C2M shopping is said to be booming in popularity, with new apps such as Pinduoduo giving consumers the power to group together to buy direct from the manufacturer and drive down prices.
C2M (consumer to manufacturer) could be worth £4.33 billion globally by 2022, and has the potential to drive the final nail into the High Street’s coffin, according to delivery firm ParcelHero.
ParcelHero believes that C2M apps will take Brits by storm when they arrive in the UK. In China, where it originated, traditional retail is reeling from C2M growth of over 24 per cent a year.
David Jinks, the ParcelHero’s head of consumer research, explained: “Using sites such as Pinduoduo and Biyao, online shoppers can purchase direct from the manufacturer. Users have the option to buy an item for its recommended price immediately or to team up with others to get a significantly discounted price.
“It’s a win-win situation for manufacturers and shoppers.
“For manufacturers, it cuts out the traditional middlemen – retailers – who traditionally take a hefty cut of the profit. Big data from C2M sites also gives manufacturers a clearer idea about the demand for their products. That means they are no longer spending money overproducing some items and getting stuck with unwanted inventory, while failing to keep up with the demand for other products.
“For consumers, the option to shop as a team slashes prices. China’s Pinduoduo app enables them to buy an item for a set price or to get a significantly reduced rate in a team purchase, ranging from a typical 20 per cent reduction to 50 per cent off or more. The shopper either starts a new team by inviting friends and family via social networks or joins an already existing group purchase.
“A team needs to be formed within 24 hours to have the order confirmed. Once a team is formed, the purchase is approved and the product is shipped within 48 hours.
“In China, a huge range of items, including cosmetics, car accessories, tech, clothes, groceries and takeaways, is available on C2M apps direct from their makers.
“Pinduoduo is the fastest-growing app in China and we believe that a similar app would have equal success here in the UK. Initially, however, there could be a few hurdles to overcome. China has far more manufacturers than Britain, which gives the likes of Pinduoduo a wider spread of products than would be feasible in the UK.
“Nonetheless, Britain has a huge number of relevant companies. For example, takeaways can join the app. So, if enough friends want pizza or chicken and fries, that could set the price of a takeaway tumbling by 20 per cent or more.
“Brits are well-accustomed to the concept of group buying, of course. Many consumers have signed up for the likes of Groupon, KGB Deals and Wowcher. These sites send selected offers to consumers and there are undoubtedly some bargains to be had.
“The attraction of C2M sites, however, is that they put the shopper in the driving seat. Individuals can kick off a team purchase on whatever item they want from an app, without waiting for special offers.
“The real question is whether a home-grown version will seize the British market or whether one of the Chinese giants will move quickly to conquer the UK. Pinduoduo already has an English language site.
“The other big question for retailers is where the growing popularity of these apps will leave Britain’s beleaguered High Street stores.”
In January 2017, ParcelHero released its ‘2030: Death of the High Street’ report. It concluded that, unless retailers developed an omnichannel approach, 40 per cent of all UK retail would move online by 2030. The impact of Covid, it says, could bring that figure even earlier.
“The move towards C2M certainly won’t help traditional stores in their fights for survival,” adds Jinks.
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