Mass Customization

Showrooming and Mass Customization: A good combination

Showrooming is a trend that most retailers fear, but a few leaders in the industry are beginning to embrace it, such as Walmart:

“You’ve got to go where the customer wants you to go. We live in the age of the customer,” Walmart.com President and CEO Joel Anderson told Wired in an interview this week. “We’re embracing showrooming.” [Source: Wired]

As Walmart is competing with Amazon, they’re hoping to leverage their physical assets and allow today’s shoppers to see and touch offline, but benefit from the convenience of online shopping all the same. 

This week, I met Jodie Fox, the smart founder of Shoes of Prey, where you can design your own shoes. One of the things we talked about is the store-in-a-store that they’ve opened in one of the two largest department stores in Australia. While the store is still new, they have found that customers who want to create their own shoes on Shoes of Prey come in to touch the materials and try on the shoes. In addition, shoppers who would have walked off from the department stores selection of standard shoes without finding the perfect shoe (oh how often I’ve been there myself!) now stop by and ask for “a shoe just like that, but in navy blue instead of black, and maybe a higher heel”. And Shoes of Prey can accommodate both needs, thereby growing their revenues (and those of David Jones!).

Portions of this concept aren’t new: Jonathan Adler (custom furniture) and similar stores have always shipped swatches to make the remote decision easier. Laudi Vidni, the custom handbag startup, opened a store in Chicago a wile back. And I’ve heard that NikeiD gets most of its traffic from shoppers that originally went on the regular site, who want the shoe nearly as displayed, just slightly different. 

So, what does this mean? Huge potential in my opinion. Retailers can differentiate their offering through mass customization, leveraging their stores and shelf space as showrooms to give consumers a hands-on experience of their existing products. Mass customization startups, meanwhile, should leverage retailers to get in front of more shoppers, helping those shoppers out that can’t quite find what they want.

Virtual Personalization

This is part of my series of blog posts where I define common terms that are related with mass customization. Also see the definitions for mass-customization,  co-creation and design your own/ create your own.

When people speak about personalization, they can mean a lot of different things. It can be the engraving on the back of an iPod, it can be becoming part of a Dilbert comic strip by including your face in it (hence making it personal), and it can be the algorithm with which Amazon determines which book recommendations to serve you -based on your previous purchases. Even the fact that yelp uses your Facebook account to show you better matches is virtual personalization. It really is its own big topic, but I wanted to touch on it since it’s an important topic, too.

There is so, so much potential in virtual personalization, and it’s a lot easier to change a digital product (such as a Dilbert comic, or a website presented to you) than a physical product during production. Knowing that, I think it’s a pity that not more companies have embraced this - especially since many of them already collect the data. They just don’t know what to do with it, and maybe technology hasn’t quite caught up with the data yet, either. Another concern is privacy, a concern that, I think, will become less and less prevalent as teens with different privacy standards become a larger share of consumers. 

One of my favorite examples of virtual personalization is Hunch. You can just use your Facebook profile to inform Hunch, but ideally you answer a few questions about yourself (e.g. what kind of laptop you use, or which party you vote for), and based on their data about a large number of people and their preferences and how these compare to you, Hunch recommends products, websites, activities and much more to you. It’s a surprisingly accurate tool, and they are using it in innovative ways - e.g. by integrating with gifts.com. I think that more companies should integrate with Hunch (they have an API) to deliver more meaningful recommendations to their customers. As a matter of fact, especially customization companies should leverage Hunch to help guide their consumers through the millions and billions of options that custom on-demand production brings with it. 

Finally, some companies leverage virtual personalization as a marketing tool. Remember the frappuccino website from Starbucks? You don’t actually get your custom drink at the end of the process, but you engaged in a meaningful way with the brand, and Starbucks gains valuable data everytime someone creates a concoction. 

Crafting

This is part of my series of blog posts where I define common terms that are related with mass customization. Also see the definitions for mass-customization,  co-creation and design your own/ create your own.

