Why moving a shop to Marketplace ‘hurts’ the SL economy.

In response to:
I don’t contribute to the economy?!

I wrote a comment, that I think is better served as my own blog entry:

She notes, heavily paraphrasing, giving up an inworld store, shifting to marketplace, and now buying lots of new toys to go and take pictures and make inworld art.

This is pretty normal for today’s Second Life merchant. Shifting to Marketplace and then using the saved rental bill or tier fee to buy more goods in world – thereby feeling they are contributing to the SL economy.

And they are. But not where it is needed to keep SL around.

What such a merchant is no longer doing is helping to support the existence of the venues they visit and enjoy the use of

Venues we enjoy are largely paid for by renting out portions of the land. Tipping in clubs or shops – is trivial by comparison. Look at the ‘how much has been paid’ meters on venues. Even in high traffic spots it is usually a paltry sum when compared to the tier for that location.

If one neither owns land nor rents land – then one is not significantly helping to support the continued existence of places to see and enjoy. That is the problem of Marketplace; it breaks the fundamental link that holds the ‘Second Life Economy’ together.

Formerly there was a cycle of goods bought from merchants who paid landowners or their own tier – thereby keeping in existence places for people to go to in order to enjoy using or showing off the goods they bought from those or other merchants.

Linden Labs stayed in float by collecting the rent bill.

A ‘circle of life’ if you will.

  1. Buy goods at shop B to use at place one loves A
  2. Shop B pays for land at A.

The second part of that is gone when a merchant moves to Marketplace.

Now it is:

  1. Buy goods at Marketplace store B to use at place one loves A
  2. A has no major source of income to pay insane tier bill, and closes.

People do not tip enough to cover the difference.
Venue A won’t succeed by selling advertising – that works for websites though often by the slimmest of margins, but for SL it would create an unpleasant A, and not be as effective as merchant B merely adjusting their settings on MP…

Some things do advertise in world at places you visit – but it is usually groups related to the place itself.

Or the venue’s mall. And of course… that mall is shrinking as its merchant’s go to Marketplace…

With every merchant that leaves their inworld shop, the ability to support inworld venues to visit and enjoy decreases.

Soon people will start having real trouble finding places to use and enjoy the things they bought from those merchants…

Therein lies the danger for Second Life.

Linden Labs though? They are now still collecting rent on what is left, plus also skimming off the top of your sales on Marketplace…

- It might be that if you have an inworld brand that does enough volume, it could even be cheaper to keep that inworld shop…

In addition to helping the larger Second Life economy…

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6 Comments (+add yours?)

  1. Trackback: Why moving a shop to Marketplace ‘hurts’ the SL economy. | Rambling with Shug
  2. Niche Store Owner
    Jan 08, 2014 @ 22:48:46

    I am sure this may be correct for some merchants.

    This is a reply also to your very informative article on the marketplace and how it costs you money.

    Something you are not considering are reasonably successful stores (by this I mean sales generating $1000-$4000US or so a month) that are selling niche styles of items. Whether it’s furniture, accessories skins or clothing. Anything, really.

    With mesh being introduced there are more and more merchants switching to this who have studied up and learned the skills. How are customers to know about these people? Word of mouth is so invaluable; but it is not everything. Not at all!

    Saying that the MP costs you more than land is a very warped view because it is comparing two completely different things. You have completely overlooked the function and main purpose of the MP – it is not sales. But customers who want xyz finding YOUR xyz when they otherwise had no idea it existed. Or maybe they did, but could not recall the name of the store or item.

    I can see from this article as well as the MP one that you obviously feel land in SL is being let down currently in some way. The venues are suffering. But a store is very rarely a venue. It seems to me you mean malls or sims with market stalls etc who are suffering from people renting these less. I don’t doubt you are right that is happening! But it is entirely the fault of the mall owners/sim owners. At least it is in my case. I used to rent in many many sims spending upward of 20k a month just on stalls. I don’t rent ANY and haven’t for a long time now. Why? It’s a hassle! It’s my time…and it’s an outdated form of marketing. It is rare to find a market that is not full of very out of date ugly products that do exactly what you talk about (ruining your own displays and marketing). And it takes time to maintain these stalls in an adequate manner as well as L.

    If there were sims offering wonderful markets with only quality vendors and beautiful builds then I think many, many more store owners of all kinds would be all over these places. If they have the traffic! But this is not the case, sadly.

