More on product configurator – Magento integration

Here are a few more tips for integrating a product configurator on the Magento ecommerce platform.

Pass multiple items to the cart

Although a single customized product is passed to Magento as one SKU, it is also important to allow a visual customizer to pass a group of SKUs to the cart all at once.    In order to do this you need a simple Magento plug-in that enables passing more than one SKU to the cart.

A visual customizer should allow for co-creation of a product as well as cross-selling matching accessories.   For example, when building a computer on Dell.com you can easily add a laptop bag or an external hard drive during the customization steps. Once they get to cart, they should see their custom product as well as any add-ons that they included along the way.

Pass customized options via HTTP

All customized options can be passed to the Magento cart via parameters in the URL.  Each configuration should be URL specific so that users can share and save the configuration.   The configurator doesn’t necessarily need to integrate with Magento via an API or via any special custom coded interface, it can simply pass product information in the URL via an HTTP request.  This makes system integration super simple so there is no platform dependence.

Magento supports http URL integration to its cart from an external configurator in the same way products are added from the catalog to the cart.    Viewing the source code from a Magento catalog page with an add-to-cart interface will reveal how the URL needs to be formed by your configurator.   Essentially your configurator is mimicking the out-of-the-box Magento catalog paradigm.

Speed everything up

Passing product information to the cart via HTTP is incredibly fast.  Many Flash based configurators struggle to pass product information to the cart because they are image rendering solutions that aren’t architected with ecommerce transactions in mind.    Look for any performance snags along the transactional flow.  Shoppers won’t tolerate delays.   The customer expects to select “add to cart” and be taken right to the cart without delay.

3 keys to building a product configurator on Magento

If you are building your store on the Magento ecommerce platform and are adding a visual product configurator, it’s important to understand how to pass product information to the Magento cart.    Magento should have it’s own set of product data already set up so the key is to pass the configurator data to the existing ecommerce environment.

Magento cart

Here are some best practices for building a visual customizer on Magento.

1)   Pass custom selections to the cart

The customer needs to see the name of their customized product in their cart plus the product details and colors that they have selected.    Keep in mind that logically this is one complete product with a detailed set of custom choices associated with it.   Simply showing a generic “customized product” is not enough information.

2)   Pass an image of the customized product in the cart

Of course the customer appreciates an image of the customized product in the cart so they can confirm that they are getting what they created before they check out.  The image should be selectable and linked to the configurator so that the customer can go back and make any adjustments to their choices at any time.

3)   Use simple products, not “configurable” products

Magento’s  “configurable” product type requires pre-building every possible permutation that your configurator can pass to the cart.   Setting up thousands, if not millions of static SKUs ahead of time would be a logistical nightmare, so we do not recommend using the “configurable” product approach.

A much cleaner approach is to use “simple” products with a set of custom options to represent the configurable components of the product.    Simply add text fields as custom options.    This approach is inherently scalable, allows you to modify your customization product data without making changes to Magento data, and minimizes the need to manage millions of SKUs that may never be needed.

Take the example of a configurable T-shirt with options for size, color, and logo.

custom t-shirt

Using a Magento configurable product requires you to declare all the option values for size, color and logo in Magento and embed these in their own simple products.   Then you have set up pricing information for each of the possible combination of your configurable product.   Let’s say the t-shirt has 4 sizes, 40 colors, and 50 logos.   This creates 4 X 40 X 50 = 8,000 unique combinations.   And say you decide to add 20 more colors for the new season?  Now you have 4 X 60 X 75 = 18,000 combinations to deal with in Magento!  Clearly this is not a scalable solution for a product configurator that is meant to scale with a dynamic business.

These are three keys to a straight-forward integration with the Magento platform.   Also see How to integrate a product configurator with Magento.

Levi’s second attempt at mass customization

In 1999, RetailTech reported “High Tech Levi’s Store Takes Mass Customization to New Level.”  At the time, switching from a mass production model to a built-for-one model seemed like a strategic necessity.

