On May 26, Professor Zeng Ming delivered a speech at the Tmall Smart Supply Chain Open Day forum, where he introduced the concept of S2b, an innovative thinking about the future of new retail and new business. S represents a large supply platform that will better empower many small b's to serve their customers. This is not a traditional franchise system but an innovative collaborative network. Only on the basis of this increasingly vast and close collaborative network can we move towards C2B, the most important business model of the future. The following is the full text of the speech: I am very glad to have the opportunity to share with you today. You are already guessing what S2b means? This is a term I coined in the past two days. I will explain it slowly, and it is also my thinking about the future of new retail and new business during this period. As the core of a company's strategic decision-making, the most important thing is to have a ultimate judgment about the future development of the industry. After many years of thinking, when I chatted with Jack Ma in 2012, we came up with the concept of C2B, capturing the future development trend. This should be the most important business model in the Internet era and the data era, and also the most basic way of thinking. The C2B model is the most fundamental subversion of the B2C model of the traditional industrial era and the most important work of new business innovation. Only when C2B begins to rise on a large scale will the entire business chain be completely reconstructed by the Internet. B2C and C2B do not seem to be a simple reversal of order; in fact, it is a change in the entire business logic, and also a change in the basic model of the entire business network from traditional supply chain to network collaboration. It can even be said to be a revolution in business paradigm. We often say that Alibaba is doing e-commerce, using so-called electronic, that is, a series of new era technologies such as the Internet, big data, and cloud computing to transform our traditional basic business infrastructure. Only when this transformation is completed will it be the real new business era. After years of observation, including research on various customized enterprises, C2B has made some progress in certain industries, but overall C2B is still a relatively distant goal and will not be applied on a large scale in most industries for the time being. However, in the five years from 2018 to 2023, we have seen the rise of a new business model. Based on this, we have proposed a new business model, S2b. Why do we still think C2B is the most core business model in the future? 1. The Internet is the most important technological development foundation First, the Internet is the most important technological development foundation of our era. We can see from the earliest PC Internet to the mobile Internet that started in 2007, and now the IoT revolution that is beginning to start. Its ultimate goal is to connect anyone, anything, time, and place, and to interact in real time. This is a true era of the Internet of Everything. In the future, everything will be online. We will move from an offline physical world to an online bit world. The industrial era is the greatest innovation in human history. The wealth created by industrial civilization in one or two hundred years is the sum of all civilizations since prehistoric times. So the industrial era solved the most fundamental problem, which is the problem of shortage economy. In the agricultural era, humanity lived on the edge of poverty, with extreme material scarcity. But the industrial era solved the problem of supply scarcity. The core was to use standardization, assembly lines, and large-scale production to reduce costs. It sacrificed personalization, but with such a new B2C model, from large circulation and large advertising, such a complete system brought us the prosperity of the past hundred years. But in the 1990s, we already felt that the entire society had entered an era of oversupply. Because material was greatly enriched, the hardest part was the insufficiency of effective demand. Although China has caught up with the industrial economy in the past few decades, after three years, the Chinese economy has entered a stage of severe overcapacity and excessive competition. The core reason is that there is too much supply of conventional goods, but consumer demand cannot be tapped. So the core of future business is to tap consumer demand, not to provide standardized manufactured products. The technological breakthrough brought by the Internet era is that we can finally establish direct relationships with massive customers at a sufficiently low cost and maintain a state of near real-time interaction. Weibo, Taobao, and WeChat all allow everyone to not only complete point-to-point communication but also complete multi-to-multi communication and coordination. So in this sense, we see that it becomes possible to reconstruct the entire business logic starting from the consumer and the customer. The core of this business logic is to continuously tap potential demand through interaction, making this demand more and more clear, and this demand itself is a dynamic evolution process. This is the foundation of future business. So the C2B model I am talking about this time has a very important breakthrough compared to before. In the past, when talking about C2B, we emphasized large-scale customization and personalization, providing personalized services from the perspective of customer value. But today I realize that the starting point of personalization is actually to establish continuous interaction with customers first. This is the beginning of everything. With such a beginning, personalized services are possible. At the same time, in the industrial era, each customer and each consumer was an independent individual, passively receiving advertisements and being pushed products. But in the Internet era, due to such infrastructure and the existence of a wide range of communication and interaction network