The Advent of Online Commerce: Mass Customization

In my opinion, Alibaba’s IPO is marking the beginning a new era for global e-commerce. It’s CEO, Jack Ma, mentioned in a July 2014 interview that C2B is an undeniable trend. He explained that “traditionally, business models are created with the assumption that a business will sell to other businesses (B2B) or simply to customers (B2C). According to Ma, “customers will soon completely dictate to businesses what their needs are. Technology driven by big data – what Ma referred to as data technology (DT) – will make it easier for companies to take care of their customers. “We will see a shift to C2B, in other words, it’s all about customization […] it is not about cost competition any longer, we have to compete against value”.

As e-commerce titans engaged into a race to the bottom on prices, costs and efficiency over the last 20 years, the next phase of growth in e-commerce should come from “customization enablers”, if we believe in Jack Ma’s thesis.

What are the implications for such trend? In order to take a closer look I’ve broken down the customization features into two types: 1) customer experience customization and 2) product customization.

1) Experience customization: potential enablers could be technologies providing a better understanding and contextualization of customer profile and behaviour, as well as better ways to integrate technological and logistics structures in a seamless customer experience. Examples of these are mobile clothing measurement technology in fashion, automation and personalization tools for site merchandising, targeted branding and gamification tools on social platforms, and so on.

2) Product Customization: potential enablers are customization tools, such as 3D printers, as well as marketplaces, platforms and communities that freely exchange user-generated information. In these models exist a direct customer-maker interaction loop, allowing for fast adjustments and made -to-measure production. Often times the makers are also the customers. Examples of product customization ventures include Etsy, Patreon, Shapeways, Thingiverse & Lost My Name. As explained in Chris Anderson’s book Makers, the manufacturing process is currently being redefined by open-source product development. Over the last years we have been observing an increase in commercially-viable applications based on crowdsourced contribution, with direct benefits to custom product innovation.

This list above is far from exhaustive. What other customization enablers exist out there? In all cases my guess is that online customer experience and products will look completely different in 10 years time, and customization trends will be a shaping force.