“Besides being known for its ubiquitous jeans, Levi Strauss & Co. has made a name for itself in technology circles for its pioneering work in mass customization. For several years, the clothing manufacturer has offered a process called Original Spin at its retail locations, using digital technology to create a pair of jeans customized to fit an individual’s proportions. Now, at its 15th store, which opened in August in the heart of downtown San Francisco, Levi’s is taking Original Spin to the next level.”

But Levi’s first attempt at mass customization was a failure.  By 2004 they had shut it down. Frank Piller wrote a summary of the experiment:

“Levi managed neither to turn the customized product into a customized relationship with its customers (during all its existence, re-orders were never easily possible, and as an active customer myself I never got any request for feedback by the company) nor to use the knowledge from the individual orders for customer knowledge management.  During all the years and my visits at Levi Strauss I never got the feeling that they wanted to make it real and big at any time. However, I strongly wish that Levi will have the courage to re-introduce a new generation of mass customization in the near future. Because one thing was always very obvious: consumers loved Original Spin – most comments the company got were very positive or even enthusiastic.”

Well, Levi has apparently taken Professor Piller’s advice.   In 2010 Levi has come back with mass customization to an extent with a new program called Levi’s Curve ID.  Levi has introduced jeans built around shape, not size.

Unlike Levi’s first experiment with mass customization, users customize their Levi’s Curve ID online — not in a store.   Offering the service via the Internet allows Levi to target millions of people instead of the few that would stop by select retail stores.

This time around, Levi isn’t truly engaging in mass customization, as they are not building the jeans to fit. But they are also not taking a one-size-fits-all approach. As put by Mary Alderete, Levi’s Vice President of Global Women’s Marketing:

Cameron Diaz in Levi Curve ID

“Our research showed that 80 percent of women around the world fall into three distinct body shapes, so one size could never fit all. Our goal is to engage women online with our interactive, custom fit experience that will match them with their perfect Levi’s CURVE ID fit whether they are a Slight Curve, Demi Curve or Bold Curve.”

Customers use a product configurator tool to discover their “Curve ID”, so they don’t need to try on 10 pairs of jeans before making a purchase.   And, as Dr. Frank Piller suggested, the customer’s customization settings are saved in their account history so they can easily reorder for years to come.  Allowing for easy repeat purchases has proven to be imperative to success in mass customization.  So far, Levi’s second experiment in personalization seems to be working with revenue up 7 percent in the third quarter of 2010.   And you know they are doing something right by having Cameron Diaz and Ellen promote the Curve ID initiative.

More on price – Custom products do NOT command premium prices

In our last post we cited many research examples that prove that custom products command premium prices.

Fast forward to 2010

In the recessionary market of 2010, charging more for personalization may not be good for business.  One of the earliest companies to embrace mass customization, Dell Computer, this year announced that it had run into problems with the model because customers weren’t willing to pay more for customization.

“In the past, we utilized a single direct configure to order model and we gave our customers a cascade of options to choose from when configuring a product specifically for their needs.  This was, and still is, a great model for custom configuration where our customers value and will pay for this service but it has become too complex and costly for significant portions of consumers and some portions of our commercial businesses.  As a result, we are addressing this complexity and added cost with client reinvention.”

Compare Dell’s recent decision to pull back on mass customization to the success of a smaller clothing manufacturer, which is enjoying massive growth because it delivers mass customization at mass production prices.

Fashion Playtes, an online clothing store for girls that lets them design their own products and share their designs with friends, charges about the same for an item as the Gap.  The cost of customization, meanwhile, is about the same as supporting retail stores. So by creating a build-to-order fulfillment supply chain and only supporting an online sales channel, they are at price parity with a mass-production business like the Gap, but with personalized products.  As a result, Fashion Playtes has grown from 5700 unique visitors in August of 2009 to 35,000 visitors a month today.

