Treehouselogic's Blog

So you want to sell custom products? (Part 1)

Posted on February 21, 2012 by treehouselogic

Albert Wenger of Union Ventures

Here at Treehouse Logic we talk to a lot of start-ups that are betting on the design-your-own business model. We’re seeing some major shifts in shopping behavior, most of which are discussed in this blog.

Albert Wenger of Union Square Ventures probably explains this phenomenon of mass customization the best: “We’re pretty convinced that mass-market consumer products are now so cheap and widely available that they’ve lost a lot of their appeal. We think people are looking for something unique and customizable. We’re interested in the social fabric — bringing people together that design things, and people who want to buy them. Mass produced goods are dominated by a few large brands. But everywhere you look there are movements seeking to bypass those brands, whether it’s the locavore movement in food, or something such as NikeID, which has seen double-digit growth year over year.”

So how can new entrants to the customization market build businesses that focus on providing something unique and customizable, as well as tap into the power of the social fabric of designers and buyers? Here are a few tips for up-and-coming custom product vendors:

Don’t repeat the mistakes of past customization businesses

Dell's product configurator

About 10-12 years ago we started seeing the first consumer-facing visual configurators. Nike ID, Dell.com, and Timbuk2 were pioneers of the design-your-own movement. What worked for them? What didn’t work? Why did Levi’s drop their customization program? Why did Dell give up on customization? A lot has changed in both shopping behavior and web technology in the last decade, so be sure to learn from others mistakes, and don’t replicate them. Do your homework and focus on creating a NEW spin on customization that is innovative, simple, and core to your business model.

Build the brand first

Your value proposition has to be much more than “have it your way.” You need a brand story that resonates with your customer. Instead of customization itself, focus on what your core product values are, for example; product quality, locally made, sustainable, fashionable, built-to-order within a week, etc. Yes, design-it-yourself is a selling point, but your customers don’t buy from you because your products are custom, they buy from you because your products are what they want.

Consider avoiding the ‘custom’ term altogether. The term ‘custom’ can imply difficult-to-make and expensive. Eventually, all products will include some level of mass customization.

Focus on product quality

Custom Burberry trenchcoat

Users are taking a big leap of faith by buying your products online. Don’t let customizability get in the way of product quality. Highlight your product with high res photos. If you’re going to differentiate from commodity products you need to stand out in quality and design. Luxury brands like Burberry use customization as an engagement tool that helps build their luxury brand. “Honestly it makes no difference at all” how many custom coats Burberry sells, Ms. Ahrendts says. “It’s customer engagement. You want them to engage with the brand.”

Launching a customization program is a lot more involved then just bolting a build-your-own feature onto a website that features mostly “standard” products. How do you plan to stand out?

Look for more best practices in future posts…

Filed under: Market Trends, Uncategorized | Tagged: business model, marketing, mass customization, social commerce | Leave a Comment »

Mass customization is trending so hard right now

Posted on February 20, 2012 by treehouselogic

Emachineshop: democrotizing manufacturing

Recently an entrepreneur made a comment to us that made an impression: “Mass customization is trending so hard right now.” Indeed, we’re seeing customization on the forefront of a paradigm shift in retailing. So what, exactly is trending?

1) Manufacturing

We’re seeing a shift towards small, agile manufacturing facilities that don’t carry any inventory. The process of “user manufacturing” is becoming more prevalent as new companies like eMachinshop.com strive to “democratize manufacturing.”

Manufacturing is coming back to the US in a big way, and it’s cropping up in the form of micro-factories. According to DIY blogger TJ McCue of Forbes Magazine “There are approximately 315,000 manufacturers in the USA. Over 30% of them are 1-4 person shops.”

Curation

2) Marketing

In terms of marketing, we’re seeing a shift toward highly visual, interactive, “curate your own” shopping experiences, rather than conventional search and browse shopping experiences. This means we are seeing dramatic changes in the way people interact and shop for products. More specifically, “pre-shopping” is driving shopping itself because it taps into the power of social interaction, ie social brand engagement.

Curation itself is a merchandising theme. Some sites like Fab.com are in the business of curating good design for their users, and other sites like Pinterest are in the business of providing easy to use, one-click curation experiences so that each user can play the role of curator. Pinterest taps into Facebook actions which extends it’s utility to a truly social experience.

