At the end of 2020, e-commerce giants revealed some "similar" sales records one after another.

Double National Day Middle School$JD.com Group-SW (09618.HK) $The top three products in sales of small household appliances were jointly created by JD.com and brands; based on the Amoy system, big data created 1800 products, occupying the top sales champion in Taobao's 235th subcategory.$Pinduoduo (PDD.US) $To guide the research and development of a thermal insulation cup, as soon as it was launched, the monthly sales exceeded one million yuan. The commonness of these achievements is that e-commerce platforms are personally involved in product development and design.

More and more new products are born in this way-the e-commerce platform is used to reverse guide the factory to develop new products, also known as the C2M model.

According to iResearch, the total transaction size of C2M e-commerce in 2018 was 17.5 billion yuan, accounting for 4.1% of the total e-commerce. China International Capital Corporation estimates that if C2M e-commerce can infiltrate 10% of China's total population, or about 140 million people, then the long-term market space is 251.1 billion yuan.

Not long ago, APP, a special version of Taobao based on the C2M model, announced that its number of users had exceeded 100 million. If you include Pinduoduo and JD.com, the development of the C2M model may have exceeded expectations.

China International Capital Corporation believes that e-commerce has gone through the stages of B2C and F2C in the past decade, and C2M is the next direction of industry evolution. However, in the past, e-commerce platforms usually only played the role of sales channels, but in the future, they have to use their own accumulated transaction data to design goods themselves and participate in the whole industry chain. Will they compete with merchants? Under the gorgeous sales growth stories, is the future really better?

The logic of defining "popular style" has changed.

In August 2020, Liu Weisheng came to Pinduoduo for an interview with a huge bag on his back. It was not him who was interviewed, but the thermos cup in the bag. They were put on the table one by one, waiting for Pinduoduo's new brand laboratory engineer to "test".

Liu Weisheng is the general manager of Schmidt household products of Zhejiang Feijian Group, which has worked for Starbucks Corp, Supor and other brands for many years. Since Schmidt joined Pinduoduo in 2019, product sales have been tepid.

In more than half of the family wealth that Liu Weisheng memorized, he thought that there was always one suitable for Pinduoduo. As a result, the answer is "neither".

In fact, this interview is Schmidt's first in-depth communication since joining the New Brand Program. Pinduoduo launched the "New Brand Plan" in 2018, through its own accumulated data, to provide suggestions for brand research and development of new products, to participate in product development and design, so as to create popular styles.

After analyzing nearly 100 million orders for related products on the platform, Pinduoduo found that consumers of insulation cups are mainly post-95 and post-00, mostly urban users, preferring products with simple design, lightweight and portable, and fashionable colors; in terms of materials, they have a deeper understanding of health and safety; functionally, they like the design of deep interaction.

Accordingly, Schmidt adjusted the development direction and customized a "intelligent warm show" insulation cup. This product was very popular after it was launched, and the monthly sales in the store exceeded one million yuan.

There are many cases like Schmidt on Pinduoduo platform. It is reported that since Pinduoduo implemented the new brand plan, more than 1500 enterprises have participated in it, resulting in more than 4000 customized products and 460 million customized product orders.

Many new popular styles on JD.com and Taobao are also created in this way. In 2020, JD.com participated in the design of more than 1300 new products in the direction of computer digital products, covering more than 30 categories, and the entire C2M project increased by 115% over the same period last year.

In an interview with Chinese Entrepreneur, Zhou Bowen, director of JD.com Institute of artificial Intelligence, once described the C2M system made by JD.com: using AI to understand the potential needs of users, "through a neural network to simulate the response of users, and then through another neural network to simulate how this product should be iterated. "

The principles of Taobao's use of C2M mode are similar. It is reported that Taobao has established commodity filing and planning capabilities based on big data, which can sum up the real needs of consumers into a system that integrates commodity functions, styles, design, and pricing through algorithms. the factory only needs to produce with these indicators.

For example, the Taobao team found that the demand of "town youth" for hairspray products not only had a styling effect, but also had a fragrance-enhancing effect, so they contacted the factory to produce the products. As soon as the new products were put on the line, 200000 pieces were sold.

In the past, brands usually needed a lot of research and discussion for marketers to launch a new product, but now, with the growing user data every day, e-commerce platforms seem to have an advantage to do so. When to launch new products, what kind of new products, and how to price them, can be handled more quickly by artificial intelligence. The products created in this way are easier to generate popular styles, increase the trading volume and exclusive products of the e-commerce platform, and increase the attractiveness to consumers.

