Why consumer-to-business is seen as the next e-commerce trend
Alibaba founder Jack Ma said in a recent conference in Hong Kong that digital economy is the future and customer-to-business will be the new trend. Either you adapt to it or perish.
In addition to the well-known Double Eleven shopping festival, Alibaba has been hosting a similar event on Dec 12, the so-called Double 12, annually since 2011.
Of a smaller scale, Double 12 serves as platform to experiment with new retailing ideas.
Starting from last year, Alibaba has been testing with the consumer-to-business approach to see how it works if consumers are given a bigger say.
From Dec 3 to 11, merchants can promote their offerings through social media, key opinion leaders (KOLs) and other marketing campaigns. During this period, customers can put the products that interest them into the shopping cart, but there is no actual transaction yet.
The digital platform would then observe and record the online traffic, like for each product, how many visitors have viewed it, how much time the visitors spent viewing it, and how many people actually put them into the shopping cart.
Alibaba’s artificial intelligence systems will run analytics and provide insight to merchants. They can then know beforehand what products stand a good chance to become a hit.
Merchants would therefore be able to place bigger orders and push down the costs through economics of scale, and pass on some of those benefits to consumers.
After all these, Alibaba will announce the final pricing on Dec 12.
Traditionally, retailers have to predict what products would become popular, ramp up production, and then stock up the outlets and hope they have made the right call.
But if they are wrong, it would lead to considerable wastage.
By contrast, the C2B model has reversed the relationship, enabling customers to tell merchants what products they like and therefore indirectly guide the production, logistics, pricing, etc.
Currently, the C2B model is still in the trial period. In the latest Double 12 event, nearly 100 million netizens participated, according to Alibaba. On average, the people put 15 products into their shopping carts.
With digitalization and C2B model, smaller merchants and individuals can also gain from global trade, Ma pointed out.
This article appeared in the Hong Kong Economic Journal on Dec 14
Translation by Julie Zhu
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