The building blocks of social commerce

Send the Trend founders

Send the Trend is a great example of a ground-up social commerce company.  In a video interview with Entrepreneur Magazine, CEO Divya Gugnani explains the company’s core DNA:

Curated content

Like Fab.com or Gilt Group, Send the Trend takes on the role of fashion curator by constantly editorializing their product mix.    Visitors who come to the site expect a level of fashion quality, just as they would from any trusted luxury brand.  Consumers depend on Send the Trend’s fashion expertise and contribute their own style by creating their own MyStyle page.

Social by design

The brand experience is based on the way fashion shoppers inherently search, browse, and share great fashion finds, ie social by design.   The curating and sharing environment created among like-minded shoppers generates a community ecosystem.

Send the Trend already has a strong social media presence with nearly 250,000 Facebook fans and 12,000 Twitter fans.  Additionally, they use Youtube to publish rich content, Pinterest for first-view photos, and Tumblr for an inside peek at the company itself.

Social incentives

For starters, Send the Trend uses a classic “tell a friend” marketing technique.    Users are asked to invite a friend with $10 cash credit.   When that sendee purchases, the sender gets $10 credit.

Like Polyvore or Pinterest, users can collect items and place them in their virtual, hosted collection.  The user is then asked to promote their MyStyle page.  They earn a commission when someone registers on the site or purchases via their MyStyle page.

Additionally, users are literally given store credit when they share Send the Trend items on Facebook or Twitter.   Users become brand advocates just by sharing their favorite items with their network.  The social insight here that fashion-find sharing feels nature because shoppers have always behaved this way, even before social media.   Send the Trend community members are proud of their finds and happy to share them among their fashionista friends.

Geo targeting + personalization

In addition to product curation and incentives to share, the Send the Trend website detects your location and services geo-specific recommendations, like sweaters for visitors from the Midwest and sunglasses for visitors from California.     Together the combination creates a more personalized browsing experience.

Focus on sales

Lastly, Gugnani emphasizes the importance of sales in every faction of the business.  Remember that your brand and all your shopping features are built to sell.  The entire social commerce flow needs to optimize the shopping experience.  The entire brand experience, including all the social building blocks, is a finely tuned, guided sales experience.

Personalization tools round-up

Customization is a $1 Trillion market

Personalization, in the context of ecommerce and mass customization, can be defined as providing consumers with a web-based toolkit to input custom text and images on to the surface of a product.  Most often personalization applies to printable commodity products like t-shirts, mugs, tote bags and stickers.  Anything that can be printed can be personalized.

How big is the personalization market? 

According to the CafePress SEC filing, “Based on 2009 U.S. Census Bureau data, we estimate the U.S. market for customizable retail goods is approximately $1.0 trillion.”

What is personalization?

A personalized mug

Personalization can also be classified as cosmetic customization, as per Joe Pine’s definition:  “Cosmetic customization, where a standard product is presented differently to different customers. The cosmetic approach is appropriate when customers use a product the same way and differ only in how they want it presented. Rather than being customized or customisable, the standard offering is packaged specially for each customer. For example, the product may be displayed differently; its attributes and benefits advertised in different ways, or the customer’s name may be placed on each item.”

As outlined in a previous post, personalization services are built with online design tools, which is a separate kind of toolset from Treehouse Logic’s unique hosted product configurator solution.  These design tools are essentially hosted editing tools – like a lite Photoshop in the cloud.  And, much like desktop editing tools, these design tools often include desktop-like navigation features like drag-and-drop.

Here’s a snapshot of a few sub-segments of the personalization market.

Print shops

Dozens of online printers offer personalization.   Examples include Custom Ink, Uber Prints, and Funky T Shack.   (Yes, seriously).   These consumer-facing printing companies offer design-it-yourself web tools that include text overlay and image upload.  Once an order is taken, printing and shipping are handled at the company’s manufacturing facility.

Personalization marketplaces

Additionally, print shops like Zazzle, CafePress, and Spreadshirt invite the community of quasi-designers to post their designs on their site and sell it to the public.  Like an eBay or Etsy marketplace, buyers and sellers converge in an ever growing network of virtual goods.  Designs are crowd-sourced by micro-entrepreneurs, and the network makes money by charging a commission on every sale.

This consumer/designer model differs from other crowd-sourced print companies like Threadless that require that designers submit more professionally designed image files (in Photoshop or Illustrator format) rather than using standards-based, consumer-facing browser based design tools.

