C2M – consumer to manufacturer – will be a £4.33 billion market by 2022 and could drive the final nail into the coffin of High Street retailing in the West, according to London-headquartered ParcelHero

New apps such as Pinduoduo are giving consumers the power to buy direct from the manufacturer and drive down prices through C2M online shopping. It originated in China, where traditional retail is reeling from C2M growth of over 24% a year.

It’s a win-win situation for manufacturers and shoppers. For manufacturers, it cuts out the traditional middlemen – retailers. For consumers, the option to shop as a team slashes prices.

“Using sites such as Pinduoduo and Biyao, online shoppers can purchase direct from the manufacturer and have the option to buy an item for its recommended price immediately or to team up with others to get a significantly discounted price,” explains ParcelHero head of consumer research David Jinks. “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% reduction to 50% 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, he adds. 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 clothing, cosmetics, car accessories, tech, 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,” adds Jinks.

Hurdles

Initially, however, there could be a few hurdles to overcome. China has far more manufacturers than the UK, which gives the likes of Pinduoduo a wider spread of products than would be feasible in the UK.

“C2M sites are particularly aimed at young consumers who think of shopping as a social activity, so there are also games, free products and social activities on the Pinduoduo app,” Jinks says. “It makes an excellent retail environment. 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…”

In January 2017, ParcelHero released the report: 2030: Death of the High Street. It concluded that, unless retailers developed an omnichannel approach, embracing both online and physical store sales, 40% of all UK retail would move online by 2030. The impact of Covid-19 means that figure will be reached even earlier, the company believes.

www.parcelhero.com