Groupon says its focus is on the bottom line, rather than top-line growth.
The web opens new ways for consumers to express their individuality with an online purchase.
The dog food bowl embossed with Sparky`s name, the sweatshirt with a grandchild`s name stamped in front: catalogers have been offering personalized products for decades. And it was only 10 years ago that an experiment in custom product--customized jeans--opened (and closed) in Levis Strauss retail stores.
Both efforts speak to the consumer`s tremendous desire for items that are unique in a mass-market world. Retailers` challenge in tapping into that demand has been largely logistical, as they struggle with order entry issues and manufacturing lead times and economies of scale that don`t easily accommodate the production of merchandise in lots of one. But now a new factor in the marketplace is changing that: the Internet.
Nowhere but the web
From giant Lands` End, which pioneered custom apparel online five years ago, to much more diminutively-sized retail operations, merchants and brands are finding that the Internet can transform consumers` interest in something unique into a profitable business.
If retailers can broaden the market reach--and manufacturers can cost-effectively, quickly and accurately automate the capture of order specifications--they can deliver a product for which consumers will pay a premium.
One of the latest online retailers to get into the custom product business with the launch of personalized cookie tins on its site in October is 4-year-old ChipnDough.com. The company spent 18 months developing a web application that lets customers design their own cookie tin lid online, then delivers the product overnight if needed. On average, its margin on the custom tin product is about 15% higher than on the same number of cookies in a generic container. "This model would not work anywhere but on the Internet," says vice president Mike Snyder.
The web medium tackles several challenges that until now have constrained retailers and brands eyeing the custom and personalized product market. Archetype Solutions, the California-based software developer and service organization that`s behind Lands` End Custom as well as more recently-launched custom apparel on Target.com and JCPenney.com, traces its roots to the Levi Strauss store experiment through its CEO Robert Holloway, a former Levi Strauss executive.
While Holloway says consumer response to the offer of custom jeans was enthusiastic, distribution was a limiting factor. To order jeans, customers had to go into a Levis store equipped with the technology needed to capture the customer`s measurements, but Levis had very few stores. "There were only about a dozen of them across the U.S., so it could never gain the momentum it needed," Holloway says. "So the challenge was, could you do it in a way that didn`t require consumers to go into a store and go through the fitting process, and make it really easy for them?"
If Lands` End Custom is any indication, the answer is yes. The company has reported that in some categories in which it now offers custom apparel, custom fit accounts for as much as 40% of sales. And it`s introducing new customers to the brand. Lands` End has disclosed that 25% of the buyers of custom pants and jeans on LandsEnd.com are new to the company.
Taking the capture of measurements and style preferences out of the store and putting it online solves the distribution problem. Consumers can order up a pair of custom pants as easily form Nome, Alaska, as from downtown Chicago. The web reaches more customers than stores can and it saves customers the inconvenience of in-store fittings. And with the customer filling in fit and style preference information in online templates developed for Lands` End by Archetype, it also does a better job of getting that data to manufacturing facilities.
Archetype gathers the customer data from its retail partners electronically, runs it through its software to generate a unique pattern, and digitally transmits the pattern to factory partners worldwide that the retailer already uses to manufacture its standard-sized apparel. Archetype installs at those plants the technology needed to receive, output and cut the custom patterns. It ships the finished garment directly to the consumer on the retailer`s behalf on a two- to three-week turnaround.
Lands` End Custom functionality is contained on LandsEnd.com; Archetype hosts on its own servers the custom clothing features on Target.com and JCPenney.com. The hosted feature appears to the consumer to be part of the retailer`s site. The process passes the shopper back to the retail site after the fit and style information is filled in.
The hosted option simplifies system integration and facilitates software upgrades, and makes the offer of custom product more cost effective for retailers, Holloway says, though he would not disclose pricing. "As we have become more experienced in what we are doing we have been able to reduce the cost of entry to retailers, and as we do more volume, there are efficiencies to be gained," he says." In a move that brings the concept full circle, Archetype expects to launch custom apparel with a new retail partner in-store as well as online in January.
Archetype scales its custom services to bigger retailers and brands, but with the right application, the Internet makes it feasible for smaller retailers to offer one-offs as well.
ChipnDough.com, with its own warehouse and 24/7 baking capacity, had refined order taking and fulfillment in its cookie business to the point of overnight delivery, using standard tins, baskets, and containers. An early experiment in providing personalized cookie tins in volume to corporate customers floundered on the use of e-mail to communicate customers` design specs.
To create customized tin lids bearing corporate graphics or logos, "We had to have an artist do the graphics, then send a jpeg back to the customer for any changes, wait to hear form them and maybe even send a sample tin. We didn`t want to get stuck doing onesies and twosies by e-mail because it was a nightmare," says Snyder.