I’m adding this one for the purpose of being complete, but all of you know what it means to craft something. It’s made on demand, and often specifically for one person, and it’s how things were made for many, many years in the past. Then mass production came and crafting became the domain of high-end makers of goods, small local shops without scale, and people crafting by themselves at home.

Important changes as companies go from crafting to mass production are automation and the introduction of machines. But I think what startups often forget is that changing and engineering processes also takes a big part in scaling up - employees need to have different skills, shops/ factories need to be redesigned and processes (re)defined.

Etsy, a website where hobby and professional crafters can sell their original items, has partly shown and partly grown this area, and the increased popularity of all things local is playing into the hands of small shops that craft themselves. Internationally and in less developed economies, crafting is much more prevalent than in the US. 

In the end, most mass customization production starts with crafting - making chocolate bars by hand, making shirts by hand. It’s a challenge for many customizers to scale up their production and turn it into a real mass customization business, rather than a premium crafting business.  

Mass Customization And Technology

Startups that allow you to design your own products are often categorized as tech startups, because, as The Economist aptly pointed out, customization is a results of digitized manufacturing. Where and how does technology come into play in a mass customization business?

Technology has two major purposes in a customization business:

1) Make it easy to gather customer preferences with configurators

2) Make it cheap and efficient to produce the custom goods (with production technologies)

Read More

CitizenMade Aims To Provide Small Businesses with Configuration Technology

A few days ago I met with Rachel Brooks, one of the two (female!) founders of the technology company CitizenMade, that set out to provide configurators for small businesses that want to play in the mass customization arena. 

The idea makes sense: Small businesses often already customize for individual clients, and an online configurator can help them do it more efficiently and modularize their production in the process. CitizenMade is working on a configurator that plugs into an e-commerce solution, pulls images and prices of different modules and allows to upload images (e.g. for t-shirts) as well as alter different portions of the product. Think of the NikeiD configurator where you can choose different colors for different parts of the shoe.

The company targets “makers” both in the B2B and B2C space, and the three companies that are currently testing the software in private beta make furniture, sports team scarves and t-shirts. The idea is that companies don’t have to provide more than some parameters of the customization as well as vector graphics. And the pricing model makes it easy to try it out - how much you pay depends on the number of products you offer, as well as how many people share their creations.

You can sign up for the beta here.

The Financial Times Mentions Personalized Production as One of the Seven Factors Driving the Future of Manufacturing

“Personalised production” is illustrated in techniques to ensure that most of the gas turbines being made in the plant incorporate bespoke features for consumers.

The Financial Times lists this factor among six others, namely network manufacturing, technological innovation, industrial democracy, boutique manufacturing, cluster dynamics, and environmental imperatives. 

Support Blank-Label in Launching a Custom Women’s Shirts Line

Blank-Label, one of the leaders in the custom dress shirt market (albeit men’s dress shirts!) currently has a Kickstarter project to fund a women’s line. I don’t know of any US custom women’s dress shirt companies, so I’m excited to see this market void filled! (yes, I pledged)

Join the 82 backers and get dibs on your custom dress shirts, ladies!

WSJ: VCs Who Love Women’s Shoes, And The Start-Ups That Love Them

Congrats Shoes of Prey on raising $3M for the customized shoe business. Or really we should congratulate the VCs that get to work with them. 

Here’s what the Wall Street Journal wrote:

The venture backing is the first since the company’s inception and reflects an ongoing attraction of venture firms for women’s shoes and applications of mass customization.

How fitting that I happened to wear my gorgeous Shoes of Prey shoes this weekend! 

Read the press release here. 

Mass customization news roundup

Here’s what’s happening in the mass customization community:

• The next mass customization conference MC2012 (organized by Prof. Piller) is in the end of June in Salzburg, Austria. The conference will be in German.
• Treehugger reported “mass customization as the trend of the year”, as observed at the International Contemporary Furniture Fair. 
• Shoe customizer Selve won Zazzle’s “Million Dollar Open Innovation Challenge”. “The Challenge was created to enable entrepreneurial companies by embracing the growing consumer trend of real-time personalized manufacturing and mass customization.

