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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.

This is welcome news for shoppers who spend hours in mall changing rooms, hunting for the elusive fit. Christine Hobbs, a 33-year-old database marketing manager in Costa Mesa, Calif., has always had a hard time finding pants to fit her 5-ft.-11-in. frame. It got worse after she turned 30. "As you get older, your body turns into shapes you never predicted," says Hobbs. So she was happy to pay $54 for a pair of brown chinos--$19 more than the off-the-rack equivalent. Lands' End has to charge more to cover the higher cost of making customized clothing. But the company is hoping that as the custom operation picks up steam, higher-capacity manufacturing processes will lower the cost per unit, boosting profit on the premium line.

For shoppers, buying tailor-made clothing online requires a little work and an honest look in the mirror. Hobbs typed in her measurements and had to answer a series of questions about the shape of her body. Yet all this effort works to the advantage of the e-merchant. Once shoppers have laboriously created profiles at one e-merchant, they are far more likely to revisit the same site than to repeat the process with a competitor.

This is leading more apparel retailers to hurry into the market. Bob's Stores, based in Meriden, Conn., is experimenting with Web kiosks in a couple of its casual-wear stores in the Northeast. Casual Male Big & Tall in Canton, Mass., also plans an online system by next year. "We think we can attract new customers who can't fit into our traditional sizes," ranging from a 44-inch waist up to 80 inches, says CEO David Levin.

Financial services are naturals for customization, too. Credit-card and mortgage companies already traffic in digital information, so they can whip up loans to fit a wide range of specific risk profiles--and charge personalized prices as well. Handling costs at IndyMac Bancorp Inc., which processes 75% of its $20 billion in annual mortgage business through the Web, are less than 1% of the average mortgage, below the industry average.

The advantages go beyond time and cost savings. Using the Web for the entire process provides lenders with a mother lode of data. That lets companies venture into iffy markets with their eyes wide open. Top credit-card issuer Capital One Financial Corp. (COF ) took the plunge into subprime lending in late 2001 and saw its delinquencies rise. Reading the data provided by customers who gave detailed info online to get credit cards, Capital One grasped the source of the problem and could customize higher rates and fees for riskier clients. "There's a risk-based price for almost any loan," says Richard H. Wohl, president of IndyMac's mortgage-banking group.

While digital products zip through the Web, physical goods can't. But industrial companies that build products based on formulas that can be digitized are off and running. General Electric Plastics in Pittsfield, Mass., is using that advantage to reach more clients and cut costs. In 2000, the company started putting design tools on its Web site that would allow client companies to configure plastics for thousands of products. Now, about 210,000 employees at 70,000 companies use the service.