    So what do they do? They list their items on a place that costs them nothing if no one buys anything (unlike a market, for I do not know any market which will not charge rent and be happy with a 5% cut like the MP does and fair enough! It isn’t viable). And not only that but the MP will bring in customers from every corner of SL who are looking for products like theirs. That is the value of the MP! And you could say it is invaluable. But no..it has a price. Free (if they find your listings but go buy in world which is easy enough to encourage) OR a 5% cut.That is a bargain. As someone who views my store in here as work and a real income this is a cost of marketing that is very reasonable if you look at real world examples in online environments.

    The MP is effectively google search for SL shoppers. An in world store is a way to display, market and sell your items; ie, it is like a website. To have only one of the two is putting yourself at a disadvantage for any serious SL business person. Just as it would be a RL business having a website but not paying for SEO and advertising.

    No doubt this is irrelevant for many hobbyists who are just out to earn a little spending money. But even then I would strongly recommend for anyone to use the MP, no matter how big or small you are. Just as I would say having an in world store is important over just using the MP.

    Love your articles and the thought that goes into them – just thought another perspective is always useful for any reading this for advice :D

    Reply

    • Pussycat Catnap
      Jan 09, 2014 @ 08:44:26

      I feel like your comment is more suited to my other recent blog article:

      http://catnapkitty.wordpress.com/2014/01/08/when-does-it-become-more-costly-to-sell-on-marketplace-than-inworld/

      This blog article was a more limited focus.

      Some of my comments below will relate back to thoughts I expressed in the other article.

      Those niche stores are exactly the people who do best inworld. Look at furniture shops – people want to see that stuff in world, mess with it, measure it, and so on. Notice how most such stores have remained inworld. Smart ones only put a handful of things on Marketplace – enough to wet the appetite. You don’t want your Marketplace stuff selling – that costs a feee. You want it to advertise.

      But this is why I comment so much on product display and store design in my other article: the store is the advertisement. And getting people to show up – you get that by yes, word of mouth. But it begins with a broad based advertising campaign. Hit up blogs, flickr, the feeds, hunts, and so many other things successful sellers have used for years. Get people seeing the product.

      Showing up on a gird display in Marketplace next to a random “Forced XXX HUD for Vampire Furry Breedables” with graphic image on your left and “5-billion want bling-scripted facelight” displayed on a Ruth avatar in the default standing pose on the right… People click past that screen and miss you.
      – And that’s exaggeration of course. To make a point: You cannot control the user experience on Marketplace – you cannot be sure your shopper will have a pleasant and ‘buy-motivating’ emotional experience when they see your stuff.

      With your own shop – you can. And if you look at the successful stores inworld, they are ALWAYS a lot more than just a wall full of boxes with basic screenshots on them. Very careful thought goes into the ambiance of the place.

      Successful merchants don’t just spam product onto a grid and hope to be seen because of search terms – they cultivate relationships with other merchants, bloggers, shoppers, SL-Artists, and so on.
      – All of which benefits an inworld shop more than a Marketplace one.

      And a niche product is even better served than a generic one, because you can use that ambiance to show people its purpose and what good effect it can be put to. Even with a product that is a script.

      Reply

      • Pussycat Catnap
        Jan 09, 2014 @ 09:00:30

        As an example, I have a dear SL friend who makes money in SL “paw over claw” by selling… sculpty flowers, and textures for making custom sculpty grass. And more recently some mesh. Plus some odds and ends like a knickknack store. She’s never really moved much to Marketplace.

        Her shop is colorfully decorated with her personality coming through in spades, and when I go there I feel the same way I do as when I’m driving down a rural freeway and see some local gardening shop run by an elderly couple that sits by the register with a big smile and a nice hello.

        Her stuff is very niche – and she does very well – by making it fun to be in her shop in a way that causes you to feel like you know her.

        She got to that point by doing every Hunt she could get into, and making a ton of fellow builder and merchant friends. All of whom then started coordinating on products. If you walk into any one of their stores – there are good odds of seeing things in them that were partly made by the others.

        She also did malls, even past the point where that became unfashionable – but when I’d talk to her she’d be rambling about what sounded like a spreadsheet of data on each mall and how well she thought a given mall was doing as a whole, not just her stall in it. Every visit we’d make to a mall she was in would involve wandering through the shops of other merchants there at some point. Either just a short “hey look at what I saw” moment, or a thorough sort of detective analysis. My ‘assumption’ is she cared to be near places that cared about their own display as well.

        This is all sounding past tense – its been a little while since we talked but she’s still a friend and her shop is still there and seems to still be doing very well for her. Her real life career has her out in the field on trips away from technology a lot, so the SL shop appears to be a handy way of padding the income and coming home to a nice bonus each time she gets back – but that is just my guess.

