A Mass Market of One

As custom online ordering moves into the mainstream, Web merchants learn to fine-tune their trade

Like many other Web businesses, it was a good idea that took time to blossom. The year was 1997, and Masterfoods USA, the division of Mars Inc. that makes M&M's, launched an online site called Colorworks. It offered a palette of 21 colors to coat specially ordered M&M's. Customers could pick any combo--maroon and gold, say, for their school colors, or silver for that special anniversary. It was a model of flexibility except for one thing: The minimum order, designed for wholesale buyers, was 40 pounds--enough M&M's to give the celebrating couple a sugar overdose.

Chocolate lovers clamored for smaller portions. And in April, 2001, Masterfoods responded, tweaking its manufacturing to produce eight-ounce and five-pound customized bags and selling them online. Although these cost nearly three times the price of regular M&M's, they've become a growing niche business, with sales doubling every year, say execs. "We're using technology to give consumers the products they're after," says Bill Simmons, general manager of the Masterfoods business development team.

From colored bits of candy to hockey sticks and complex plastics, lots of items are now being tailored to individual desires. This is part of a continuing industrial evolution--from mass production to mass customization. The result is the mass market of one. And the Web is helping to bring it about. Companies are wooing shoppers with a digital version of the classic Burger King come-on: "Have it your way."

The appeal is extending from retail stores into the labs of the world's biggest manufacturers. Procter & Gamble Co. (PG ) lets shoppers design everything from eye moisturizer to liquid foundation makeup at its reflect.com site. Engineers at Rockwell Collins Inc. (COL ) use virtual online labs to tailor materials for fighter-pilot visors. And Yankee Candle Co. (YCC ) woos buyers with brightly-hued labels and exotic scents they can mix and match for the right candle. "Mass customization will grow, becoming a necessity in some industries," says Paul H. Zipkin, professor at Duke University's Fuqua School of Business.

Companies are approaching this new world with caution, and with good reason: The Web can find plenty of customers for made-to-order products, but retooling a factory to spit out thousands of faultless variations on a theme is no easy job. Nike Inc. (NKE ), for example, spent six months working with suppliers in Asia to rejigger its manufacturing for custom-made sneakers. Other companies, aware of the complications, start off with reduced offerings. Staples Inc. lets customers pick fabrics or colors--but only for chairs.

Today's custom e-marketers have lots to learn from services that have flopped. One clear lesson: It's nearly impossible to customize tastes. Why? Words rarely suffice. When Generals Mills Inc. (GIS ) launched Mycereal.com two years ago, it urged breakfasters to order their dream cereals. But customers found that the taste fell far short of their mouth-watering descriptions--and cost more than $7 a box to boot. It was the same story at P&G's coffee site, Personalblends.com, which tempted coffee lovers with blends customized to their own tastes. Shoppers were stumped by the questions designed to help define their taste--and were unwilling to pay the $10 a bag that P&G needed to charge.

Still, recipes for success are emerging. Industries such as clothing that can charge a premium for quality are a natural. Others, like golf clubs and hockey sticks, that deal with simple shapes also have an edge. For businesses rooted in databases, from credit-card companies to mortgage lenders, the race to the mass market of one is well under way.

Customization not only expands markets but also allows businesses to charge more. Take Branches Hockey in Osceola, Wis. In April, 2001, the stickmaker launched a service that lets consumers order customized products. Players pick from 26 options, including the length of a stick, blade patterns, and curve patterns for the blade. Branches plugs the data into its digital cutting equipment and cranks out a custom stick in five days. The company charges 39% more for custom sticks. Branches says the online offering has increased revenues for the entire business by as much as 25% in the past year.

Companies that turn to customization can offer services that wouldn't work without the Web. Catalog clothing company Lands' End Inc. (LE ), which only has a handful of outlet stores, introduced customized chinos online a year ago and jeans early this year. Now, custom orders make up 40% of chinos and jeans sold online. In November, Lands' End introduced made-to-order twill pants and dress shirts.

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By Faith Keenan in Boston, with Stanley Holmes and Jay Greene in Seattle, and Roger O. Crockett in Chicago

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