The recent examples of Dell and Fashion Playtes seems to indicate that consumers do want customization — but it’s debatable in these recessionary times whether consumers are willing to pay much more for it.  But if a company is able to offer personalization and compete on price it can be like steroids to their growth rate.

It also means they don’t have to compete with major brands on price alone. They can sell items for the same price — and offer customization to differentiate themselves from the major brands.  Some examples of new companies that utilize product configuration and competitive prices in their business models are Rickshaw Bags (custom messenger bags for $60), iTailor (custom dress shirts for $29.95) and Mix My Granola (custom mixed granola for $4.99 per 16oz container plus additional ingredients for about $1 each).

In the era of cut-throat price competition on Amazon and eBay, customization vendors don’t necessarily charge a premium for their products since online shoppers are search-savvy and always looking for the best deal.   Instead, a new generation of mass customization vendors is targeting mass markets by matching their mass production counterparts and setting themselves apart with a better shopping experience.

This doesn’t mean that custom products no longer command premium prices.  Custom luxury goods are a breed apart from mass-market products and still command higher prices for designer brands, better quality, and hand-crafted artisanship, although at much lower volumes.

It should be noted that the customization flow offers many opportunities for up-sells and add-on accessories.  Although prices of base products may appear to be at parity with standard products at first glance, the ease of upgrading is so easy that shoppers are tempted to increase the size of their shopping cart before checking out.  Dell, for example, is masterful at cross-selling peripherals and accessories during the customization process.

Certainly there are two sides to the price premium debate.  But, combining reasonable prices with a differentiating co-creation experience appears to be the hot trend in mass customization.

More on price – custom products command premium prices

Let’s face it.   Part of the appeal of the mass customization business model has been the promise of higher prices and higher margins.

In 2006, Forrester found that consumers were willing to pay a premium for customization: “19% said they are unwilling to pay more for a custom product.”

That same year, KPMG found that consumers were willing to pay more for custom clothes: “Mass customization isn’t just about customer satisfaction, but also about pumping up margins. About 20 percent of the population wants custom apparel — and they’re willing to pay an extra 30 percent or more for it.”

In a study conduced by researchers Franke and Piller in 2004, “users were found to be willing to pay a price premium of more than 100% for a self-designed watch on average.”

Joe Pine, author of Mass Customization – the new frontier in business competition, found in 1995 that custom products demand a 28% premium.

From a post from 2006 from Anita Windisman’s blog on mass customization and personalization: “Another reason for having a mass customization strategy is that is attracts a highly desirable consumer. Forrester Research maintains that these consumers could be your most important customers. Why?   Because a whopping 81% are willing to pay more for customized products.”

Is mass customization about built-to-order products?

Dr. Frank Piller, a leading scholar in the field of mass customization at MIT, recently posted a blog entry on what differentiates mass customization and personalization.

An interesting point in the discussion about the definition of mass customization is the sources of shoppers’ tastes and preferences for custom products.    What attributes of custom products are more appealing than mass produced products?  Craftsmanship, quality, price, fit, or simply the novelty of buying something that is built-to-order?

Dr. Frank Piller

Dr. Piller explains –

“Take, for example, the widespread belief that mass customization entails building products to order — a belief that also I followed for a long time. But today I agree that this is not necessarily true.   Customers are looking for products that fit their needs, and they do not necessarily care whether those offerings are physically built to their order or whether those items come from a warehouse – just as long as their needs are fulfilled at a reasonable price.”

The recent rise in popularity of mass customization is not necessarily due to shoppers becoming so finicky that they won’t buy products off the shelf anymore. Instead, online shoppers expect a deeper, more visual, more interactive selection experience that quickly leads them to exactly what they desire, whether it be custom or standard.