services, customers have already gathered together in advance due to various social scenarios. This is what we call birds of a feather flock together. So how to make good use of existing groups to serve them well has also become a very important model of C2B, which we call the future of community e-commerce. One is community e-commerce, and the other is continuous interaction with customers. Many people sometimes say to us, we have been talking about customer first for over a hundred years. What is the difference between customer-driven and customer first? The most essential difference is that customer first is the highest pursuit of the industrial era, and everyone treats it as a slogan to be realized as much as possible. But in the Internet era, customer first and customer-driven are the starting point of all operations, the foundation of any enterprise's survival, and the dividing line between life and death. If you cannot achieve customer-driven, such an enterprise will have no room for survival in the future. In the future, if any enterprise does not establish a continuous interactive relationship with customers, it will not be able to understand customers, nor will it be able to get real-time feedback from customers, nor will it be able to tap potential demand. So this is also because customers need services in the future, not just simple products. As long as you provide services, you must have an Internet interface to interact continuously with your customers; otherwise, you will not get any feedback at all. This is also what we have repeatedly emphasized in another article: intelligent business is the most important competitive standard for future business, and the premise of intelligent business is to form a closed loop of live data. The starting point of the live data loop is continuous feedback with customers. You provide them with a service, and they immediately tell you whether it is good or bad. For example, Taobao's personalized recommendations for products: if you click, it means it is good; if you do not click, it means it is not good. Then the entire algorithm calculates in the background what to recommend to you next time. So intelligence is built on a continuously optimized, powerful algorithm engine and a closed loop of live data. So C becomes the starting point of all enterprise operations. 2. C2B and collaborative network are the two sides of future business Second, I have always said that C2B and collaborative network are the two sides of the new business of the future. Because the collaborative network is the only way to realize C2B. All things about the industrial era can be represented by one image: linear. Any thinking in the industrial era is linear. Assembly lines, supply chains, and hierarchical management are all relatively fixed and closed linear thinking. Although we talk about flexible supply chains, this flexible supply chain is also a weakening of linearity. Low cost, fast response, and high customization are completely conflicting core indicators in the supply chain. To dynamically optimize these three indicators at the same time, only a network structure can achieve it, because only a network has such flexibility. In other words, the most valuable thing in the future is actually a collaborative network. The global dynamic optimization of this collaborative network can generate a supply chain on demand in real time to meet the personalized needs of any node at that time. If you can meet the needs of one person, you can meet the needs of all people. And the way to achieve this is a flexible network. We pursue flexible supply chains, but the optimization of one line is no match for the changes of a network. This is still a derivation. A very realistic problem is that in most of our current industries, the degree of informatization, dataization, and networking is still very low. C2B still needs a long gestation period. It is still difficult to directly jump to the stage of collaborative network. Including in the development of the entire Internet e-commerce, for example, in women's clothing, which is the most active field on Taobao, we have found that the degree of informatization is very weak. Currently, it is only completed in the retail and marketing end, and many other links are information islands. Based on this background, everyone is hotly discussing flexible supply chains and supply chain platforms. What is the most realistic direction for their future? This is the question I want to exchange with you today. 3. S2b S is a large supply (chain) platform that greatly improves the efficiency of the supply side. In the next five years, a platform will first form. b refers to a large platform corresponding to ten thousand, one hundred thousand, or even higher levels of small b's, allowing them to complete services for customers. The reason is that in the current environment, it is possible to complete low-cost interaction with customers in real time. The relationship between them is an empowerment relationship, not a traditional franchise store. The traditional franchise store is again the logic of the industrial era, with the core being standardized processes and strict quality control. This is completely different from what we are talking about. The small b's we talk about are species that grow on the supply platform. This platform must ensure quality and efficient processes, but the most important thing is to let small b's autonomously exert their ability to reach customers. In fact, it organically combines human creativity with the creativity of the system network. These large platforms doing S do not promise small b's that they will provide traffic or guarantee their survival, but I provide you with backend support. Small b's have to find traffic themselves, and even for the S platform at the start, they need to find small b's that come with their own traffic. In fact, any small b has its own small network and circle on different network platforms. They can use their Internet tools to influence at least a group of people. How to let these small b's fully