Mark Zuckerberg of Facebook has said that any app is an order of magnitude more valuable when it’s social. Curation and design-your-own are marketing themes that are primed for democracy and crowd-sourcing because they are “social by design.”

Jess Lee of Polyvore

3) Democritization

“Democrotization” is a fantastic made-up term which gets investors excited because it speaks to the rich potential of crowd-sourcing. Many industries like fashion are being disrupted by web-based services that give individuals the power to design, influence, and sell their own products. “Democrotizing fashion”.

Polyvore is a good example because they were one of the first companies to focus on enabling creativity among fashionistas. “Polyvore’s mission is to democratize fashion, “To empower people on the street to think about their sense of style and share it with the world.” says Jess Lee, Polyvore’s vice president of product management.

The site bucks the age old trend of fashion driving the market. In Polyvore’s world, the market is driving fashion. In the past, Vogue has famously been considered a voice on high that says, “Here’s what we think fashion is.” But Polyvore’s user-generated content model is changing the status quo, abandoning the industry’s long-time queenly paradigm.”

Filed under: Market Trends | Tagged: co-creation, mass customization, product configurator | Leave a Comment »

How to build a Facebook marketing campaign

Posted on February 14, 2012 by treehouselogic

TV ads compete for consumer attention

Advertising has historically been about interruption. TV ads appear, for example, between segments of your favorite TV show. The problem with the interruption advertising model is that the message is not contextual or relevant. Users are focused on their show, so they’ve learned to dismiss any brand interruptions as annoying.

Brands are finding their voice on Facebook. From pages, brands can invite their customers to interact with them in a more personal way, beyond classic interruption marketing.

As brands plan Facebook campaigns they have to consider how to carefully approach their audience on this new medium. Why would a user care about what the brand has to say? Why would that user become a fan of the brand? Once they are fans, why would they engage in the campaign and share the brand’s content with their friends? How do you earn their trust and encourage them to voluntarily share your message?

Here are some best practices to launching Facebook campaigns:

Be useful

The best examples of brands on Facebook include an example of the brand creating utility. Solve a problem that your are uniquely qualified to solve. Your Facebook app is essentially extending a new, free service to your customers. Use Facebook as a new way to serve your customers.

Nike+

Nike+ is a great example of a brand that extended its core offering (clothing and shoes) to creating utility for the athlete community they have cultivated. Nike+ provides training tools that help their customers’ track and share their fitness progress. The Nike+ Facebook app solves a problem, which makes it an order of magnitude more compelling than a standard TV ad.

Mark Zuckerberg’s take on advertising (and this is not a direct quote) is that advertising on Facebook has to be as good as everything else on Facebook. This means that advertising needs to be socially generated content that is contextual and personalized for every user.

Be relevant

Don’t bore people. Timing is everything. Your content cannot feel spammy, it has to be contextually relevant. Likewise, your content needs to be relevant to your brand or it will just confuse users.

Don’t broadcast. Stimulate

Your messages should be conversation starters. Get people to talk about you. Stimulate your community to join the conversation. Likewise, highlight your super fans and make the story about them and their experience with the brand. Their story is your story.

Keep it simple

Many Facebook campaigns end up as complicated gimmicks. Focus on the core idea and deliver on that idea. Remember what Steve Jobs taught us about product design – simple is better.

Plan with a purpose

Huggie's Hong Kong Facebook campaign

Focus on what your customers care about. For example Huggie’s produces highly absorbent baby diapers, but they don’t necessarily need to hit their customers over the head with product specs. They found that mothers care about baby photos so they focused on highlighting their fan’s babies, which really caught on.

Know your own voice

Your brand has a personality, let it be heard. Small businesses have always succeeded by building personal relationships with their customers. Don’t just post content, talk to people.

These themes apply to mass customization and product configurator design because interactive design tools inherently create deep brand experiences. Fans want to get to know your product and what better way to let them than to let them design their own versions of your brand?

(NOTE: This post was inspired by talks by Paul Adams – Researcher, product manager, designer at Facebook, and Mark D’Arcy, Director of Creative Solutions at Facebook.)

Filed under: Consumer Experience | Tagged: Facebook, social commerce | Leave a Comment »

What is “social by design?”

Posted on February 12, 2012 by treehouselogic

Mark D'Arcy - Facebook

The web is going through an exciting transformation right now because it’s being rebuilt around people. The web’s first iterations were focused on content and products. The reason social is so hot right now is that the social web is evolving into a closer reflection of how humans have always interacted.

