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Newbury Comics is a retail chain in New England that builds miniature palaces to pop culture. It started out as a comic book store on Boston’s Newbury Street 2o years ago, but has evolved over the years to sell music, toys, gadgets, fashion, and a whole bunch of Twilight ephemera.

Founder Mike Dreese is an MIT Alum who applied the intelligent analysis and blunt tone of an engineer to the more traditionally right-brained worlds of fashion and pop-culture. He gave a talk at a ecommerce event I attended last week and shared some interesting thoughts on his business and history.

Scott Kirsner moderated and recorded the audio, which is well worth a listen, but a few quick hits follow:

• Newbury Comics has 30 stores, ~$70MM in revenue, ~$25MM of which is collected online.
• Dreese was candid and said that 80% of CDs in their store could be had cheaper online, but retail was often about impulse or urgency.
• Retail is all about merchandising. Find “winners”, the products people must have. Buy a lot of them and charge 20% more than you normally would. Dreese said a replica pin from the “Hunger Games” was an example of this. They pre-ordered a bunch and when they proved to be popular, they raised the price making it one of their best performing products.
• Retail is collapsing. Newbury Comics is opening new stores in malls which used to be out of their price range. They have been able to rent mall space now because the rents are coming way down and not because their business has become better. His outlook for Best Buy and Target were especially grim.
• They grew their online business from $10 Million to $20 Million in one year by leveraging Amazon and Ebay. Dreese repeatedly stated that he believes the future of ecommerce is on sourcing products and taking risk on warehousing and production, not creating new distribution channels.
• Retailers have to take risks. One of the things that gives Newbury Comics an edge is giving product partners working capital to manufacture goods to ensure they have supply. Bigger retailers do this routinely, but few at Newbury’s scale do.
• There are many other nuggets, so listen to the podcast for more insights.

Mass customization doesn’t get a lot of coverage from mainstream media sources aside from the occasional mention of 3D printers. Inc. magazine has bucked that trend in their October 2009 issue by putting Ponoko founder and CEO David Ten Have on the cover and writing about the 3D printer’s ugly cousin, the laser cutter.

If you read this blog you probably know the basics about Ponoko. They give designers the ability to produce one of a kind products by taking a design that is uploaded to Ponoko.com  and producing it for a simple fee. The big vision is the democratization of design and manufacturing. The small vision is that it is a neat service that helps people make fun wooden chachkas.

The article is really informative. At 10 pages long you learn a great deal about the companies origins, the struggles of the founders, and what the future holds. Some interesting facts:

- Ponoko has revenues of ~$250K. Fellow customizer CafePress has revenues of ~$100MM (One of the founders of CafePress is an investor and board member).

- If you order a product from Ponoko, it is very likely the CEO who laser cut it for you.

- Traffic does not equal sales. The press wrote glowingly about Ponoko, but customers didn’t buy. It sounds reminiscent of BugLabs which was a press darling at launch, but doesn’t seem to have a great deal of traction in the developer community yet. This might be instructive to customization entrepreneurs, if you let your customers make anything, they might not know where to start.

Overall, the article doesn’t paint a pretty picture for mass customization. Ten Have and Ponoko have slogged through tough times, face massive challenges, and are operating in an environment that doesn’t fully understand/appreciate what they are doing.

Read the article, it is inspiring and will leave you rooting for Ponoko’s success. Their team is trying to do something transformative and deserve all the support they can get.

Techno Source produces toys that contain electronic and web-based components. One of their high profile launches has been a line of interactive jewelry powered by “Clickables” technology in partnership with Disney‘s new Pixie Hollow MMO game. When a child buys Clickables jewelry it unlocks virtual goods in the game. What makes this offering special is that kids can share these virtual goods by touching the jewelry together in the real world. Ginny McCormick, interactive director at TechnoSource, was recently interviewed by Virtual World News and shared insights into a very interesting “Web Meets World” product.

Creativity as a game mechanic

“And there’s something incredibly appealing about creating your own fairy. I’ll laugh about it with my husband: I need to do something for work, and I’ll be stuck designing a fairy for hours. There’s something magical about that process and girls really get excited about it.”

Games don’t have to be about killing monsters or racing cars. A well built tool that allows people to easily design something can be more fun and rewarding than a traditional first person shooter or racing game.

Social Networks: Facebook and Face-to-face

One of Ginny’s observations is that parents limit their children’s playtime online. In order to keep kids engaged with their brand they create offline value which allows kids to interact online or in the schoolyard. The jewelry approach is also a great way to build virality into the product since the girls will be showing it off to friends.

Enhance existing behaviors, don’t try to create new ones

“At Techno Source we always look with technology for ways to take classic play patterns that have engaged girls for decades and make them better. It’s not changing the way girls play, but using technology to enable those.”

Can toymakers build great virtual worlds?

“It depends on the toy, but building a virtual world is a full time job. It’s a mix of a lot of disciplines. One of the best things is that virtual worlds are constantly changing and evolving. Toys are manufactured and shipped in the box. I think one of the reasons Clickables are successful is that we can make updates very quickly. What’s physically programmed is a very minor experience. We have a whole lot that we can change and keep up to date.”

This is an important point. The major toymakers have become expert at offshore manufacturing, IP licensing, and television advertising at the expense of invention. These activities are invaluable, but don’t get at the core of fun which is part of the reason video games have hurt the toy industry. These new technology companies get that customers want fun, irrespective of how it is delivered, and it is often by playing with friends. Tech focused toy companies are helping kids connect rather than focusing on injection molding and 30 second commercials.

Games add long term value to toys

A lot of parents I know complain about their kids discarding toys quickly. Even something special like a Build-a-Bear custom bear might be cast aside after a few days or weeks. By adding a component that encourages repeat use and regular playtime toys gain an extra lease on life.

New shopping paradigms enabled by technology

“For example, at Toys “R” Us we have a Clickables point-of-purchase display. If you’re in the girls aisle, you’ll see a display with a Clickables sensor on it. Girls can touch their bracelet in the store and unlock something in Pixie Hollow. Because of the way the technology works, in theory we could change what’s unlocked on a weekly basis so girls are always getting something new and exciting and relevant”

This could be a great win for struggling toy retailers. It would make sense for them to create a “private label ” offering where they can make their stores destinations for new content.

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