During my first year of business school, I had read an exciting case study about Timbuk2 and how they created a build-to-order business model. The build-to-order model, aka Dell.com, has clear cost advantages. Why produce massive quantities of inventory that may go unsold if you can wait to build product until you receive a customer order? In summer of 2010, I worked for Dave Sloan, the founder and CEO of Treehouse Logic, a startup that provides a visual customization platform that enables mass customization. My exposure to the exploding mass customization market has revealed a few key insights that I would like share with readers of our blog.
Myth: Mass Customization is a fad.
Fact: The US alone has some 220 online customizer firms. In the past decade shoppers could configure their own laptop at Dell.com or Apple.com but in 2010 you can create your own bags, t-shirts, jeans, shoes, shorts, bikes, lamps, cards, art books, jewelry, granola, chocolates and pet food as well. The New York Times reported on growth in sales of customized products in US for 2009. In 2009, orders at Spreadshirt had doubled. Blurp (customize your art book or photos) sales were up 43%. Zazzle, Cafepress and Scrapblog each reported 80% increases in sales in the holiday season compared with previous year’s sales. At Blue Nile, orders were up 20%. This was despite the fact that ecommerce sales had only grown by 4% in the season. In March 2010, readwriteweb.com suggested that the U.S. may be on the verge of a co-creation invasion from Europe, where these kinds of startups are more prominent. Looks like co-creation is here to stay.
The reasons that this trend is no fad are highlighted in our VentureBeat article, but in a nutshell it is the alignment of growing customer demand, maturing technologies, and Internet penetration.
Myth: An online customizer is just a visual product picker.
Fact: Guidance matters. A customizer must be more than just a stand-alone build-it-yourself tool. As part of my internship, I created and conducted a survey on behalf of Treehouse Logic asking users the importance of (subject matter expert’s) recommendations. 85% of respondents deemed it as an important feature. 77% of responders wanted to see creations of other shoppers to drive their design process. Customization is seeing the rise of community interaction and crowd sourcing.
Shopping is an inherently social activity; shoppers like to get creative tips from vendors as well as see what other customers are creating and buying.
Myth: Mobile-based customizers have yet to arrive.
FactMyth: Downloadable iPhone/iPad apps for customizers have arrived. Snaptee allows users to design t-shirts with outstanding ease of use and place the order in a click, simultaneously providing a gaming-like experience. Mobile creates an even richer Internet customization experience because of interaction elements like drag-and drop, multi-touch, app performance, and easy user interaction via finger touches. Apps expose a whole new potential target segment for customizers – the mobile gamers.
Update (10/25/13): This article was originally published on Treehouse Logic blog. Reference to Shirtee has been replaced with Snaptee, since former was discontinued.