Manufacturer-C2M or Platform-C2M: Comparative analysis of an innovative e-commerce model

Taking advantage of big data, platforms have begun to mine consumer insights and incorporate them into the development process to drive product success, which is known as the customer-to-manufacturer (C2M) model. In this paper, we consider a setting where a manufacturer distributes products through an online retail platform and examine two typical C2M modes: one in which the platform sells data to the manufacturer, who then engages in C2M cooperation and develops new products (i.e., the Manufacturer-C2M mode); and the other in which the platform retains the data and takes charge of all decisions related to C2M innovation (i.e., the Platform-C2M mode). Our analysis shows that product prices in the Platform-C2M mode are generally lower than those in the Manufacturer-C2M mode when both firms successfully innovate. Moreover, when the platform demonstrates higher relative efficiency than the manufacturer, it invests more effort and achieves a higher success rate in product development, and vice versa. We further show that the preferences of the platform, the manufacturer, and consumers across the two C2M modes are primarily driven by the data volume and moderated by the firms’ relative efficiency. As the manufacturer’s relative efficiency improves, he becomes more inclined to favor the Platform-C2M mode. Notably, platform-led innovation does not always benefit consumers more. Alignment among the platform, the manufacturer, and consumers can emerge under the Manufacturer-C2M mode when the data volume is moderate, resulting in a “win–win–win” outcome. Our findings offer useful implications for both industry practice and policy governance.