Founded in 1997, Build-A-Bear is a retailer.

It sells toys, everything from teddy bears to branded characters like Pokémon. Sounds normal, right? Just like any other toy retailer? No, here’s where things get interesting. They don’t just sell toys; they sell a toy-building experience.

Example: When you buy a teddy bear, you get to customize it as per your choice. Change the sound, scent, stuffing, clothes, and accessories. The only limit is your imagination. Now, note that these customizations can be quite sophisticated.

Want a sound with a pre-recorded laugh? How about a personal message that plays when you hug the bear? Yes, that’s what I’m talking about here. You can even add a heart that beats when you hug the bear.

The most interesting part?

They don’t call their retail stores “stores” but “workshops” instead. Because they’re really like workshops. A place you can build your own toys.

Cool, right? This is amazing.

Once you customize your toy, you feel you own it. It’s yours completely. That’s a huge motivation to keep buying from Build-A-Bear. No wonder they’re doing more than $500 million in revenue a year. The net profit margin is in double digits (around 11%). That’s because differentiate their offering. They aren’t a normal toy retailer trading toys.

They’re selling an experience.

Their success story reminds me of LEGO. Similar to Build-A-Bear, LEGO is also about customization. Build anything from modular bricks.

I think companies like Build-A-Bear and LEGO are doing well because they sell experience and ownership. Allowing customers to personalize products and experiences can help you build successful businesses. IKEA has been doing this successfully with furniture. Right?

When people work hard to build something on their own, they appreciate the product more. Compare that to something that’s ready-made. Do you get the same feeling? You don’t.

I don’t see a reason this strategy can’t be used to disrupt other industries? Even Dell, the PC giant, also allows customers to customize the specs of the PCs they order. The idea was novel when Dell first introduced it in the early 2000s. It became so successful that Dell continues supporting it to this day. Customization is still one of Dell’s core strengths.

What other businesses come to your mind? Comment below.