwide with local payment methods and the ability to easily calculate sales tax, VAT, and GST.

• Build new lines of revenue: Optimize payment revenue by collecting fees on each transaction. Monetize Stripe’s capabilities by enabling in-person payments, instant payouts, sales tax collection, financing, expense cards, and more on your platform.

Learn more about Stripe Connect, or get started today.