Mass Customization

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

Tue, 15 May 2012 16:25:00 -0400

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]

Sun, 13 May 2012 00:08:30 -0400

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

Sat, 25 Feb 2012 20:30:39 -0500

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.

Automated production of customized products! MyMuesli gets their...

Sun, 12 Feb 2012 18:09:35 -0500

Automated production of customized products! MyMuesli gets their automated filling machine.

The video, unfortunately in German, describes how MyMuesli developed the machine over 8 months. Each ingredient has its own “filling station”, and - after scanning the cereal cylinder to be filled - disperses just as much of the ingredient as is necessary.

Design your own furniture comes to Australia!

Fri, 27 Jan 2012 20:48:24 -0500

I just took a quick look at a new mass customization player, after @evolvex tweeted me about their offering. Evolvex’s website looks great - they have simple furniture, and you can customize openings, colors, legs and more. Prices seem pretty reasonable, cheaper than US based Inmod.

They asked for advice on Twitter. Check out their site and let them know. What advice would you give them?

I took this photo from an Automotive Shopping Behavior Study...

Fri, 25 Nov 2011 17:10:00 -0500

I took this photo from an Automotive Shopping Behavior Study from Google. The graph compares what people usually do when they visit the website of an OEM (=original equipment manufacturer and in this case mostly the car company’s website).

It turns out that the most popular activity on those websites is to play with the configurator. In 2010, about 35% of all visitors to a car website ended up building their own car. That’s huge - especially since creating your own dream car seems to be even more popular than looking for offers!

However, keep in mind that this only supports the idea that “creating your own” is fun - something we know from The Customization 500 study. What is also interesting in this chart is that the popularity of “build your own” dropped dramatically - from nearly 45% to approximately 35%. At the same time “search inventory” is the only activity that is stable. Now, we don’t have the data to really understand why that is - it could be that the website visitors are more practical in 2010 compared to 2009 because they are more likely to afford cars now, or maybe there were so many deals that customers just wanted to take advantage of them quickly instead of waiting to receive their custom built car. It’s something to look out for though - how is the interest in design-your-own changing over time?

What do you think?

How much revenue can you make with mass customization?

Sun, 30 Oct 2011 19:39:12 -0400

Mass Customization is a steadily growing trend with more and more companies offering personalized or customized products. But how big is this opportunity really?

After hearing that Spreadshirt nearly doubled its US revenue this year, I decided to do a bit of research to see how much money really is in this market. A lot of customization companies are startups and don’t disclose their revenues, but there are exceptions:

Element Bars, the custom energy bar maker, was on the TV show Shark Tank and as a result is discussing revenues publicly. In 2009, the founder Jonathan Miller estimated yearly revenues to be around $100k.

Another rather young startup, Gemvara, reportedly has revenues around $12 million according to a BostInnovation article. It’s important to keep in mind though that the average order size for the personalized jewelry company are larger than for most customization websites.

I’ve only heard rumors about the revenues My M&Ms generates for Mars, but they should be around $10 million per year, with the majority being earned just before the holidays. Compared to the overall revenues of Mars of about $30 billion, the personalization business must seem like a pet project to them.

Spreadshirt, the company mentioned above that doubled their US revenues, now estimates 2011 revenues in the US at about $20M, with their 2010 global revenues having been $42, of which I’d expect the most to be generated in Germany.

Spreadshirt’s biggest US competitor, Zazzle, reported $20M revenues in 2006. I checked out Zazzle’s website traffic in the past, and they had about 1M visitors every month in 2007, and now get more than 4M visitors per month. That would imply that they quadrupled their revenues to a rough estimate of $80M per year.

One of the surprises in my research was Personal Creations. The aesthetically not very pleasing website generated $50M in 2007 according to Internet Retailer.

Danny Wong reported on NikeiD contributing more than $100M to Nike’s 2009 revenues. While that’s little compared to the $2.5billion Nike makes in a year, it’s quite a chunk of the $260M total web sales revenue of Nike. Keep in mind that those are international revenues, not just for the US market.

The biggest suprise however were Shutterfly’s revenue figures. An article from only three days ago describes their Q3 2011 revenues for personalized products alone to have been $57M, which would imply a yearly revenue of approximately $230M. The revenues were also up 56 percent. Even if we assume that there was already some holiday business in there, that’s an impressive number.

The “So-What”? Mass Customization is a business with both short term (revenue) and long term (growth) potential. Are you going to be part of the trend?

Customized Ice Cream in 55 Seconds

Mon, 10 Oct 2011 06:51:25 -0400

I recently visited in Chicago, and my friends, knowing that I’m all about mass customization, took me to see iCream, a customized ice cream shop. Unfortunately it was already closed, but I was able to take some pictures and the website is super informative - if you want to learn more, watch the Food Network video they have posted on their home page.

iCream is fascinating because so far, we’ve only known ecreamery, which takes your custom ice cream order online, makes it and then ships it to you. iCream uses liquid nitrogen to create your custom order right then and there for you to take. You choose flavors, toppings and even the color you want your ice cream to have, they mix it and then blast the liquid nitrogen over it to turn it into ice cream. With the customization options that iCream offers, you can make 256,00 different ice creams. You can also make customized puddings which come nice and hot - a smart choice for a city like Chicago, where the winters get brutally cold.

