Rakuten Ichiba and Amazon, which are well-known by many in Japan, are not just marketplaces for selling goods. They also have systems that connect people and services. Platform businesses centered around original ideas or offerings are no longer the domain of large corporations. Small and medium-sized enterprises (SMEs) and individual entrepreneurs can now create and scale them as well.

This article provides an easy-to-understand explanation of how to establish a platform, covering fundamental steps and development methods, as well as with notable considerations and successful case studies in Japan.

What’s in this article?

• What is a platform business?
  
• The main types of platforms
  
• How to create a platform
  
• Key elements for creating a platform
  
• Points to consider when creating a platform
  
• Some successful examples of platforms
  
• How Stripe Connect can help
  

What is a platform business?

In our increasingly digital world, one factor that determines a company’s competitiveness is “how well it can build systems that connect a large number of users.” Against this backdrop, platform businesses have been gaining attention in recent years.

A platform business is a commercial approach that provides a place where companies and individuals can exchange goods and services. Rather than the venture handling products, value comes from facilitating transactions and interactions among users.

The main types of platforms

Platform types and formats change depending on who they connect to. Let’s take a look at the primary characteristics of business-to-business (B2B), business-to-consumer (B2C), and consumer-to-consumer (C2C) offerings.

B2B

This kind of platform connects businesses with the ultimate aim of improving operational efficiency and reducing costs. An example of this type of environment is MISUMI, a place where companies can procure parts and materials, and it is a B2B service, so only corporations or individual operators can register as members.

For this kind of B2B model, reliability in handling high volumes of data and specialized design for enterprise members become significant.

B2C

This is the most common method where companies provide services directly to consumers. Amazon, Rakuten Ichiba, and Uber Eats serve as familiar case studies. They all offer a straightforward experience from making an online purchase through to delivery and product review.

In this type of environment, the key to success is a good user experience (UX) and trust in the brand.

C2C

This is a model in which both sellers and buyers are individual consumers, enabling direct transactions of goods and services between them. In Japan, Mercari, Rakuma, and minne are well-known examples that have successfully expanded the flea market and handcrafted products space.

How to create a platform

The approach to creating a platform varies depending on the degree of implementation flexibility and the associated development costs. You need to weigh the objective and the amount of preparation time you have when selecting the method that best suits your company.

Development from scratch

Organizations that want to implement specialized or proprietary functionality or plan prolonged growth strategies could choose ground-up, from-scratch development. However, implementation costs run high, and domain skills and knowledge come into play, so it is important to confirm in advance whether your company can secure the necessary resources.

Package development using existing resources

Customizing existing packages is ideal for SMEs seeking a balance of speed and stability. With tools such as Shopify, it is possible to develop ecommerce sites or similar marketplaces in just a few weeks. Still, if high-scale expansion later on is a possibility for the company, the limitations in these packages’ features might become an obstacle.

No-code/low-code development

Business owners can quickly form reservation sites or membership communities using tools such as Bubble or Adalo, without any programming knowledge. Nevertheless, because no-code and low-code implementation have apparent limitations on customization, if your goal is long-term expansion into a full-scale operation, you need to consider building from scratch or migrating to packaged solutions.

Key elements for creating a platform

Having development skills alone is not enough to succeed in a marketplace venture. Let’s take a closer look at the elements needed to create a platform:

Technical Infrastructure and API

Stable infrastructure that can handle user registration, payment processing, communication, and information management is very significant. By combining external application programming interfaces (APIs), it is possible to assemble a reliable setup quickly.

Furthermore, by designing with API integration in mind, it is possible to accommodate future service expansions and app integrations flexibly.

Design and UX

To help users achieve their goals without confusion, the design needs to prioritize functionality over visual appeal. Early on, the focus must remain on reducing drop-offs at every stage, from registration to actual use. Ongoing user interface (UI) testing and behavioral analysis enable continuous refinement of the experience and keep participants engaged throughout the process.

In Japan, where many people don’t own a computer but do have a smartphone, it is meaningful to pay close attention to the UX on smartphone screens when designing web platforms.

Business model and monetization

The revenue models used for marketplace ventures vary widely and can include transaction fees, advertising, subscriptions, and data provision. But, to achieve sustainable growth, your priority needs to be increasing the user base and transaction volume, rather than solely pursuing profits from the outset.

Points to consider when creating a platform

As a platform expands, its operational complexity rises. That said, keeping the following points in mind can help reduce that risk:

Assess whether your platform can break into the market

Launching your own marketplace can be challenging in a space already saturated with similar services. First, analyze the market size and competitive landscape to determine whether there is room for your company’s platform to enter successfully.

Security and regulatory compliance

Platforms handle personal information and payments, making compliance with the Personal Information Protection Act, the Specified Commercial Transactions Act, and PCI DSS top priorities.

Appropriate guidelines will also be foundational for user-generated content, such as rating systems and reviews. Additionally, it is key to implement thorough security measures for ecommerce sites.

Expandability and scalability

On marketplaces, as the active user base increases, server load increases as well. Therefore, planning infrastructure from the outset helps guarantee smooth operation as the number of participants increases.

For example, with cloud services that allow separate management of information and functions, or structuring frameworks to add features as needed easily, makes future modifications smoother. If you create a platform without factoring in these design choices, you might have to rebuild later, wasting time and money. Choosing systems and structures that are simple to expand in the early stages is central to ensuring stable long-term operation.

Some successful examples of platforms

Across Japan, a wide range of platforms connect users across fields, create new value, and drive industry growth. The sections below highlight several notable and successful case studies.

Rakuten Ichiba - Comprehensive B2C online mall

Rakuten Ichiba is a B2C ecommerce platform where businesses and sole proprietors can open their own online shops and sell products directly to consumers. Since its launch in 1997, Rakuten Ichiba has grown to become Japan’s largest EC mall, forming a robust ecosystem that delivers value to both sellers and buyers.

Beyond that, they have successfully integrated group offerings such as Rakuten Card, Rakuten Pay, and Rakuten Points, creating a circular ecosystem in which visiting the platform once leads to using other services. With this background, Rakuten Ichiba is positioned not merely as a marketplace for sales but as a comprehensive environment that supports the entire consumer journey.

MISUMI - B2B parts procurement platform

MISUMI is a B2B digital marketplace that specializes in the manufacturing industry. Users can complete the procurement of machine parts and tools entirely online. For factories and other industrial production locations where estimates and orders previously took considerable time, MISUMI has provided a platform that enables instant digital search and ordering of necessary parts.

The marketplace offers a variety of flexible systems, including single-unit orders, short lead times, and automated quotes for custom items. This convenience has enabled small and medium-sized manufacturers and designers to advance development efficiently, boosting productivity across the entire manufacturing industry.

MISUMI is highly regarded not merely as an online store, but as a hub that has digitized the industrial production transaction process itself.

minne - a C2C platform for handmade goods

minne is a C2C platform where individuals can sell handcrafted accessories and goods. minne built a marketplace for handmade products where items crafted with the maker’s heart connect sellers and buyers.

In addition to user-friendly features that make listing and selling straightforward, the marketplace is committed to forming an environment where creators can work with peace of mind, including messaging with customers and curated collections of their work.

Moreover, by linking with exhibitions and events, they create sales opportunities that integrate online and offline channels.

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.