CustomMade Looks to Expand, Drive New Model for E-Commerce and Retail

5/7/12Follow @gthuang

Whether you call it e-commerce, digital marketing, or what not, the Boston area has a lot of companies trying to create the future of how people buy stuff online.

There are established e-retailers like Wayfair (fka CSN Stores) for home goods; newer companies like Gemvara for buying jewelry and Zmags for doing tablet-based browsing and commerce; smaller “customization” startups for designing apparel, like Blank Label, FashionPlaytes, and Zyrra; and curated marketplaces like Daily Grommet, Krush, and Curisma.

But one local startup is coming at e-commerce and retail from a different angle. Let’s say you’re looking for a serious piece of furniture or jewelry, and you’re particular about what you want. You could browse through dozens of options on various sites. You could mix and match styles to create something that’s your own. Or you could start from scratch, get your item hand-made by a master craftsperson, and be involved in the whole process—if the price is right, that is.

CustomMade, a Web startup in Cambridge, MA, is trying to figure out that balance, now that it has the resources to become a bigger player. Last week, the company announced $4 million more in venture funding from the likes of Google Ventures and Schooner Capital, bringing its total capital raised to about $8 million. The 24-person startup and its investors see a big opportunity to create a new retail-buying model in the years ahead.

“We will change the landscape, because custom is what people will come back to,” says Mike Salguero, the co-founder and CEO of CustomMade. “There’s a revolution going on in this country, with people wanting to know where the stuff they buy comes from.”

First, a few words about what CustomMade is not, at least according to its founders. It’s not an Etsy competitor for handmade goods (“we’re service, they’re product”). It’s not the next Gemvara (“there’s no configurator”). And it’s not too geeky to be adopted by most consumers and craftspeople. “A lot of what we have to do is build systems and processes to make it delightful enough for both sides of the marketplace, so people can be convinced it’s a viable alternative,” says co-founder and chief operating officer Seth Rosen.

CustomMade runs an online marketplace designed to connect consumers looking for furniture, woodwork, ceramics, and other crafts with high-quality makers near them. The goal is to give consumers a custom-built experience at a price that’s competitive with traditional retail—easier said than done, of course.

Rosen and Salguero (see photo above) are old college friends and former real estate and finance execs who bought CustomMade in 2009 (it’s actually been around since 1996). For the past couple of years, they’ve been working to expand their network of several thousand makers around the U.S. while also revamping the website, evangelizing the concept, and, oh yeah, figuring out a revenue model (which has evolved from subscription- to transaction-based).

The company sits at the intriguing intersection of digital commerce, the social Web, local marketing, and personalized products and services. So you could say it has as much in common with online project-based communities like Kickstarter, Quirky, and GrabCAD (which is here in Boston) as it does with most e-commerce sites.

And that is what’s most compelling about CustomMade. It exemplifies a new approach to e-commerce—a field that has diversified away from uniformly Amazon-like experiences to also include more personal and community-driven approaches. (Though there’s nothing wrong with Amazon’s model, clearly.) It’s also interesting that the startup’s founders aren’t retail guys or craftsmen or social Web geeks. They’re just savvy businessmen who saw an opportunity from the outside, by looking at the problem differently.

“With paradigm-shifting companies, people always think the founders are nuts. In this case they’re right,” Rosen says. “What everyone’s doing in e-commerce is, ‘How do I sell more stuff, and be the person to sell more of it?’ We’re saying, that’s totally cool, but you could also do this.”

Their business still faces serious challenges, of course. “Our biggest competitor is what we call ‘blinders.’ Consumers don’t know custom is an option,” says Salguero. “People still think custom is the way it was eight years ago. It’s not,” Rosen adds. “It’s basically a retail alternative right now—if there’s a connector.”

CustomMade hopes to be that connector on a grand scale. In the next few months, the company plans to roll out a new website that will look “a lot less like e-commerce,” says Rosen, and a lot more like Kickstarter. For example, it will include better ways to gather ideas for custom projects. “The focus of our site will be our stories,” he says. “Projects will all look like creation experiences.”

Before any new retail model can take off, though, more consumers will have to believe they can get better value for their money through CustomMade than via traditional outlets. One thing’s for certain: times have changed, for both buyers and sellers. “Customers can get access to makers they never had access to before, and makers have access to technology they never had before. They can communicate,” says Rosen. “We’re all selling stories. I think people want to buy that.”

Gregory T. Huang is Xconomy's Deputy Editor, National IT Editor, and the Editor of Xconomy Boston. You can e-mail him at gthuang@xconomy.com. Follow @gthuang

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  • Disgruntled Maker of CustomMad

    I would agree the founders are NUTS They have violated the legal agreement of CustomMade with me and will not make it right

  • CustomMade Sucks

    Custommade is currently involved in illegal business practices and are with-holding funds from the makers on their site. There are numerous complaints to the Better Business Bureau and the Federal Trade Commission concerning their company and the payment processing partner WePay they demand their makers switch over to. They are fast developing a reputation for not listening to their customers…both designers and buyers because of their big payout agreement with their payment processing partnership. Run FAR AWAY and sell your stuff on Etsy!!

  • Very discusted Maker

    →I feel bad for CM because this was and could be a Great Company, but at this point the practices and System glitches are going to run CM into the ground :( Very sad the people who have the power to say “we mad a mistake” and go to a system that will make themselves and the makers happy, just won’t do that!

    →It’s going to be interesting to see if the do the right thing or ride their pride right into the ground
    I was very happy with CM until the partnership with WEPAY and Now I absolutely Hate doing business with them, As one of the Wonderful people who are creating the Artesian Products make CM possible, we are being mistreated, and unfairly forced to suffer struggle and take money losses, that should be and probably are Illegal!

    • Disgruntled Maker of CustomMad

      Since Google ventures has hands on after they gave CM the grant I doubt it is in just the hands of CM but google which couldnot careless!!!