Is Western Luxury Ready For China’s C2M Model?
The fashion industry has traditionally been a descending, authoritative system where brands dictate what consumers want to purchase by continually refreshing their designs. This concept that design should come before demand has rarely been challenged. But one recent trend disrupting this power balance in China is the Consumer to Manufacturer model (C2M).
Consumer to Manufacturer (C2M) has two main variations. In its original form, factories create products customized for customer needs and preferences. The second (a development of the first) sees e-commerce platforms like Alibaba, JD.com, and Pinduoduo use big data and AI to help factories and brands pinpoint these preferences. There are several complementary strands – such as customization, personalization, and bespoke products – that align with this model.
Many have predicted that C2M will be a new driver in the e-commerce landscape. In 2019, 420 million C2M-related bookings and sales were made in a single day during China’s 618 (the country’s second-largest online shopping festival). According to data from the Chinese research company iResearch, this market reached $2.5 billion in 2018 and is estimated to total $6 billion by 2022, which includes a compound annual growth rate of 24.4 percent. Though still a small percentage of China’s total e-commerce market, it’s a model that crucially enables brands to better address issues of inventory, supply chain efficiency, and demand.
Moreover, recently, the divide between what the designer, stylist, or merchandiser produces and what the customer wants to buy is becoming increasingly divergent. Insta-famous brands, See Now, Buy Now, and DTC [direct-to-consumer] models are all flourishing; C2M is another indicator that brands which fail to listen to consumers on product preferences and launch times will miss a trick.