New apps are giving shoppers the power to buy direct from manufacturers and group together to reduce prices. C2M is a £4.33bn market that could drive the final nail into the High Street’s coffin, says ParcelHero.
Team purchasing on apps such as Pinduoduo puts online shoppers in the driving seat, says ParcelHero. (Courtesy ParcelHero/Copyright Pinduoduo Inc.)
C2M (consumer to manufacturer) shopping is booming in popularity. New apps such as Pinduoduo are giving consumers the power to buy direct from the manufacturer and drive down prices.
The home shopping expert ParcelHero says C2M apps will take Brits by storm when they arrive in the UK. ParcelHero’s Head of Consumer Research, David Jinks M.I.L.T., forecasts C2M online shopping will be worth £4.33bn globally by 2022. It originated in China, where traditional retail is reeling from C2M growth of over 24% a year.
‘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% 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. 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% 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.
‘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. 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…
‘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 a high-profile 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 means we will reach that figure even earlier. The move towards C2M certainly won’t help traditional stores in their fights for survival.