        The two of met as ‘noobs’ in an NCI class – so I’ve seen that shop grow from a single scripted cushion made from a ‘look, I made my first sculpty’ into a serious business.

        The thing about Marketplace is that it means words typed in a search box will more easily come back with your product – but there is a LOT more to selling product that showing up in a search result.

      • Niche Store Owner
        Jan 10, 2014 @ 23:25:02

        Yes my comment was more aimed at your other article, sorry! It sort of linked with this one and I read this after.

        I’m not saying in world stores are not important. Because they very much are! Especially as you say in terms of presenting your products with flair and the right environment. I prefer if customers purchase in world, but that doesn’t mean I don’t love the MP.

        As far as I am concerned it is one of the best things to happen in SL was Xstreet getting big. Simply because like I mentioned; it serves as a google search. And whilst there is a lot of trash on the MP if you have a GOOD product with a GOOD image you stand out. You really do! I know this as a customer searching the MP but also as a merchant who makes many sales on there every day.

        This is infitinetely superior than doing a place or general search within SL. For example…if you would like a mesh victorian table. If you search that in SL you will get a whole lot of physical places to go visit as well as profiles and just a confusing mess. But if you search that on the MP you will get all these images displayed in an orderly fashion with up to almost 100 on each page. And if your search brings up those XXX huds and other assorted junk that is irrelevant, you can easily refine it down on the left hand side bar to “furniture” or whatever it is you are searching for.

        Now your results will primarily be the mesh items you are after (unless a merchant is dishonest and spams keywords though I find this is rarely a problem) so already there you have cut down your valuable time searching. And you will only see things with victorian influences. All in all, as a customer this means you can find a niche item all in under a minute if you see something that catches your eye. Maybe you will spend longer searching, maybe not.

        That is so very very important for making sales. It’s a pretty basic rule of marketing that everything you sell should be easily accessible. That flows over into your in world store, too. If people present things in a consistent and logical manner that is visually attractive their customers will love them so much more for it.

        I am a merchant. Not an artist. My goal is to make money for the time that I put into my work. I would far rather make 95% more from a sale on the MP than making 0% because the person never knew my product existed. Now…maybe that person likes it a lot. And maybe they buy more on the MP. Great! Or maybe they are curious and take the trouble to visit my in world store. Even better! Because like you say you really can make it your own and market your items to their best light.

        The MP does not hurt SL. It has made shopping so very much easier for customers looking for a specific thing. And brings customers to merchants. It is up to each merchant to be able to entice people to their stores with great content and great marketing material (ie not ugly posters!).

        And this is ignoring the huge number of people who just want to shop on the MP most of the time because it saves them time and hassle. Many SL users are stuck with older computers or slower internet and simply cannot afford the 5 hours it would take to go physically look in every store they know has something they might like!

        (Yes I love to shop on the MP! But I also love to shop in world. It completely depends on my mood and if I am after a specific item or if I am after many).

        If a merchant does not have a MP presence I immediately wonder WHY! What is wrong with their products? They are afraid to have them up for review. That is a terrible thing and such bad press. And if they have only a few there? its the same thought but just less strong. And on top of that, you can’t even see what they have on offer.

        So all in all if a merchant is serious about their work on here, they really do need a MP and just like an in world store they need to put effort into making it attractive and easy for shoppers. Unless they are SO huge and make 1000US a day…they are missing out. And even then. They are missing out :)

        I think it’s important for any prospective store owner to know this! It cannot be said enough. Just as I would think it is so very important to put in the effort and investment of making an attractive and well thought out in world store. You have to have both to get maximum sales and customer base.

  3. lokieliot
    Jan 09, 2014 @ 04:31:49

    When i decided to get a private region the effects of marketplace was only just being realised on the grid. That i could not expect merchants alone to support the huge tier costs of having a full private region. Also i did not want a place that was just a big shopping place. I thought there must be a way to gain finical support for a full region without having to rely on Shops and advertising. New Babbage is a collection of regions supported by a community of steampunks. It does not rely on merchants for its tier support, it’s residents pay their rentals so that they can continue to their interest in building and roleplaying. New Babbage has been supported this way for 7 years now and there is no signs that it will stop any time soon. So i tried this model with my private region. The first year was hard trying to find people who would invest enough into the region and at one point i thought the whole thing would fail but 3 years later the Region is being successfully supported by those who love the place not by shops or advertising. I fully understand and support good in world Store experiences, but i also know the value of the Marketplace. Wether or not Marketplace is actually hurting the SL Economy, i’ve still yet to decide. While owning a region supported by merchant rentals is much harder these days possibly due to the rise of Marketplace, there are proven successful alternatives.

    Reply

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