Most brands are currently in the process of “adding social” as a bolt-on approach to their existing websites. These brands start with a pre-existing product-centric structure, then add ‘social features’ like “like” buttons and social sharing widgets.

Is a website that includes social sharing widgets “social?” Mark D’Arcy of Facebook compares conventional bolt-on approach to adding salt to French fries. The French fries themselves don’t change at all; you’re just sprinkling on some social. The result is mediocre.

The next step is rebuilding your business from the ground up so that it is “social by design.” Social by design means focusing on people first, then technology and products; the core experience is the social element, not just an afterthought.

Example of a share widget

Spotify is a recent example of a product that is social by design. The music sharing application offers a core value of sharing music. The secondary experience is playing and enjoying music. Users login to Spotify with the Facebook ID to see their friend’s playlists, even real-time gestures of what their friends are listening to, ie “Dave is listening to enter the sandman by Metallica.”

Another example of social by design is Facebook Photos. Facebook prioritized photo tagging over core photo editing features like red eye correction and filters. What’s important to Facebook users is the person in the photo and the context of the photo, not the quality of the photo itself. Early photo sharing applications like iPhoto and Shutterfly focus on photo editing as the core value (features), but lack any contextual sharing functionality (people). The key is not to re-invent desktop-like photo editing tools within social networks, but to focus on a more simplified and shareable approach to photo publishing on Facebook.

Another great example of social design is a “gift ideas” experiment at Etsy. Etsy’s experimental “Gift ideas” feature let’s you search their library of content based on what your friends have liked on Facebook. You can select a friend and see a visual search result of gifts that match their Facebook likes. Brilliant.

The theme here is that products and services are being rebuilt from the bottom up to focus on people. New sexy ecommerce business models are all people-centric, rather then just another marketplace or online shop. People are what make brands compelling, whether it’s service staff, friends who recommend that brand, or other shoppers who endorse the brand.

How does the lesson of social-by-design apply to product configurator design? The design experience is usually too daunting for users, which is why many mass customization businesses fail. Design-your-own has to be as easy as selecting, comparing, and shopping. Customization experiences that are social by design and dead simple will be the most successful.

(NOTE: This post was inspired by talks by Paul Adams – Researcher, product manager, designer at Facebook, and Mark D’Arcy, Director of Creative Solutions at Facebook.)

Filed under: Consumer Experience | Tagged: social by design | Leave a Comment »

What do consumers like about designing their own products?

Posted on January 11, 2012 by treehouselogic

What did you like about the product configurator?

We recently ran a research study that investigated consumer tastes and preferences in the context of product customization. The goal was to find out what consumers want from a product customizer. We asked them to run through a Treehouse Logic product configurator and then respond to a series of questions.

The results are very telling: User experience design is top priority. Consumers are no longer of tolerant of websites that are not intuitive and fun to use. Good usability includes application performance, a smart layout, and comprehensive navigation. When users are exposed to an A+ site, they appreciate it. During the user flow, consumers need obvious answers to questions like ‘where am I?,’ ‘what do I do next?’ and “how do I finish?”

In addition to ease of use, respondents mentioned the ability to navigate many choices, and the importance of visualization of the custom product.

50% complimented the site’s ease of use
33% appreciated the rich selection of choices, (ie a graceful solution to “the paradox of choice.”)
17% raved about the visualization, ie zoom, alternate views, and the importance of seeing high quality, accurate images of the product as they design it.

179 respondents answered the optional open-ended question “What did you like most about the product customizer?” Here are a few verbatim answers.

Ease of use:

“Intuitive, lots of preprogrammed options, fast, very EASY”

“Easy and simple steps with a quick update of pricing on additional additions.”

“Its intuitive design and customizing features”

Selection:

“A wide range of selections. Various colors.”

“I liked being able to choose colors for every component.”

“Broad options for materials and colors.”

Visualization:

“Very fast in seeing what I wanted to appear in my changes”

“The zoom feature – the varying viewpoints of the product”

“I liked the visualization of the custom bag.”

Filed under: Consumer Experience | Leave a Comment »

[video] Bodymetrics addresses the fit problem

Posted on January 9, 2012 by treehouselogic

Bodymetrics addresses the fit problem of mass customization. “Ordered jeans online and they don’t fit!” Introducing Bodymetrics for Your Living Room.

