Welcome To The C2B Era - What Entrepreneurs Can Learn From Alibaba's Jack Ma
Alibaba's self-made Founder and CEO declared open the era of C2B, or Consumer to Business. Customers will soon completely dictate to companies what they need from them.
Until now, a start-up entrepreneur had two options to choose from when establishing the core of the business model: either you were B2C (Business to Consumer) or B2B (Business to Business) or a combination of both. In his speech Softbank World 2014, Alibaba’s self-made Founder and CEO declared open the era of C2B, or Consumer to Business.
What he implies by this statement is that customers will soon completely dictate to companies what they need from them. Only will thrive those who adjust and accommodate.
The future will be all about customisation, according to Ma. There are currently eight major trends at play that back his paradigm-shifting vision.
Global Market & Hyper-Localisation
Globalisation is no longer a paper concept. What with China and India entering the WTO in 2001, borders and restrictions coming down year after year, geopolitical trends have been heading in that direction for a while. The latest technological innovations have enabled the idea in reality, now that we all have Internet-enabled smartphones in our pocket to communicate with everyone on the planet.
A global market doesn’t necessarily mean that popular products can be distributed on a worldwide scale. To find global success, a company from a given country must export culturally adapted versions of its products, adapting to the local tastes of many different domestic markets.
In fact, a company can even sometimes establish success first in a country far away from its headquarters, as demonstrated by Disney’s Tsum Tsum craze in Japan for example.
Digital Distribution & Software As A Service
With the advent of smartphones and tablets, another paper concept came to life: Digital Distribution. Music, movies, series and video games can now all be consumed over the air, without the need to buy a physical component anymore. Virtual goods deliveries present way less overhead than traditional items: businesses don’t need to store them or ship them, and there is no reproduction cost tied to them. If at first, this represented a boon to increase sales volumes with ease, the phenomenon has also allowed the emergence of a new business model: Software as a Service (SaaS).
SaaS is the heir of the “Freeware” model, through which users can try the software for free, and purchase additional features through micro-transactions. The model has become dominant in gaming, a sector in which it is dubbed “Free to Play” or “Freemium”. It is also widely adopted by new B2B start-ups nowadays, which provide a basic service to their clients on the cheap, and then find ways to charge the top-tier accounts that use a feature or another a bit more than average.
When applied directly in B2C, the model tends to increase the power of influence for consumers. In order to generate success, the Free-to-Play model often means that the game developer must deliver frequent content updates, with new levels, new characters, new features and new powers. The best way to deliver the right content, which will guarantee an uptake in revenue, is and remains to listen to your existing audience as to what they want next. As opposed to the product era, where you would just ship the final iteration and customers had no other choice than to either buy as is or pass on the offer, this subtle shift in the relationship has consequences that run deep.
Obviously, social media, now a common part of our daily lives, are the means for brands and companies to turn to fans and listen to what they want. For consumers, social networks are a place to get in direct contact with the brand and voice their concerns. Ultimately, due to their public nature, the social networks can become the point where to apply pressure for a change in policy or strategy. Even the ending of a million-selling mainstream video game like EA’s Mass Effect 3 can be altered through public outcry nowadays. Combine this with Software as a Service and you get pretty strong dynamics for consumers inspiring and at times even leading creators into a direction or another.
And it’s not just Facebook or Twitter. Sina Weibo, QQ and TenCent WeChat give you access to hundreds of millions of people in China.
VKontakte pretty much puts the Russian population at your fingertips. Ask.fm lets anyone and everyone interview members, without any form moderation from a talk-show host. As for Pinterest, its ever-growing impact on ecommerce sales demonstrates how Social Media are bound to become deeply intertwined with fashion, trend-setting and goods consumption.
User Generated Content
YouTube, Twitch.TV, Instagram, DeviantArt – all these platforms completely rely on their user-base to generate content and keep them alive. Along with social media, the UGC phenomenon is changing mentalities everywhere and is therefore pervasive even in more traditional business spheres. Many entertainment productions integrate some UGC component in their Marketing campaigns, hoping to boost virality this way. There are countless examples of video games that implement the means for User Generated Content in their franchises, be it by encouraging “mods”, by allowing live video-sharing in one touch, or by baking level editors into the product.
The trend is no longer limited to the digital world. Look at Pepsi’s Spire experiment: the drink customisation machine allows consumers up to 1000 flavor combinations. When Lays runs country-based contests allowing people to submit their idea for new flavors of chips and then produces the winning idea en masse, it is essentially crowdsourcing ideas, and that is also a form of UGC.
With the rise of Kickstarter, and other more niche crowdfunding platforms such as Indiegogo, Pubslush, YouCaring, Seed&Spark or GiveForward, consumers now have the possibility to vote with their wallet right at product inception and incubation. Forget fixing and updating products after release based on social media feedback.