There is a fine line between customizing a product and making product feature selections.  Custom shoe shoppers, for example, do not want to be given a sheet of leather, a pair of scissors and some thread so they can build their own shoes.  Instead, they want to be shown templates, graphics options, color recommendations and style choices.  In effect, shoppers want to be guided through a visual custom shoe building experience in the context of a customizing and selecting attributes that the shoe vendor delivers to them.

Custom shoes

This point highlights a key position that we’ve been taking at Treehouse Logic – next generation ecommerce websites include customization in the context of an extended online shopping experience  – ie search, browse, self-educate, select, fine-tune, customize, personalize, compare, rate, share, and buy.      Our research has shown that shoppers do not necessarily seek out custom products.  Instead, they seek out and select products that meet their needs, and customization via a visual product configurator is a key mechanism to delivering on those needs.

VentureBeat-VCs get on board with design-it-yourself offerings

Here is a link to my recent VentureBeat article on the increasing popularity of mass customization and co-creation offerings from a venture capital perspective.  And here is the article itself:

“Companies that let customers design their own products are becoming the next big thing. Just three months ago, I wrote that this trend of “customer co-creation” was one to watch. But it may prove even hotter than I thought. Since publishing the story, I’ve seen quite a bit of new funding activity in the space.

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.”

Mass customization ventures are attractive to VCs not just because they’re seeing tremendous growth. As it turns out, a scalable build-to-order supply chain model is also very cost-effective — sometimes even more so than a conventional mass production model. And because co-creation sites are seeing viral growth, they promise low customer-acquisition costs.

Here are some examples of recent VC-funded mass customization companies, as well as a few that have shown impressive traction in the past few years:

Gemvara
Gemvara lets you custom build jewelry online. Earlier this year Gemvara received $5.2 million in a funding round. Its revenue has doubled each month since its launch in February 2010, and it expects to close the year with more than a $10 million run rate.

Fashion Playtes

Fashion Playtes, a web store that lets girls aged 6-12 design their own clothes online, just raised $4 million in its first institutional round of funding led by Fairhaven Capital Partners. The service’s popularity with the tween market has grown by more than 600 percent in the past year: The site had 5,700 unique visitors in August of 2009 and is averaging 35,000 visitors a month today. Investor Scott Johnson explains, “Fashion Playtes’ mass customization strategy brings the power of social networks, multiplayer games, and modern custom manufacturing to the $11B+ tween apparel market.”

Shapeways
Union Squares Ventures and Index Ventures were part of a $5 million investment into mass customization company Shapeways this year. This Dutch company lets buyers customize 3-D printed wares — and hopes to be the Kinko’s of 3-D printing.

Chocri
Major chocolate maker Ritter says it invested in “the low seven figures” in Germany’s Chocri, a site that enables the co-creation of chocolate bars. You design it using a product configuration tool on their site, and Chocri mails it to you from Europe. The cash infusion will help Chocri scale its operation by optimizing its fulfillment process.

Polyvore
Polyvore’s design tool serves as a virtual styling tool, letting you mix and match clothing products from your favorite online stores to display your own “outfit” to the world. Polyvore’s tagline is “Clip + Create + Shop + Share = Polyvore.” Other users vote on the outfits with as many as 400,000 “likes” added daily. With 30,000 style sets being created every day, Polyvore now contains 20 million sets in its database. The company has raised $8.7 million in funding since 2007. (Incidentally, Polyvore recently underwent a management reshuffle. CEO Sukhinder Singh Cassidy resigned last month over disagreements about the company’s direction, and cofounder Pasha Sadri has taken on the chief executive position.)

Zazzle
Kleiner Perkins led Zazzle’s $16 million first round in 2005. This mass customization vendor lets you design your own bumper stickers, T-shirts, mugs and posters that you or others can buy (see image at top). Zazzle reports that it has 20 million unique visitors per month, 31 billion unique products available, and has grown 1,600% in traffic and 900% in sales in the past four years.

