Technological advancements in big data and AI are disrupting commerce in fundamental ways, including supply and demand forces. Spearheaded by China’s e-commerce giants, a new business model is emerging: consumer-to-manufacturer (C2M).
Reshaping the retail industry by prioritizing consumers’ needs, here’s everything you need to know about C2M.
Hailing from e-commerce giants in China, the Consumer to Manufacturer model connects end-producers and end-consumers to produce tailored products at lower prices. Platforms such as Pinduoduo—counting 536.3 million active buyers and 7 billion products sold in the first half of 2019—share consumer data with retailer enterprises, allowing them to better identify market demands and know exactly what consumers need, want, as well as their budget.
The consumer, via big data, approaches manufacturers with propositions of what they should produce: it is now the consumer who initiates production.
C2M is being referred to by some as the “fourth technology revolution” (after the steam-engine, electricity, and automation), and is expected to revolutionize the production and supply chain while reshaping the retail industry by prioritizing consumers’ needs.
C2M is essentially evolving traditional manufacturing from an R&D and marketing-driven process into a consumer-driven process.
VP of Corporate Development at Pinduoduo
In the traditional production model, manufacturers produce goods and approach consumers with the product trying to make sales. It typically takes more than 18 months to develop a new product under this system.
Data allows manufacturers to understand consumer needs and preferences, enabling products to be developed in a much shorter time and significantly increasing efficiency within the production process.
Reduced product lines, stronger economies of scale and a streamlined supply chain mean the end purchasing cost is decreased. Manufacturing enterprises can better realize product innovation and satisfy market demands, allowing them to offer a higher quality of products at lower price points.
Shenzhen’s Jiaweishi is a manufacturer of brand-name consumer goods, including Philips and Whirlpool. In 2018, they established their own brand of robot vacuum cleaners. When they started selling online through Pinduoduo’s “New Brand Initiative” program, they were granted direct access to huge buyer traffic.
Following the success of initial sales of the original robot vacuum, Jiaweishi is now able to greater improve their product and further increase sales:
• Based on the data collected from Pinduoduo, the robot vacuum’s randomized cleaning route to a more orderly one. The product’s appearance is being redesigned to make it more appealing to consumers.
• Consumer concerns with regards to the quality of an unknown brand’s product are being addressed via live streaming videos. These live streams make the manufacturing process transparent to consumers, while simultaneously spreading Jiaweishi’s brand name.
Want to learn more about the Chinese e-commerce market? Check out our guide:
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