On a personal basis, what I also liked a lot about iCream was that it was started by two Chicago Booth graduates (which is where I went to business school before launching chocri in the USA). Maybe there’s a link between Chicago Booth and customization?

Mashable: Coke Lets You Create Your Own Drink on Facebook (And in the Real World)

Thu, 25 Aug 2011 11:00:06 -0400

Mashable: Coke Lets You Create Your Own Drink on Facebook (And in the Real World):

Awesome to see another big company push their customization efforts. Coca-Cola invested 100 million into customization last year. Although I’m not convinced about the product yet - which sodas could I possibly want to mix to get something tasty?

(Image from Mashable, see link)

Ralph Lauren Promotes Design-Your-Own Collection With A Bang

Wed, 24 Aug 2011 20:37:10 -0400

Ralph Lauren has offered custom polo shirts for a while now, but they launched the “Design Your Own Collection” in one of the largest department stores in Europe (the prestigious KaDeWe in Berlin) with a huge show. The show in itself isn’t directly related to customized products, in fact it is a refitted 4D video mapping show Ralph Lauren has used in New York and London before (video mapping is a projection technique that lets you turn uneven surfaces into a video display).

What I think is tremendously interesting about this is that Ralph Lauren decided it was worth a lot of money to launch their customized product with a bang in Germany. It tells you that the US company sees a lot of potential in the German market in respect to customized polo shirts, a fact that doesn’t surprise me as Germany is still a leader in the customization arena.

springwise: In Spain, design your own clothing via 3D...

Wed, 24 Aug 2011 10:17:11 -0400

springwise:

In Spain, design your own clothing via 3D simulator

Design-your-own initiatives have regularly featured on Springwise over the years, and recently we came upon another interesting example. Set in Spain, Crearmoda allows users to design their own clothing and then offer up those designs for voting and incorporation by others. READ MORE…

Go to the Mass Customization Conference!

Tue, 23 Aug 2011 17:03:55 -0400

The next mass customization conference, MCPC 2011, is rapidly approaching - it is scheduled for November 16-19 in San Francisco (official info here).

The motto of the conference is “Bridging Mass Customization and Open Innovation”, and as always, it is organized by Professor Piller and his fellow scholars.

The conference will be a great opportunity to meet other entrepreneurs and thought leaders in the field of mass customization, and over 45 sessions and 130 different presentations allow for a focused interaction. What I also particularly enjoyed at the last conference at MIT and what is bound to return are discussions of the newest research from scholars such as Prof. Piller about mass customization and open innovation.

Check out this flyer for all the important info.

springwise: Personalized coffee blends, shipped weekly to the...

Fri, 19 Aug 2011 12:04:06 -0400

springwise:

Personalized coffee blends, shipped weekly to the door

The combination of personalization and home delivery is an irresistible one in virtually any product category, and coffee is no exception. Aiming to provide java lovers with an alternative to the mass-market brands that dominate most supermarket shelves, EightPointNine is a UK company that lets consumers create their own custom blends and then have them shipped each week directly to their door. READ MORE…

Building Houses and Mass Customization

Thu, 18 Aug 2011 17:39:41 -0400

As you know, I’ve been wondering a lot why mass customization is so much bigger in Germany than in the US, and my blog post (see link) tries to answer that question. Recently, another idea came to my head: Could it be that Germans are culturally more interested in creating their own?

What brought this idea to mind was that I had noticed for quite a while now that Americans and Germans have very different ways of building houses. In the US, houses are built by companies, who plan the houses and then sell them during and after the construction. It’s quite efficient, and the producers have all sorts of data on what the majority likes, which they use when they build many and many of these houses.

In Germany, people tend to buy a piece of land and then proceed to build the houses themselves - sometimes with similar companies in a turnkey project, sometimes with many different contractors. What’s different about the German approach is that the house buyers/ builders are very involved in the creation and its details: Even if it’s a turnkey construction, they usually pick everything from floor tiles to door handles.

Now, to throw this crazy idea out: Could it be that Germans just like to be more involved in the the creation of the “stuff” they consume? Could it be that Germans experience a form of co-creation in several aspects of their lives and are thus more likely to (a) get excited when a design-your-own website launches and (b) more likely to launch such a business themselves?

How much of the proliferance (at least relatively) of mass customization in Germany is due to

Cultural Aspects
Funding Environment
Coincidence
Better Awareness in a Smaller Market
Less Mass Production

Would love your thoughts!

An amazing argument for personalized clothing:

Tue, 26 Jul 2011 19:01:52 -0400

An amazing argument for personalized clothing::

inkdot:

This weekend I was told a story which, although I’m kind of ashamed to admit it, because holy shit is it ever obvious, is kind of blowing my mind.

A friend of a friend won a free consultation with Clinton Kelly of What Not To Wear, and she was very excited, because she has a plus-size body, and…

Job Opportunity: Marketing Manager for Customization Startup

Mon, 25 Jul 2011 15:10:00 -0400

… had to take this down because they’re in “stealth mode”. Sorry. Email me (carmen.magar at gmail) or Dave Sloan if you’re looking for a job in the mass customization world!