Filed under: Consumer Experience | Tagged: Fit | Leave a Comment »

[video] Personalization is about people: customink

Posted on January 5, 2012 by treehouselogic

Great video from www.customink.com describing the value of personalized products.

Personalization adds a level of value beyond the surface it is printed on. Personalization delivers emotion, fun, captured memories, and brand relationships. T-shirts unite!

Filed under: Consumer Experience, Uncategorized | Tagged: personalization | Leave a Comment »

How big is the Mass Customization industry?

Posted on January 5, 2012 by treehouselogic

Mass customization market size

How many millions of dollars in sales does the mass customization industry generate every year? Can I get that data by region? Can we slice the data by customer segment; like urban hipster youth versus affluent soccer moms? Who are the incumbent companies in the mass customization market? Who are the up and comer start-ups and what market share are they gaining?

Well, the first problem to answering these questions is that the mass customization industry does not exist as a stand-alone industry. Even Frank Piller would agree that the ‘mass customization’ term is an oxymoron and doesn’t accurately describe one specific market. The term is really a generic description of manufacturing process.

Here’s a break down of some sub-markets that leverage customization:

Personalization

The personalization industry is really it’s own animal. Usually personalization incudes these two key elements:

1) Image upload (upload a picture of your cat and drag it over this t-shirt!)

2) Text overlay (write a message over the image of your adorable cat!)

Personalization manifests itself as a sub-section of the printing industry. Shutterly enables personalized photos, Vista Print offers custom business cards and stationary, and Zazzle and CafePress offer custom printed hard goods like skateboards, caps, and sweatshirts.

The personalization industry is giant and growing, no doubt. Zazzle alone has 1,000 employees. Companies like CaféPress, Threadless, and Spreadshirt are growing and in some cases eyeing IPOs.

User-generated products

The design-it-yourself market is gaining steam as shown by a flurry of VC funding and NikeID generating $100M in 2010 from custom products alone. Most of the customization vendors featured in recent “The customization 500” study are small, with a few exceptions like Nike, Converse, and Adidas.

One thing is for sure, we are in a mass customization 2.0, ie “me-commerce” era beyond just offering basic customizability. “Where Mass Customization 1.0 offered a single experience for a built-to-order process, Me-Commerce digs deeper to tailor the customization experience to the goals, desires, and motives of the consumer, leveraging these idiosyncrasies to assist the customer in developing the best possible product and with the best possible experience.”

What’s important to realize is that customization will permeate ALL reaches of the larger retail market. Large volume commodity apparel manufacturers like Gap and Old Navy will integrate more interactive visualization tools into their online shopping experience. Mass producers will over a level of customization, ie designability, into the purchasing flow.

“Standard” products like cameras and mobile phones will expand their choice navigation tools to product configurator toolsets. The key ingredient is fun. Shopping is getting more fun and inherently more shareable. And shareable content is the key to any successful social media campaign.

Consumers are suffering from “search fatigue.” Engaging customization experiences add value to mainstream shopping sites because they

Offer a new level of creative interaction. Consumers want to have more fun while shopping.
Offer a more intuitive way to navigate the ‘paradox of choice.” New businesses like Fab.com and Trunk Club have shown that users will spend money on services that offer the service of product curation.
Generates a more social shopping experience. Customization is really just a sub-set of the social commerce market, ie design/shop and share products ala Facebook, Pinterest or Polyvore. Engagement is just as important, if not more important, than sales conversion.

So, how large is the mass customization market? Well, how large is the retail market? The online shopping market? The manufacturing industry? I guess it depends how you slice it, but there’s a lot of missing data out there.

(Side note: It’s too early to tell where 3D printing will take hold in the consumer and manufacturing markets, but one vendor, Markerbot, claims to have sold 10,000 3D printers in 2011.)

This post was inspired by Carmen’s article on the topic of revenue opportunity in mass customization.