CafePress
Zazzle competitor CafePress also lets customers build their own bumper stickers, T-shirts, mugs and posters. A profitable company, it doesn’t depend on venture funding. It received a second round of funding in 2005, the last serious investment in the company, according to a timeline on its Web site. Available merchandise surpassed the 150 million mark in 2008.

Threadless
In October, crowd-sourcing T-shirt site Threadless.com celebrated 10 years of giving artists the opportunity to design shirts and have them scored by the Threadless community. Winning designs are sold through the online store. The company generated $30 million last year.

Modcloth
This innovative online retailer secured $19.8 million in a second round of financing this year, the company announced in June. Modcloth’s innovative “Be the Buyer” service lets visitors vote on which clothing styles Modcloth should put into production. Modcloth’s sales grew 17,000% between 2006 and 2009.

With growth rates like 17,000 percent over three years, it’s not a huge surprise that VCs would see the writing on the wall and invest heavily in the mass customization model.”

——

Source:  VentureBeat

Quick update as of 11/10/2010

MyShape raises $5.5 million to help women shop for clothes that fit them.

Customization vs Mass Customization

Dave Gardner, Fast Company blogger and author of Mass Customization – an enterprise wide business strategy, recently wrote an insightful blog post entitled “Mass customization vs customization:  What really matters?”

Here’s an excerpt from Mr. Gardner’s post:

“I define “mass customization” as the ability to produce a single, customized product with the same efficiency as a mass produced product.  We can all imagine what it takes to produce thousands of Hershey bars but how does the effort differ to produce just one or three?  Mass customization implies seamlessness from the standpoint of configuring, pricing and ordering all the way through the manufacturing process. Where customizers often lose efficiency is the set-up time to produce an order.  A mass customizer would not suffer this inefficiency.”

The question at hand is efficiency.   Mass production leverages economies of scale which “refers to the cost advantages that a business obtains due to expansion.  There are factors that cause a producer’s average cost per unit to fall as the scale of output is increased.  “Economies of scale” is a long run concept and refers to reductions in unit cost as the size of a facility and the usage levels of other inputs increase.” (Wikipedia definition)

path to mass customization

Many alleged “mass customizers” have launched innovative online product configurators but fabricate each product by hand.  The Internet increases the efficiency of receiving orders, but as Mr. Gardner points out, efficiency must be reflected in every link in the supply chain – from order submission to order fulfillment.   To deserve the “mass” prefix in “mass customization,” the customizer needs to be able to match the efficiency of mass producers in both customer acquisition and product delivery.

As Gardner points out, most mass customizers are companies that have started with on-demand business models, rather than mass producers like Nike and Levi’s who have experimented with shifting from mass production to mass customization.

So what really matters?

Gardner concludes that a company shouldn’t really be concerned with labeling themselves “mass customizers” or “customizers.”   The important thing is to focus on finding a successful business model for your size and scale, and look for efficiencies as you grow.

When a customer is buying a specialized, personalized, custom product over the Internet, they are not directly comparing their purchase to a standard item found in the isles of Target.  The customer expects that their custom product will be hand crafted and built with personalized attention.    That level of craftsmanship often merits a premium price and longer delivery time.   In the case of hand-crafted custom products, customers are less concerned with instant gratification and more focused on quality, fit and the novelty of having an artisan item specially created for them.

Rickshaw PCQ

As an example, here are a few customizer mantras that highlight that their focus is on special attention to craftsmanship.

• GemKitty – “You design.  We craft.”
• Rickshaw Bagworks – “Fresh bags made daily.”
• Blank-Label – “Designed by you.  Stitched by us.”

What really matters is customer satisfaction.  And, that holds true for mass producers, mass customizers, and customizers.

Fashion Playtes raises $4M to expand do-it-yourself fashion market

Fashion Playtes is a great example of a new company that built itself on the principles of co-creation and mass customization — and is enjoying both burgeoning consumer demand and VC funding as a result.