utilize their own traffic and give full play to their autonomous capabilities to form a new driving force is a very interesting thing in the future. The inference of this model is what everyone feels: the dividend of opening offline stores has accelerated from the second half of last year to this year, because the cost of customer acquisition on the Internet has reached a new peak, and offline has become a traffic depression. And because commercial real estate has been suppressed relatively low in the past few years, it is suddenly found that the prices of street-side small shops are rising rapidly. Due to the emergence of such supply platforms, it is possible to achieve one inventory for online and offline, unified sales. In this sense, some advantages of the original Internet model are also transferred to offline small B's. In this way, the operational advantages of some offline small B's begin to appear, so there will be a dividend period of several years. Finally, this sentence is my guess. The core of empowering small b's, in addition to forming strong capabilities in the cloud of the comprehensive platform, may also need to help small b's provide some scenario-based support in real-time interaction with customers to reduce their costs. The most likely is some kind of smart hardware. The logistics industry is promoting self-pickup cabinets. Next, will vending machines become a mini supermarket that reaches you within 100 meters? The delivery may be by unmanned vehicles. If the advantages of IoT and smart hardware are used in scenario-based interaction, completing a cloud + terminal reconstruction, it is a bit like the big bang of iPhone + apps. This is a very anticipated future. Although I have not seen a complete S2b case to this day, welcome everyone to recommend yourself and have in-depth communication with us. At present, we have also seen some prototypes, including Redcollar, which everyone has mentioned a lot in recent years. As a manufacturing platform, Redcollar, through its own management software system, and tens of thousands of small b's, many of whom are overseas retailers, may not even have storefronts, but they have customers, forming a good platform for personalized custom suits. The second is a very interesting phenomenon we have recently noticed: traditional wholesale markets, such as Hangzhou's Sijiqing, have also completed a traditional upgrade. The upgrade between wholesale stalls and retail and production has turned the entire Sijiqing into a grassroots fashion release platform. They only sell goods for two weeks. They support the front-end small b's, which are various sizes of internet celebrities. Most small internet celebrities actually do not have design capabilities or products. They rely on supply platforms like Sijiqing to support their product needs. What internet celebrities do is interact with customers in real time to tap demand, and even let customers participate in product design through pre-release of products. Internet celebrities are promoting brand online, and Sijiqing is helping to platformize the mid-to-back end. These two forces will further penetrate the entire ecosystem. In addition, we see more, like chain service platforms. For example, Alibaba's Lingshoutong is essentially a subversion of the traditional franchise model. These are the sporadic innovations I have seen, but the big direction behind them points to the logic of S2b. This thinking was influenced by the popular C2M (Customer-to-Manufactory) concept during this period. I have been thinking about this, but in the end, I feel that this is not the business model we want in the future, because if you really ponder the current C2M, most of it has not completed real-time interaction with customers. It is still done through small b's, and the starting point of its entire process is not the customer but the factory. M, as a production platform, opens up its production capacity. More accurately, it should be called M2B2C. First, it completes interaction with C through small b's. Second, it platformizes and flexibilizes the production line, turning it into a breakthrough in the manufacturing field that can provide services externally. To summarize today's discussion, the S2b model most wants to introduce the big direction behind it. First, unlike retail, it is possible that multiple platforms will coexist. Because it may be greatly affected by the industry, and the supply situation of each industry is different, it is possible that multiple models coexist. But no matter which model, it has the following core elements. You can refer to what you are currently doing and see what is consistent with this direction and what needs effort. Second, online and software-based, requiring imagination and hard work to put all related behaviors online. Online first requires software-based. On this basis, dataization can be completed. That is, software can communicate with each other, and the core of software communication is data flow. So it is necessary to form a closed loop of live data through data connectivity to support the automation of all business decisions. Only when software and software call each other's services through APIs can decisions be automated and ultimately move towards intelligence. So dynamic collaboration is achieved through software APIs, and such a network structure can support micro-services at a sufficiently low cost. Finally, service. In the future, everything is service. Products are just an intermediate link in the realization of your service. At the same time, the relationship between S and small b is empowerment, neither a buying and selling relationship nor a traditional franchise relationship. So in the next five years, the most likely to lead are supply platforms. They are data-based platform entities that will complete the initial network collaboration on the supply side. Only on the basis of such a dense and close collaborative network can we move towards the entire C2B model, which is also the strategic direction most worth working on in the next five years. -END-