Filed under: Market Trends | Tagged: business model, mass customization, social commerce | 1 Comment »

Ecommerce innovation focuses on people

Posted on January 3, 2012 by treehouselogic

Etsy sales

2011 was a big year for a new wave of sexy ecommerce business models. Consumers have shown an interest in (and been throwing disposable income at) new online buying experiences that offer more than just large catalog of products. Here’s a quick summary of some new spins on the online shopping business model:

Specialized portals

Etsy specializes in hand-made goods by enabling very-very small businesses to sell their goods online. Etsy “brings heart” to ecommerce and has created a strong community around hand crafted goods and sustainable manufacturing. Some juicy Etsy stats:

For 2011, sales increased over 80% from 2010 (compared to a 10-30% industry average)
Etsy had more than 15 million visits Etsy between Black Friday and Cyber Monday
Etsy’s mobile traffic grew 350% from 2010 to 2011.

Why has Etsy seen such success? Instead of a we-sell-anything approach, Etsy focuses on the collectibles community. Many sellers have grown tired of eBay’s old school interface and lack of focus on sellers. Additionally, Etsy has created a sense of product quality and prioritizes technical innovation and the user experience.

Happy Toy Machine

Design it yourself

In 2011, more newcomers popped up in the design-it-yourself (ie mass customization) space. These sites enable the quasi-designer or fashion blogosphere to control product design. Happy Toy Machine, Define my Style, Ocozy, and Style Rocks all launched in 2011, just to name a few. Design-it-yourself is a great fit for product categories that include both functional and style variability. Popular categories include fashion, jewelry, food, toys, and furniture.

What is the size of the design-it-yourself market? Many indicators show growth trends, including a recent Forrester report that finds that “interest in customizable products is mounting. More than 35% of U.S. online consumers are already interested in customizing product features or in purchasing build-to-order products that use their specifications.”

Social commerce

2011 was the year that social commerce went mainstream, mostly as a result of online retailers integrating Facebook share and like functionality into their pages.

Copious, a new San Francisco based start-up, focuses on solving an age-old problem in ecommerce: trust. Shoppers want to feel confident that they are getting what they expect, and from reputable (or known) sellers. Copious taps into your Facebook network to make you feel more at ease by showing your “six degrees of separation” from the buyer.

Curated designs / fashion

Fab.com is focused on good design

Fab.com takes the daily deal concept to the next level by focusing not just on great deals, but on great design. Fab’s recent business model pivot and growth success can be attributed to the need to focus on a well-defined, but broad shopping category; great design. Indeed, curation of content is a refreshing approach to many customers that are fatigued from the noise of product search and daily deal emails.

Another ecommerce model that leverages the power of curation is subscription commerce. Subscription commerce provides a shopping solution for customers that don’t want to go to the mall (ie suffer from mall fatigue). Examples include Trunk Club and Manpacks.

What do all these new ecommerce models have in common? Focus on people. These companies are not technology companies or supply chain companies; they are service companies. They are servicing a market that large shopping marketplaces have neglected.

Focus on community: Specialized shopping portals like Etsy focus on cultivating the needs of a specific customer segment
Encourage creativity: Design-it-yourself sites focus on inviting the customer to participate as a designer
Build trust: Social commerce sites like Copious focus on raising consumer confidence by validating the trustworthiness of sellers
Editorialize content: Curated daily deal sites focus on providing style advice along with great deals.

What’s are some next generation trends in ecommerce? Aspirational shopping for one. Pinterest has created a rapidly growing community focused on the cross-section of self-expression and online shopping.

Filed under: Market Trends | Tagged: ecommerce business, etsy, fashion jewelry, forrester report, hand crafted goods, mass customization | 2 Comments »

Customization video round up

Posted on December 8, 2011 by treehouselogic

Here are a few videos from various corners of the customization and fashion technology markets.

3D customization in Spain

This fashion design tool requires a “unity web player plug-in.” Huh? Otherwise, a great demonstration of life-like online shopping (ie augmented reality) via a ‘virtual try it on’ approach.

Mass customization of housing

Really slick video graphics to demonstrate modeling user-specific products based on defined parameters (ie a product configurator). Very space age and academic.

Upcload takes on “the fit problem.”

Here’s a pretty slick demo on how shoppers can easily match their body dimensions to garment sizes online. The goal is to achieve the Holy Grail of online apparel retailing; ensuring the perfect fit over the Internet. Of course it will only solve the problem if the platform is widely adopted by brands. In the context of mass customization, you can imagine how a shopper would design-their-own product by specify functions, styles and colors, then submit their body dimensions with a quick “Upload ID” submission.

Filed under: Market Trends | Tagged: build-your-own, video | Leave a Comment »