A Profitero study showed Target’s online prices were 25% more expensive than Wal-Mart’s, which were just slightly more expensive than prices on Amazon.
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ChipnDough solved the problem with an internally-developed application that lets customers do the design work on tin lids themselves. After customers select the cookie assortment they want, they enter the online feature, pick a background, pick graphics from clip art available on the site, or upload their own photos and graphics digitally. Once uploaded, the photos and graphics can be scaled and placed on the tin by the consumer according to his or her preference. Text can be added to the design, with the choice of more than 150 type fonts in 40 ink colors. Then the design and artwork can be saved on the site in a "My library" account for future use.
Snyder adds that two trends--increasing broadband penetration and digital camera use--are helping ChipNDough tap consumers` built-in desire for customized goods. "I`ve talked to some customers who are not very technically-minded, and they are having no trouble with the application," he says. The company aims to extend its reach by partnering with other retail sites.
The Internet--and consumers` interest in custom product--have put Personal Creations Inc. back into the wholesale business. Though supplying other retailers with personalized products it manufactures at its Chicago-area facility constitutes only about 5% of revenues versus 60% for its consumer web site and 35% for its catalog, wholesale is now the fastest-growing part of its operation, says president of e-commerce and new business development Geoff Smith.
Back to the future
It isn`t Personal Creations` first experience with supplying other retailers. Under a previous model it dropped in 1998, it sold products that could be personalized to catalogers. Personal Creations accepted order information from the catalogers, manufactured and personalized the items, and drop shipped them directly to the consumers.
What made that business so problematic that Personal Creations abandoned it shows why the Internet makes it work now. "Some of the catalogers were not capturing the personalization information correctly, so they`d pass us a bad order. There was a lot of human intervention, with a company taking orders, faxing them to us, and our people re-keying them in our system so we could manufacture the goods," Smith says. "It was an inefficient business, so we decided to get out of it and focus on the consumer direct business."
The Internet changed all of that. "We realized we could get back into it using the web. We could communicate directly from company to company through the web, XML or some other electronic means," Smith says. The customization information is never re-entered after the customers enter it themselves. The order is passed into Personal Creations` system electronically and flows to its manufacturing system electronically. Return rates due to personalization errors are less than 0.5%. "We`ve eliminated room for human error and labor cost," Smith says.
Letting others in on the act
Personal Creations offers an end-to-end personalized product service to other retailers on a free, hosted basis as a way to move its own products. With about 3,000 products that can be personalized by more than a dozen methods ranging from photo transfer to engraving, and a system that integrates into order management systems, Personal Creations offers a way into the personalized products business for retailers who don`t want to build infrastructure themselves. Online shoppers pass from a retailer`s site to the Personal Creations interface to enter custom product information and then back to the retailer`s site without realizing they`ve ever left the retail site.
Smith says many of his wholesale customers are dealing in commodity items and looking for a way to distinguish themselves by providing something unique to their customers. "For some, it`s providing a whole new category of business," says Smith.
One such company is ToysRUs.com. While it initially carried nearly every personalized product offered by Personal Creations, its partnership now is increasingly supporting efforts to focus on mothers` needs relative to their children. Personalizing kid and baby gear "extends the existing assortment and makes it more unique," says Ghalia Bhappy, director of products and product management at ToysRUs.com.
That`s especially true of exclusives on which it also can command a higher margin. Under an exclusive agreement with manufacturer Fisher-Price, for example, it works with Personal Creations to offer a personalized Talking Elmo, the Sesame Street character. The toy is programmed at Personal Creations to speak and sing using a child`s name and a selected greeting. It`s one of its fastest-moving personalized items and one of a relative few that Personal Creations doesn`t actually manufacture itself.
But for the most part when it comes to personalized items, "We are looking into the needs of moms. A lot of moms have children in daycare now, for example," says Bhappy. That fact helps make personalized pacifiers a brisk seller on the site, given that parents don`t want to ink a baby`s name to identify a pacifier any more than they want to place another baby`s pacifier in their child`s mouth. For similar reasons, ToyRUs.com taps Personal Creations for personalized sleeping bags, used for nap time by toddlers in daycare.
Keep the kids separate
Bhappy disclosed no figures on the sale of personalized products vs. identical items that aren`t personalized, noting that sales also are affected by factors such as pricing, distribution, site traffic, and more. However, "If all of that were common and not variable, I would say that some of the personalized products do fly faster in areas where there is a definite advantage in personalizing it," she says. "One example is Leap Pad carrying cases. When all the kids have it, and all the kids get together, whose case is whose? So we put their names on them."
While granting that the web has opened up the possibilities for personalized products, Bhappy offers two caveats for retailers looking to get into the realm of personalization. One is that what works online doesn`t necessarily work in stores.
"We thought of putting personalized products in our stores, but as of now, they`re offered only on our web site," she says. "These are the type of products you can`t really carry in a store without a lot of infrastructure supporting them, to make sure the quality stays consistent."