You've probably heard of mass customization: It's when businesses use e-commerce to let consumers order customized versions of products. The idea is to delight customers by providing exactly what they want and need.

Typically, only large companies like Levi Strauss have the necessary infrastructure and resources to put into the customization systems. But Sarah McIlroy, CEO of FashionPlaytes, Inc. of Beverly, Mass., is proving that a young company can make mass customization work for its needs and budget.

The Idea

Initially funded in 2009 and publicly launched in 2010, FashionPlaytes has a target audience of "tween" girls. It lets them "interact and engage around fashion and style," not only through a FashionPlaytes social network, but also by letting the girls order customized versions of clothes at reasonable prices.

The concept came to McIlroy when she remembered how, as a child, she'd ask her mother, an experienced seamstress, to modify her clothes so she'd stand out from friends and schoolmates. When the grown McIlroy's own daughters asked for something similar, she could still point to their grandmother, but she figured many children don't have such an outlet.

So she raised money--more than $12 million to date--and devised a way to build a company around such a service. McIlroy realized that if she brought a line of clothing in from Asian factories to keep the basic expenses down, she could get a U.S.-based factory to take those existing clothes and add ribbons, extra layers, appliques, rhinestones, and other materials. An online system could let the young customers choose basic clothes and specify the modifications they wanted. The domestic factor would create the customer variations and ship the final product to the customer approximately two weeks after the order was received.

The Business Model

However, investors wanted to know that FashionPlaytes could keep pricing in line with what customers would find in a store like the Gap so it was available to a broad market, not an upscale niche only.

Ultimately, the answer was yes. The price of a product goes up with the number of customizations, but customers can get something custom for just over $20. The fully decked-out version might be $45.

It's the two-tier manufacturing approach that makes this possible. Like any clothing vendor with unique offerings, FashionPlaytes creates the basic designs (they call them silhouettes), colors, and materials. Even there, customers have a say. The company asks the girls to vote on its choices and uses that information to help inform size, color, and design mix and improve forecasting.

The take-up has been significant. About 500,000 girls have already signed up to become members and created 6 million virtual designs. They spend more than an hour when they visit the site. Design contests can attract as many as 50,000 votes. "Girls are spending over an hour on our site every time they come and coming back two times a week, sometimes more than that," McIlroy says.

Why It Works

Impressive growth for just a couple of years. McIlroy attributes it to a strategic shift: "We shifted our marketing, messaging, and architecture to be girl-focused. Prior to this we were aiming at the gift givers and adults."

It's a good reminder to entrepreneurs that sometimes the most ambitious types of business plans are as possible for a small company as for a large.