Now companies can turn to fans with an early demo or even a paper-concept and not only ask them if they would buy, but actually give them the opportunity to preorder the thing right now, providing the project with funding to materialise in the process. For creators and inventors, the eco-system allows them to “trial & error” ideas on a much smaller budget. For consumers, it increases their power over what gets made and what gets shafted at prototype stage.
The TaoBao Model
If you’ve looked into Alibaba, you probably have discovered that a huge chunk of its profits and success comes from a platform called TaoBao. To get a quick idea of what TaoBao is, think eBay meets Etsy, with the China manufacturing backbone behind it.
Alibaba.com at its origin was a web site listing thousands of Chinese factories offering production outsourcing services in a wide variety of sectors. This was a B2B web site, where foreign businesses would come and find the right manufacturer for the products they wanted to produce or export. The minimum order quantities were in the thousands of units.
When TaoBao emerged, it allowed consumers to trade between themselves, same as eBay does, but it also tapped into its existing database, enabling factories and even farmers to become direct-to-consumer businesses overnight, through its order fulfillment centers and services. With the rise of the Chinese middle-class, the sheer domestic demand of over 400 million potential consumers has represented for these manufacturers a true shift of paradigm, for which TaoBao has acted as the catalyst.
TaoBao is the core reason why Alibaba’s Jack Ma is so confident about his C2B prediction. This is the place where he sees it happen first in his imagination. If direct manufacturers-to-consumers relations are already streamlined, all you need to add into the mix is customisation options for all goods on offer and voilà – Welcome to the C2B era.
Another major drive for this era of full-on customisation definitely is 3D printing. Although we are still far away from the distant future when every household will have a good quality color 3D printer at home, allowing businesses to deliver physical goods in file format direct to consumers.
Right now, not many people have 3D printers at home, and those who do, tend to settle for the cheap entry-level monochrome model, which doesn’t enable manufacturing of commercial quality goods. On the other hand, the high-end full color printer from 3D Systems only costs €48.000 at the time of writing, which has given ideas to many a startup in the merchandising/licensing field.
Sculpteo, a French company focusing on 3D printing, has struck major deals with for example Adobe to let you order a physical production of any 3D file you create in Photoshop. Shapeways has entered agreements with Hasbro to a run a SuperFanArt initiative, through which fans can create and even sell 3D print designs based on the My Little Pony franchise. Amason is also getting in on the action.
In the video games industry, a bunch of new start-ups are hard at work to build in-app merchandising solutions that completely revolve around 3D printing. Toyse enables players of Cut The Rope and Pou to make personalised 3D printed items based on in-game characters and virtual pets, then get them delivered at their doorstep. In similar fashion, Chair and Sandboxr let you 3D-print high-quality figurines in Infinity Blade III.
Infinity Blade III
Even more interesting as to what the future bodes, GLU mobile has partnered with Ntensify end of last year to try out an innovative angle in their mobile game Deer Hunter: the option to purchase 3D printed merchandise was tied to in-game achievements. Only if you completed a level with a particularly high-score, or if you reached the top of a leaderboard, or reached a key point in the game, were you offered the opportunity to 3D print a unique trophy to materialise that moment. The object you chose to 3D print and order would engrave your personal score within the design. This is in my opinion where 3D printed swag gets the most exciting: fully personalised and customised designs tied to memorable events and moments.
Now with the new ChefJet 3D Printer from 3D Systems, another possibility is 3D printing of computer-designed desserts and candies, thereby adding edible marketing into the mix of options to play with. Metal is coming next. Just imagine for a second what big game universes with massive player bases, such as Angry Birds or League of Legends, could do if they rolled with this line of thinking. Now think for a second how blockbuster movies and music superstars could also capitalise on this trend. This is not the distant future of 3D printing – This is just around the corner.
The Internet Of Things
It’s been about a decade since electronic manufacturers and software developers have been preparing for wearable computing and intelligent home appliances. Smart watches are just the first wave. Soon enough we’ll have fridges capable of figuring out that we need to order more butter before the weekend based on our usual consumption, then sorting out promo offers from e-tailers’ digital catalogs, before automatically placing the right order based on brand preferences and pricing, all this without any form of human intervention.
In coming years, there’ll be CPUs in pretty much everything we own or wear. As opposed to a device, clothes we wear are highly dependent on taste and culture. Therefore, it will only be natural for electronic manufacturers to team up with fashion designers going forward.
In a second phase, it’s totally within grasp to imagine that social media, UGC and 3D printing will all be assimilated by the movement, and that components will eventually be available to the hobbyists, ushering us into an era where there will definitely be unique pieces of smartwear. A company called Normal already 3D prints earplugs that are specifically designed for your ears.
Disney can turn any 3D printed item into a speaker. It’s only a matter of time before all this research and technology is merged together into applications that will allow for consumers levels of customisation that go well beyond past and present boundaries.
We have forever had this saying in business circles that “customer is king”. This was always more of an abstract principle, an ideal that we all knew we couldn’t take literally. It’s about to become reality.
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