Embedded design tools

Threadless drives customization innovation

Some software companies make their front-end design tools available to back-end printing businesses.  Spreadshirt offers an API that enables anyone to embed and skin their design tool, but printing itself must be processed via the Spreadshirt supply chain.  Inksoft offers printers a front-end design tool template that they can used to process print orders, but the template is not very flexible.

The worlds of customization and personalization toolkits are colliding and evolving quickly.   Although many of these t-shirt designers brought innovation to the market by publishing design tools on the Internet, the market is demanding more flexible toolkits that allow brands to build their own branded personalization experiences.  We’ll see a lot of disruption in the personalization space in the next few years, especially now that social commerce is taking a leading role in ecommerce innovation.

Customization meets social commerce

Custom jeans

Mass customization legend Frank Piller recently posted about custom jeans up-and-comer Getwear.   “The website seems to be very carefully designed and somehow a “best of breed” of best practices for a good co-design toolkit.”

Is Getwear any really any different that other custom jeans companies Indi, Make Your Own Jeans, and DoMyJeans?

GetWear believes that their site is new and different.  “None of them is social,” explains Yaakov Karda of Getwear.  “It was you (the customer) and the company.  Basically, it is an analogue of web based “atelier”. There’s not much fun in buying atelier made clothing for young people; the concept looks and sounds outdated.   Getwear is all about social commerce. From my point of view, mass customization has perfect potential if coupled with community but will not succeed on the large scale if it is not.  All other “custom jeans” businesses mostly target people with special requirements (and though an established need for a custom product). It’s a very limited market (and with harsh competition).”

Are Buyer / Sell communities "social?"

Is Getwear an example of social commerce?  Yaakov is referring to “crowd-sourced,”, not “social.”   Of course co-creation (ie open innovation) and social are not the same thing, but they are often confused.   Does social just mean community-enabled or does it imply tapping the trusted opinions of friends or connections?   Certainly, giving quasi-designers the ability to sell their creations in your marketplace is democratic and taps into the power of network effects, but it does not merit the title ‘social commerce.’

Social as a collaboration enabler

Nicholas Marx of Besposkable says this about their open portal approach:  “Through social, we’re enabling collaboration: both sides – buyer & seller – can make edits to our product configurators. We’re finding that many people want a relationship with the maker of their things. They want to be able to ask them for their advice, etc. Only the personal attention of single craftsmen or a small team can provide the attention to detail needed for true customization. We’re finding that people want to buy from other people, not really from factories. I think many of the custom DIY outfits out there are missing that.”

Although the Bespokeable model leapfrogs conventional buyer / seller marketplaces like eBay by enabling creative collaboration, this may not merit the title “social commerce” as it doesn’t tap into power of trusted referrals.

Social commerce as a lead generator 

Pinterest is probably the best example of social commerce in that it taps the tastes of your Facebook friends.   Pinterest enables an aspirational, “pre-shopping” experience rather than a conventional yellow-pages marketplace.   Like Facebook, Pinterest feels more at home as a marketing tool than a sales tool.

 

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

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…

How to build a Facebook marketing campaign

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.)

How big is the Mass Customization industry?

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.

Magento product configurator interest on the rise

Last week, eBay hosted the X.Commerce Innovate Developer Conference 2001.   “Powered by trusted, global leaders in the commerce space—eBay, PayPal, Magento, GSI Commerce, and other best-of-breed partners—X.commerce delivers tools developers need to build new and better end-to-end commerce solutions in a single, flexible, open environment.”

Since then, Treehouse Logic has seen a surge in interest in Magento-integrated product configurators.   Specifically, we’re seeing a lot of traffic originating from the Magento forums discussion on product configurator integration.  Certainly, Magento, along with new parent companies Ebay and PayPal, is making an aggressive move into mainstream ecommerce development.

One hot topic at the developer conference was a new partnership between Facebook and eBay. Facebook is taking on an increasingly important role in ecommerce as brands focus on creating inherently “shareable content.”

VP and General Manager of X.commerce Matthew Mengerink said  “What we’re encouraging developers to think about is to try out the more ‘pre-shopping’ social experience”, he said. Meaning that the process of joining friends at an online store, browsing, sharing, and chattering via enhanced social features is a way to encourage brand recognition, organic word-of-mouth familiarity with products — and is integral to making the online shopping experience more resemblant of offline shopping. And to grow online sales.”

Indeed, a product configurator (or product customizer) is becoming the backbone of many social commerce campaigns.  Shoppers can build their own product as part of the “pre-shopping” experience.  This notion of pre-shopping is super important.  It essentially introduces shoppers to your brand, allows them to gain confidence with your brand, and let’s your brand stand out in the crowd.