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Start-ups bank on the customization of you

Gone are the days of wearing a plain Gap T-shirt and khaki outfit — the look that swept the 90's and embodied the cultural zeitgeist. Nowadays, millennials prefer uniqueness over uniformity.

In response, retailers and start-ups are stepping in to allow this generation the ability to customize everything from clothing to jewelry on a larger scale. Take Nike, where shoppers can customize their new sneakers.

Function of Beauty, a startup which offers customized hair products
Source: Function of Beauty
Function of Beauty, a startup which offers customized hair products

From customized shampoo to tailor-made multivitamins, these bespoke products are also attracting investors who are betting that consumers will pay a premium for products that are designed just for them.

Yoram Wurmser, an analyst at eMarketer, said there has been a strong trend among consumers away from items with recognizable logos to individualized experiences and products.

"Instead of spending money on Coach, they're getting basics at Zara and H&M and looking to Etsy or Handmade at Amazon for differentiated products," Wurmser told CNBC. "The customization trend is an extension of this and I expect it to continue to grow in 2016."

One hair product start-up, Function of Beauty, lets consumers select from one of four hair types — straight, wavy, curly, or coily — and then choose their hair goals, which also vary. All told, there are 450 million possible combinations for consumers who want a specific look, the company's founder said.

"I saw a huge need in the beauty industry — and the hair-care sector, in particular — for products that were individually tailored to the needs of the customer," Zahir Dossa, one of the company's co-founders told CNBC.

Since its launch last month, the start-up raised $270,000 and was backed by the seed accelerator program Y Combinator with the hopes of shaking up the $400 billion hair-care industry.

"While we make money through the sales of personalized sets, our true goal is to develop lifelong relationships with our customers to constantly provide them with beauty products," Dossa said.

But the big question is whether customized consumer products businesses can actually scale their operations enough to be profitable.

It may come down to how much consumers are willing to pay. A bottle of shampoo made from Function of Beauty will set you back between $26 and $38, which is far above competing mass-produced products.

At WellPath, a customized nutritional supplement service, vitamins are made to suit individual goals based on a 30-question survey focused on nutritional and dietary habits. Subscribers receive monthly packages based on the results.

The company's founder, Colin Darretta, left his job in investment banking after seeing an opportunity to shake up high premiums he thought he was paying to companies such as GNC and Amazon. The start-up has partnered with personal genomics company 23andMe and fitness tracker Fitbit, and prices vary from $40 per month for vitamins to $50 per month for protein powders.

"I could see consumers paying a small premium to get personalized products," eMarketer's Wurmser said. "It all boils down to what type of premium this will entail."