Is product customization always beneficial in the context of C2M platforms? A signaling theory perspective

As a new driver of the e-commerce economy, the customer-to-manufacturer (C2M) model has attracted increasing attention. Product customization is a crucial element in C2M businesses; however, given manufacturers' relatively limited ability to serve end customers, it can create uncertainties for consumers. Scholars have paid insufficient attention to product customization on C2M platforms. Therefore, we developed a theoretical framework and crawled secondary data from Biyao, one of China's largest C2M platforms, to examine the role of product customization, as well as when product customization can be most effective. We used ordinary least squares regression analysis to test our hypotheses. The results demonstrate the positive effect of product customization on customer purchases on C2M platforms. Further, we investigated three moderating variables—brand awareness, lead time, and group buying. It is found that the positive effect of product customization on customer purchases is greater when brand awareness is higher and lead time is longer but weaker when products are sold through group buying.