Consumer-to-manufacturer (C2M) Business Model

Consumer-to-manufacturer (C2M) is a model connecting manufacturers with consumers. The model removes logistics, inventory, sales, distribution, and other intermediaries enabling consumers to buy higher quality products at lower prices. C2M is useful in any scenario where the manufacturer can react to proven, consolidated, consumer-driven niche demand.

Understanding consumer-to-manufacturer

Consumer-to-manufacturer is a disruptive form of consumer-driven demand-shaping, combining elements of social selling and tech-enabled consumer aggregation. In recent years, C2M has enjoyed a resurgence in interest thanks to advances in technology.

Interactions between the consumer and manufacturer are nothing new. Manufacturers collect consumer data to better gauge trends and develop ideas for innovative products. Indeed, smaller manufacturers already undertake direct-to-consumer selling on farm-to-table platforms and eCommerce sites such as Taobao and Douyin.

However, a key characteristic of C2M lies in the initiator of demand. Rather than fulfilling one order at a time, manufacturers receive real-time feedback on demand for specific and customized products. Feedback and product demand are wholly community-driven, allowing the business to passively source important metrics regarding consumer preferences, location, or behavior. Importantly, the manufacturer does not produce an item unless it has been ordered by a consumer first. 

Fundamentally speaking, the C2M strategy involves consumers collectively approaching the manufacturer with what they should produce. The strategy differs from traditional methods where the manufacturer approaches consumers with what it could produce.

Where is C2M most suited?

C2M is useful in any scenario where the manufacturer can react to proven, consolidated, consumer-driven niche demand.

Note that C2M will not be able to compete in marketplaces where common products are easily sourced. Here, product demand is more predictable and is already being met by manufacturers.

Instead, consumer-to-manufacturer should be employed to analyze niche demand infrastructure within specific verticals such as insurance. In this context, demand is more difficult to detect. It typically occurs in industries with high production costs for high-value or high-importance items. 

Real-world examples of customer-to-manufacturer

The Customer-to-manufacture strategy has seen great success in China with several apps helping Chinese enterprises respond to consumer demand.

In 2018, the Chinese eCommerce platform Pinduoduo (PDD) launched its “1,000 New Brand Initiative” giving small and medium manufacturers access to huge buyer traffic. 

Consumers use Pinduoduo to buy full-price items or get a discount if they invite others to participate in a group purchase. In most cases, the discounted order is shipped once a certain number of purchases has been met. 

Manufacturing company Jiaweishi used C2M to redesign the appearance of its robotic vacuum cleaners and give them a less randomised cleaning route. As a new brand, it also live-streamed the manufacturing process to allay consumer concerns over product quality.

Cookware company Sanhe also used C2M to great effect. Although one of Europe’s biggest cookware manufacturers, PDD helped the company identify strong domestic demand for its pots made with the same quality and craftsmanship as export models. This demand was backed by consumer data on product functionality, material, and color. Sanhe also received valuable data on the age, gender, and spending power of its Chinese market.

Key takeaways:

  • Consumer-to-manufacturer allows consumers to purchase directly from the manufacturer. With most third parties omitted, consumers get access to higher quality products at lower prices.
  • Consumer-to-manufacturer is less effective in general product marketplaces where demand has been met by established players. Instead, it is more useful in industries with hidden demand and higher product pricing or production costs.
  • Consumer-to-manufacturer has been popularised in China by eCommerce apps such as Pinduoduo. The company behind the app uses technology-driven insights to help Chinese enterprise produce products based on consumer demand and preferences.

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Published by

Gennaro Cuofano

Gennaro is the creator of FourWeekMBA which reached over a million business students, executives, and aspiring entrepreneurs in 2020 alone | He is also Head of Business Development for a high-tech startup, which he helped grow at double-digit rate | Gennaro earned an International MBA with emphasis on Corporate Finance and Business Strategy | Visit The FourWeekMBA BizSchool | Or Get The FourWeekMBA Flagship Book "100+ Business Models"