China’s consumer-to-manufacturing (C2M) model is expected to become a new driver in shaping the country’s e-commerce landscape, not only bringing new growth points for the retailers and manufacturers but also better addressing user demands.
The model connects manufacturers and consumers for the production of tailored products at lower prices. Through the application of AI-powered data analytics, online retailers, consumer brands, and AI companies are jointly making mass-customization possible in China.
While still new to outsiders, C2M has already garnered lots of attention domestically thanks to the rapid rise of e-commerce platforms such as Pinduoduo and NetEase’s Yanxuan that have already adopted the model.
“C2M is essentially evolving traditional manufacturing from an R&D and marketing-driven process into a consumer-driven process,” explained Victor Tseng, vice-president of corporate development at Pinduoduo, during a TechNode Emerge panel at TechCrunch Shenzhen on Monday.
Importance to manufacturing
China’s manufacturers are in dire need of new approaches and technologies to find new growth points. The sector is experiencing a general decline in demand. The consumer price index grew 3.8% year on year in October, the fastest rate since January 2012, while industrial profits fell 5.3% a month earlier under pressures from US trade tensions.
With China’s 800 million+ e-commerce users making up nearly half of the global online shopping market, e-commerce has become a key channel for Chinese manufacturers to better understand user preferences and predict sales.
Even automakers are engaging with C2M firms amid a prolonged slump in sales. Pinduoduo held a team purchase promotion with car dealers during this year’s Double 11 shopping festival. Some 3,100 cars from five major auto brands were sold in just nine hours.
Manufacturers didn’t just receive a one-time sales boost, according to PDD’s Tseng. More than 20,000 indications of interest were registered for the promotion. Carmakers were able to gain an insight into demand and better predict consumers’ intent to purchase, he said. This could help them optimize manufacturing and save money at multiple stages, and these savings could trickle down to consumers.
C2M has gained momentum over the last two years due to two major shifts, said Dan Kong, senior investment director at North Summit Capital, during the panel. “The first factor is that users’ demands from different channels are different. Secondly, technological advancements in big data and AI, are enabling change. The key for C2M is to connect consumers and manufacturers through data and computational infrastructure,” he said.
Users’ needs, especially those of younger generations, are diversified, while user channels are greatly segmented. They include a host of online marketplace platforms such as Taobao, Pinduoduo, and Douyin, said Kong.
Customization options for consumers were previously costly and limited to luxury product categories, said Chadwich Xu, CEO and co-founder of Shenzhen Valley Ventures, during the panel. He echoed Kong’s view that the ever-sophisticated demands of younger generations that typically celebrate their individuality, and want more personalized products, have accelerated the rise of C2M.
With contributions from Jill Shen.