Data represents the preferences of consumers, compared with factories and brands, e-commerce platform has formed a huge advantage in data, and the advantages continue to expand. For contract manufacturers, this will add a retail sales channel, but for brands on the platform, it may not be good news. The important question is, how will the e-commerce platform use this capability in the future?

Secret battlefield

At present, e-commerce platforms mostly package and export the capability of C2M to specific cooperative factories and brands. But not only that, for example, JD.com has begun to personally promote his own brand.

According to officials, JD.com created a "virtual CEO" for the factory by opening up JD.com 's capabilities in product selection, channel penetration and supply chain incubation to high-quality factories.

JD.com has launched four free brands, JD.com made in Beijing, Huixun, Jiabai, LATIT, covering clothing, fitness equipment and other different categories. And this will more or less compete for the same brands on the platform, resulting in a certain impact.

The power of the e-commerce platform to invest heavily in C2M is not difficult to understand. According to public data, the volume of "new products" accounted for about 40% of the market in the e-commerce shopping festival in 2020, which has become an important driving force for overall consumption. As a result, the platforms began to personally promote the innovation of goods.

On the other hand, the products of different e-commerce platforms are becoming more and more homogeneous, and the growth of users is also reaching the ceiling. And new products bring new consumption. In the first half of e-commerce, everyone emphasized transaction efficiency. When transaction efficiency reached saturation, e-commerce platforms had to go upstream to solve production problems to promote the birth of new products.

Liu Qiangdong once put forward the theory of "ten sugarcane", saying that JD.com should extend from the "last five sugarcane" of marketing, trading, warehousing, distribution, and after-sale to the "first five sugarcane" of creativity, design, research and development, manufacturing, and pricing, and penetrate deeper into the industrial chain. This should also be Pinduoduo,$BABA-SW (09988.HK) $The consensus.

According to JD.com, it has generated data collaboration with more than 55 per cent of brands to help forecast sales of more than 5 million goods. more than 300000 supply chain intelligent decisions are given every day, and the sales of reverse customized C2M products in 2020 are 1.7 times that of 2019.

Similar to the field of industrial products, the C2M competition of agricultural products is also going on. BABA has built more than 2500 fresh brands by aggregating ecological advantages such as Taobao, Tmall, Box Horse and Da Runfa in 2020, and has realized a self-supporting and direct supply circulation network of agricultural products by setting up logistics networks such as origin warehouses and sales warehouses.

Similarly, Pinduoduo launched the "straight hair of origin" of agricultural products, providing cooperative farmers with comprehensive measures such as personal docking, resource tilt, and activity support, to expand their own uplink system of agricultural products.

It can be speculated that the ambition of e-commerce is not only to be an e-commerce retail platform, but also to break through the industry and become an "industry chain service platform". The in-depth transformation of the industrial chain can bring more lasting and long-term benefits and moat to the platform. It can be predicted that the competition for factories and agricultural production areas will be more intense when taking over the e-commerce platform.

Responsibility for change and Future Business pattern

With the huge amount of users and data accumulated by itself, the voice of e-commerce platform in the industry chain is getting stronger and stronger.

Moreover, long-term consumption trends are also driving the C2M model. According to the Wanlian Securities report, 73.8% of the middle-income group pays attention to performance-to-price ratio in consumption, ranking third in importance, after product quality and time savings.

China International Capital Corporation believes that platform enterprises such as e-commerce platforms and industrial Internet platforms in the future will have the ability to lead the construction of the C2M model.

However, given that the C2M model revolves around creating individual popular styles, this raises concerns that these explosions will further reduce the market share of other brands. At the same time, after logistics, warehousing, trading, design and payment are all in the hands of e-commerce platform, the discourse power of brands and factories will be further transferred to e-commerce, which may become more "weak".

At present, C2M is still in its infancy, just like a person in the process of growing up, with the growth of age, the body will become bigger and the ability will become stronger, but the responsibilities in the society and family should also be increased accordingly.

In the process that the e-commerce platform relies on its own accumulated users and big data gradually penetrates into the industry, its impact on the upstream and downstream industries is also increasing.

With the Internet ushered in more stringent supervision, how to balance the interests of all parties in the industrial chain will be the key to the smooth development of the new business model of the e-commerce platform.