The Economist: Mass Customization a Result of the Third Industrial Revolution

It’s always nice to be known for something. When this Economist article on mass customization came out, I was handed the magazine the same day, and received a few emails and comments from people that wanted to make sure I’ve seen it. So allow me to pass on the favor and make sure that YOU have seen it, too!

It’s actually not just one article - The Economist dedicated an entire section to the broader idea of mass customization, with some really great information about the current state of the 3D printing industry. The main article calls it the “third industrial revolution”, an idea that might not be new to you if you’ve read my post “Mass Customization As a Revolution In Production?”. 

The consequences of all these changes, this report will argue, amount to a third industrial revolution. The first began in Britain in the late 18th century with the mechanisation of the textile industry. In the following decades the use of machines to make things, instead of crafting them by hand, spread around the world. The second industrial revolution began in America in the early 20th century with the assembly line, which ushered in the era of mass production.

As manufacturing goes digital, a third great change is now gathering pace. It will allow things to be made economically in much smaller numbers, more flexibly and with a much lower input of labour, thanks to new materials, completely new processes such as 3D printing, easy-to-use robots and new collaborative manufacturing services available online. The wheel is almost coming full circle, turning away from mass manufacturing and towards much more individualised production.

The Economist sees technology innovations in the form of “clever software, novel materials, more dexterous robots, new processes (notably three-dimensional printing) and a whole range of web-based services” as a main driver of the rise of customization, noting how the “cost of producing much smaller batches of a wider variety, with each product tailored precisely to each customer’s whims, is falling”.

Among the consequences of digitized manufacturing are cleaner and emptier factories, with much of the production moving back to the developed countries - a trend that many mass customization startups know well about, because most of them have kept production local (example: chocri’s customized chocolate bar production in Berlin). 

I encourage you to read the article as a whole, and to check out the special report, even more so if you’re interested in 3D printing!

[Back soon]

Sorry all for the radio silence here. I’ve actually put a lot of work into researching mass customization in the last few months, just never had the time to blog it! Expect more activity here soon.

The Ghirardelli example of virtual customization and how customization lets companies obtain valuable data

I just realized that I never wrote a blog post about one of my favorite examples of easing into customization- Ghirardelli’s “New Intense Dark” campaign (clicking the link is worth wile alone for the intro).

For about a month in summer 2010, Ghirardelli offered up a configurator on a separate website, allowing their fans to design a new chocolate bar. Dark chocolate was a given, but then users of the website could choose flavors and names. After 14,000 flavor entries, and more than 230,000 votes, the chocolate bars were judged by professional judges (see picture for the criteria, which is interesting in itself), and the winner - Hazelnut Heaven - was produced in 2011. 

I don’t know if the crowdsourced chocolate bar was a huge hit (I’ll check next time I’m in a grocery store), but there is no doubt in my mind that Ghirardelli benefited greatly from this campaign. Why, you might ask? Because they obtained incredibly valuable data. Typically, companies engage in market research to identify, for different segments, what people like in terms of flavors, what they are willing to pay for per element (e.g. what flavor). Conjoint analyses are the best type of research the industry traditionally has to understand how small changes in a product change the buying behavior of their target market. Then, a new flavor options are tested first in focus groups, then maybe later in a test market.

In contrast, Ghirardelli was able to get insights from more than 200,000 consumers. The 14,000 contributors were even more valuable - not only did they offer up their creativity, they also shared their creation through social media, hoping for votes and creating a fantastic word of mouth campaign for Ghirardelli in the meantime. McKinsey calls this Big Data - the idea of gaining insights from (relatively) readily available data. 

On a more general level, every company that allows you to customize a product obtains valuable data in the process. Data that pertains to you as an individual, but more importantly, data that turns “target customer” from an average Joe to a real understanding of who they are, what they need and what they prefer. Companies that are daunted by actually customizing their products can use virtual customization campaigns like Ghirardelli’s to benefit from the beauty of this process.