Fashion Playtes, a web store that lets girls aged 6-12 design their own clothes online, just raised $4 million in a Series A funding led by Fairhaven Capital Partners.

Fashion Playtes is about as far as you can get from a “one size fits all” model. The service gives buyers more than two million color and design options for them to co-create dresses, pants, skirts, jackets, handbags and T-shirts. The site’s product configurator is a virtual sketchpad that lets users design their own clothes, save them in their account and order them when they are ready for shipping to their home address. Prices are set based on the complexity of the design and the number of items. The design tool even lets customers create their own brand name for the products they purchase.  Visitors can share their co-creations with the world via a Wall of Fame contest that lets visitors rate each others’ creations. Through a partnership with SecretBuilders, FashionPlaytes lets users create a virtual world where they  “build” a house, play games, design clothes, and chat with others.

Investor Scott Johnson explains – “Fashion Playtes’ mass customization strategy brings the power of social networks, multiplayer games, and modern custom manufacturing to the $11B+ tween apparel market.”

Unlike custom clothing that often commands a premium price, the cost of purchasing a T-shirt or skirt from Fashion Playtes is about what you would pay at any Gap store.

Johnson notes that the cost of producing customized goods is negligible: “Fashion Playtes targets Gap pricing and quality, and they achieve it nicely.  The customization costs roughly equate to Gap’s cost of supporting retail stores.   And the customization is currently done in Fall River at a factory that has ample capacity for scale.   Fashion Playtes has barely scratched the surface of that single production facility.”

It’s important to note that Johnson is directly weighing the costs of customization against the costs of leveraging a traditional brick-and-mortar channel.   For Fashion Playtes, the costs of a self-service co-creation website and on-demand supply chain equate to the cost of a mass production supply chain.

The service’s popularity with the tween market has grown by more than 600 percent in the past year: The site had 5,700 unique visitors in August of 2009. They are averaging 35,000 visitors a month today.

They’re part of a growing number of innovative ecommerce companies operating in the hot soft goods space, including StyleCaster, IndiDenim, MyShape, Polyvore, and StyleFeeder.

Polyvore on mass customization of sets

A great example of a company driving innovative, interactive, social online shopping experiences is Polyvore.   Polyvore is the largest social shopping platform on the web, with users uploading 30,000 creative sets per day, for a total of 20 millions sets in total.   Polyvore’s vision is simple and highly scalable – let shoppers collect product clippings from across many stores and create their own sets to show off in the community.

In this video interview with GigaOm, CEO Sukhinder Singh Cassidy speaks about Polyvore and how a new generation of ecommerce tools are priming the web for richer shopping experiences.

“There are those that come to Polyvore to express their creativity and those that than come to be inspired to shop, and those that come to inspire others to shop.  I think of it as being in the genre of the next generation of shopping online.

We are in the early days of shopping online, particularly for soft goods online.   For many years we’ve had great tools for shopping online, comparison shopping, and finding things like books and video, and people are increasingly shopping for clothing and accessories and softer goods.  But, the reality is that these sites don’t meet the aspirations or expectations of the experience that you have offline.

Shopping for soft goods is often fun – it’s social.   It IS an experience.  You’re going out shopping sometimes to be inspired, sometimes to buy a specific thing.   1.0 and 2.0 of shopping online has been very transactional and well suited to hard goods that can be easily compared and bought without emotion.   But I think what has everyone excited about sites of this generation is that the category is wide open to bringing the aspiration, inspiration and fun back to online shopping.”

Polyvore has built a co-creation portal that encourages crowd-sourcing – generating high volumes of user-generated content.   The model is mass customization of sets – empowering the shopper with a powerful design tool that better enables a real shopping experience.  Whether shoppers are interacting with a brand by designing their own product with a visual product configurator, sharing sets with friends and the community, or sharing their creations across Facebook or Twitter, the experience is getting closer to a fun, social, and creative offline shopping experience.