2 Questions for Peter Weijmarshausen from Shapeways. Shapeways...

Thu, 07 Jul 2011 14:42:09 -0400

[Flash 10 is required to watch video.]

2 Questions for Peter Weijmarshausen from Shapeways.

Shapeways recently moved to New York from the Netherlands to build their marketplace of 3D printed objects. Just as Makerbot is revolutionizing 3D printing by making the printers themselves more accessible, Shapeways is really groundbreaking in allowing normal people like you and me to design something and have it printed by them. I met with Pete last week, and asked him these two questions:

1) Tell us a bit more about how you can make your own 3D object with Shapeways

Peter talks about how you can completely design your own object, create one with a bit of help and personalize an existing piece with Shapeways

2) What are the differences between European and American consumers?

Peter emphasizes that differences between users are diminishing as the service becomes more and more global, but that Europeans are more enticed by the freedom of creating something with Shapeways, whereas Americans are more excited about making money with their own creations.

Apologies for the background noise.

"Home-based shopping will permit consumers to control manufacturing directly, ordering exactly what..."

Wed, 06 Jul 2011 13:07:18 -0400

“Home-based shopping will permit consumers to control manufacturing directly, ordering exactly what they need for ”production on demand”.”

- An article in the New York Times from 1982, titled: “Study Says Technology Could Transform Society” about this time when every home might have a two-way videotex (computer terminal with internet connection), predicting mass customization.

Pretty cool.

Recommendation Engines: 5 Lessons from Pandora, StumbleUpon and YouTube

Tue, 28 Jun 2011 14:41:27 -0400

I went to SXSW this year but happened to miss a really cool panel on Recommendation Engines. Luckily, it was recorded here. I figure that most of you have companies that allow for an endless number of combinations, so I think that some of the lessons from this panel might be interesting to you, too.

What I had in mind when I took notes from the recording is that MyCereal.com, before it shut down, didn’t ask consumers to pick the different ingredients for their cereal, but rather asked them questions such as “Do you like nuts?” or “Do you want to lose weight”, and then gave the users recommendations based on that. This is a new twist on the idea of a configurator: Rather than letting the consumer really design their own, you create a product for them that they can then alter. That is also one of the reasons why NikeiD is so successful: People start customizing when they find something in the standard catalog that they kind of like - with NikeiD they can make it truly perfect.

So, here are the lessons from the panel:

LESSON ONE: Make it simple

Pandora realized that the radio is an inherently simple experience: You press a button, and you get music. They had a lot of ideas for features and more control for the user over time, but found that it was important to keep the experience simple and accessible to all users. I think that translates into customization - don’t ask your consumers to do too much “work” before giving them anything (or at least try to make it really seamless and fun!)

LESSON TWO: Offer both broad and close matches

Not everyone knows yet what exactly they want. YouTube found that most of the searches on the site are broad, and so in their recommendations on what to “watch next”, they both give close matches to the content of the video as well as broad matches to the overall thematic cluster or the type of video. So as I’m thinking of cereal recommendations, I imagine a cereal that exactly matches your preferences, as well as one that has maybe been created by a nutritionist, that’s very delicious but maybe doesn’t have all the ingredients you indicated beforehand.

LESSON THREE: Provide users context why you recommend what

You could have a black box (as in: a complicated algorithm) that spits out recommendations that you want your users to eat without asking questions. Both Pandora and StumbleUpon however recommend to keep it comprehensible to the user why you recommend what - not only because users like that more, but also because they found it easier to innovate and keep making it better by keeping it traceable. All of the companies found a way to measure how successful their recommendations were.

LESSON FOUR: Make it social, but not too social

Social recommendations are for example when you connect to Facebook, and now the cereal mix that you see has been liked by a friend. Or the cereals mixed by friends just rank higher on the list of recommendations that the user gets. This is a great marketing tool: Not only does it build trust in the product (it’s easy to show data that people are more likely to click on something they friends “liked”), it’s also a starting point for a conversation with a friend, enforcing the connection to the brand or product. Also, in a weird way, influencers are turned on by the fact that no one has liked something yet - they feel that they discovered something valuable that they can share with their friends.

At the same time, the panelists stressed the importance of serendipity, and they suggested not getting all recommendations from a social graph - because then users won’t get the “really wacky things” as often.

LESSON FIVE: Tom Conrad is funny and insightful

Tom Conrad, the CTO of Pandora, is hilarious. He’s also extremely insightful, and one of the thought leaders in personalization. Follow him at @tconrad on Twitter and go to a panel if he’s talking - I first met him at the Mass Customization Conference at MIT in 2010, where he was a fellow presenter.

Want to get started?

All the panelist companies are building their own native recommendation engines, but if you want to plug into an existing taste graph, they recommend Hunch.

[INSPIRATION] Cool Design-Your-Own Websites in Germany

Thu, 23 Jun 2011 11:04:10 -0400

[INSPIRATION] Cool Design-Your-Own Websites in Germany