Not just wholesale! 1688's ambition for the C-end is revealed

In recent years, 1688, a traditional wholesale platform, has been quietly transforming, targeting the C-end market and launching a membership store model. With high cost-effectiveness and flexible shopping methods, 1688 has quickly attracted the Z generation and new middle-class groups in first- and second-tier cities who are pursuing cost-effectiveness and sideline opportunities. This move not only broadens the market space, but also provides merchants with the opportunity to step out from behind the scenes and build brands. At the same time, it also faces challenges such as changes in user habits and improvement of service capabilities.

The membership model is really popular.

Costco's Q1 performance this year also grew by 6.2%, with a net profit of US$1.589 billion, higher than expected and higher than the same period last year.

Recently, Walmart’s Q2 quarterly financial report showed that membership revenue increased by 23%, and Sam’s Club’s global membership reached a new high;

Recently, even 1688, a subsidiary of Alibaba, has once again stepped up its efforts in the C-end (individual consumer end) track and tried the membership store model. It is said that it will provide individual consumers (members) with periodic purchases, bulk purchases, scene purchases and customized purchases.

You should know that 1688 is Alibaba’s “online wholesale market” with an annual transaction volume of 800 billion yuan. It has always been doing wholesale business with B-end small and medium-sized enterprises.

It is really necessary. Even if it involves 2B, we should also compete with 2C.

However, why does it want to increase its C-end business? Why do these C-end users like 1688? Who are they? What new opportunities are there?

This is something we as entrepreneurs and marketers can explore.

I am very curious, who are the C-end users on 1688?

The data shows that 1688's C-end consumers mainly come from first- and second-tier cities, among which Generation Z aged 25 to 30 accounts for 48.8%, and the new middle class aged 30 to 35 accounts for 44.9%.

These user portraits are similar to the population portraits of the Xiaohongshu platform. They like new things, are keen on trying new things, and have huge purchasing power.

Unexpectedly, these young people don’t even go shopping in physical shopping malls, but go to this large online wholesale market.

Why is this? I asked people around me and found two main reasons.

First, cost-effectiveness.

After the outbreak of the epidemic, many people became more rational in their consumption, from pursuing brands to focusing on cost-effectiveness.

It just so happens that 1688 has always been focusing on having source factories and no middlemen to make a profit from the price difference. There are more than 100 million kinds of products, and you can choose any of them, and they are cheap to buy. They are definitely alternatives to big brands, with high quality and low prices.

Someone has made a special comparison. Taking a mustard macadamia nut from Sam's Club as an example, at the same weight, its price on the 1688 platform is only half of the original price.

Looking at it this way, it smells really good.

Second, the need to make money from a side job.

During the epidemic, in addition to shopping for their own use, many people took on part-time jobs (transformed) as bloggers and opened small-scale stores, starting with one piece. They are keen on "making money" and are also happy to talk about money. They also share and spread the word, so more and more young people are going to 1688.

With so many C-end consumers pouring into 1688, this cannot be wasted. As a platform, we must be thinking about how to convert it into more GMV.

Therefore, it is necessary to increase investment in C-end consumer business.

However, this matter also brings both risks and opportunities to 1688.

Opportunities:

• By serving C-end consumers, especially young groups, we can open up new market space, meet personalized and customized needs, and increase our own GMV.
• It complements Taobao's business, meets the Z generation and the new middle class's pursuit of cost-effective and personalized products, and consolidates Alibaba's market share.
• Provide 1688 merchants with an opportunity to switch from white-label to branded products. In the past, they only supplied goods, competed on price, and earned profits from the supply chain. Now, facing the C-end, they can move from behind the scenes to the front stage, face consumers directly, listen to their voices, build their own brands, have more initiative, and have greater profit margins.
• It may give rise to and incubate a number of new consumer brand companies.

Risks and challenges:

• User habits: 1688 has traditionally focused on serving the B-end market, and shifting to the C-end may face challenges in terms of changes in user habits and platform image.
• The service capabilities of platforms and merchants need to be improved. Providing services to the C-end may require improvements in logistics, after-sales and other aspects, which requires additional investment and resources.
• The lack of experience and ability to serve the C-end will easily damage the shopping experience of C-end consumers and cause negative reputation and impact in a short period of time.

However, now all industries are involuted. 1688 takes advantage of the supply chain and tries to face the C-end, which is also an innovation. In the end, only innovation can break the involution.