Digital Flips The Equation To Consumer To Business, Or C2B - Forbes

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For the past two decades, “B2C” (business to consumer) and “B2B” (business to business) have been firmly embedded within our digital lexicon. Now, one of the world’s digital leaders suggests flipping the well-worn acronym B2C around, as digital has reached the point in which is is completely reversing this value flow.

Ming Zeng, chief of staff and strategy advisor to Alibaba Group and author of Smart Business: What Alibaba's Success Reveals About the Future of Strategy, says the global economy is experiencing a shift away from business to consumer (B2C) and toward "customer to business," or C2B.

“The C2B mindset turns the traditional business-to-consumer concept on its head in profound ways,” Zeng writes. “When business decisions are driven by machine learning through feedback loops, the firm’s actions can finally be dictated by the customer.” However, it’s not an overnight process, he cautions. “Making any one function of the business operate is difficult. When a firm starts retooling any given activity, it has to subsequently retool every aspect of its operations, from branding to product design to manufacturing. Only once processes are functionally independent but smoothly and automatically integrated, firms can then create products and services in concert with users, with key production and design decisions informed by this interaction. In doing so, the entire firm’s operating model runs on network coordination and data intelligence.”

Once in place, such a C2B-focused company has immense competitive advantage. I recently had the chance to discuss the implications of this with Zeng, who points out that the Internet “makes it possible to interact with massive customers directly in real time. All leading Internet companies are already serving billions of customers daily. These innovative practices are spreading throughout the whole economy.”

What are the most important technology platforms and tools to enable this rapidly acceleration evolution to C2B? All of today’s technologies – such as marketing automation, CRM, digital commerce platforms – are important, Zeng says, “because you need to move end-to- end operation online, only by then, will you have a true close loop C2B model. You need to digitalize human work, maybe leveraging a lot of new IoT technologies; you need to run every operation on a new SaaS platform; and you need to build new data center and new AI processing capabilities on cloud. Of course, in practice, most companies would do it step by step, starting with online marketing and sales first, and then trying CRM.”

There are obstacles that need to be addressed before companies achieve a greater degree of personalization, Zeng points out. “A C2B model, by default, achieves mass customization. For many people, grasping the truce spirit of the C2B model is a very difficult first obstacle, because it actually requires experience and expertise with Internet, datafication, SaaS, and algorithms. This takes a lot of commitment and learning by doing.”

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On-demand product development and manufacturing, in which the customer is an active participant, also is enabled as a part of digital transformation. In most cases, however, “these developments are still at very early age,” Zeng cautions. “Innovations in these areas are concentrated in just a few industries, such as fast fashion and home decoration.”

For on-demand product development to happen in a profound way, “companies first have to build on-demand marketing, to build direct access to customers, and then build online community with customers,” Zeng advocates. “Only then can you start the process of customer engagement in product development.”

In addition, greater digitization is required. “You also have to move in-house development process online, which is a challenging task that demands both Internet capabilities, as well as deep domain knowledge,” Zeng states. “For example, in the fashion industry, an important bottleneck of moving product development online is the stage of patterning, when a design has to be made into an actual product to see how it is fit for mass production. This traditionally requires very experienced tailors and takes a long time to finish. If this step is not digitalized and moved online, it is impossible to incorporate constant and numerous customer feedbacks into actual product development process.”

In what ways can companies open up to customers and partners to support a more robust C2B approach? “Move as many steps in your whole supply chain online as possible,” Zeng advises. “This is the foundation for C2B model and for any business to become smart. In traditional industries, many steps are still handled by man, and hence companies cannot benefit from the new technologies. For example, inspection of cloth is still done by human, rather than machine, and it is the bottleneck for moving procurement online in fashion industry, and hence this part of supply chain cannot be made customer driven, as data cannot flow through the whole chain.”