Thursday, March 15, 2007

Business Musings: A picture is worth 1000 sales

This is likely to be the first in a series of articles (with perhaps a hint of semi rants) regarding the visual presentation of stores, logos, and product photography in Secondlife. Today we are going to talk about product photography, and I'm going to follow up with visual store presentation and then finally logos and branding. So, here we go.

One of the things I notice, particularly about new vendors is a serious lack of attention to 'product photography'. This is, a presentation image of your product in its best light that will entice the viewer to buy it. Many new vendors I meet are more concerned with the simple act of setting up shop than presentation of any kind. This of course results in some serious eyesores of shops, and the cold, hard reality is that it really doesn't matter how good your product is, if it looks like crap, people are going to assume its crap. What many new vendors fail to realize is that a poor presentation may infact be hurting your sales MORE than the actual location or products you offer. You have to remember, that in the giant clutter of eyesores in SL, if you want to stick out, you have to NOT be an eyesore. People are attracted to good design and thoughtful, slick presentation. The more refined your presentation is, the more people are going to be inclined to not only check out your stuff, but believe in the quality of the merchandice, and trust that you know what you are doing as a vendor.

So what makes for a good presentation?
Well, there are several factors, three that are major.
1) Vendor textures
2) Space usage/store setup
3) Signage

The most important I find is the vendor textures. While the other two are also important, the vendor texture is often times the main visual presented, especially in small spaces with limited prim allocations. There are four major peices of information that should be present on a vendor texture aside from the actual picture of the product itself:

1) The name of the product
This is important, especially if you have products that might be similar with only slight differences. For example a mod vs a no mod version of a product. Or one that is a dusky red vs one that is a true red. People have a very poor color memory and memory for detail in general. They may not realize, without a definative marker like a name, that two similar products may be significantly different. It also makes clear what you are selling, especially if you are using a model that has been decked out with products from other stores. A common example of this is in clothing. The vendor is selling the clothing, but not the shape, hair, skin, shoes, eyes, etc of the model in the picture. By giving it a clear name, it helps to eliminate any misunderstandings or misrepresentations of your product.

2) The price of the product
People want to know clearly and quickly how much something is. They don't want to have to mouse over it or go looking through fields of hovertext, and both of those aren't present if you intend to use the texture as an add for the web/blog later. Its good to be clear also incase there is a vendor malfunction that the product was a particular price if there is any discrepencies in the records.

3) The permissions of the product
This can be a make-it-or-break-it for some people. Most people who've been in secondlife for more than a few months get a strong sense of the types of permissions they want on the things they buy. Some won't by anything that isn't transferable. For other people the ability to mod or copy is the most important, so its important to make it clear what sort of permissions are on your products.

4) Key features of note/product list
Because there isn't always a demo and no sales people in SL, your graphics have to basically do the job of a sales person themselves. Part of selling is telling a potential customer what is cool about a product and what sorts of features it has. Some products may have more features than can be listed on a vendor texture (in which case you put "Click for notecard!" on the vendor texture.), but most its simply listing key features that would help a potential consumer understand the strengths of your product. Some products its not as practical for, such as clothing since we all know what clothing is and does, but in that case, its good to list what the customer actually gets when they buy the product. So if its a summer bikini you are selling you would put :
1 bikini top
1 bikini bottom

This again makes very clear exactly what is included in the purchase price. Shoppers are always looking for value for their L$ and providing a product list is a good way of showing value.

One peice of information that should be on a vendor texture primarily if there is no other signage around it permitted is your logo. Its optional though.

Aside from the information, there should be a compelling, clear, visually appealing picture (or collage of pictures) of whatever it is you are promoting. Aside from appauling typography and heinous gaudy builds, this is probably one of my biggest pet peeves of shopping. Ugly photography is a definate turn off when shopping. If I can't see clearly what you are selling or it looks crappy or too small or hard to see or blurry or just plain looks like you didn't care at ALL, unless its something that I'm in desperate need of, I'm probably not going to buy it from you, even if it rocks my socks. ( that is unless someone hunts me down and gives me a demo or something, but your vendor still failed to make me buy.)

I can hear some voices already going "But Myst, its impossible to get good photography in SL!". To that I say 'not so!', however, much like in real life, it does require some post processing to get the most out of it. Most 'raw' photography isn't really good enough or complete enough to be used as a vendor texture alone. Just taking a picture and uploading it to your inventory to use as a texture usually isn't a good idea. Not only is there usually a LOT of wasted space in casual snapshots in SL, but it hasn't got any of the information on it that it needs. Also, most people don't consider key factors such as lighting, composition, background, etc. If you have the land to put it, creating a 'photography studio is nice. There are several out there for sale if you don't have the means or want to create your own, but they are very handy. Backdrops, lighting, and model pose is all controlable and you can take your time to compose your shots. If you like to roam around, location photography can also be quite effective, showing your product 'in use' as it were.

Some of the more effective uses of photography i've seen for products are in instances where there are several models or a single model shown from a couple of different angles with a definitive focus on the product. A few examples I can think of off the top of my head for clothing designers is Pixeldolls, who generally have several shots of the product in a single picture with variations of the outfit on a single model (generally). The shots are clean, the product is obvious, and all the information is presented cleanly and clearly. For a different style, but again, multiple presentation, BareRose puts several models sometimes of totally different sorts (humans with furries, males with females) for their products to show how the product might be worn on different avatars. The photos are generally taken from different angles with poses and then assembled onto the texture. There is also a consistant, clear presentation. You can instantly recognize a BareRose product box even if you aren't in a store. In the forums, its instantly recognizable. There are many other designers with excellent presentations, but those are a few I could name off the top of my head. I'll try to find some other samples, as seeing is often much better than trying to explain. Although I will note that sometimes there is too much of a good thing. I've seen people try to cram 12 or more product shots onto a single 512 x 512 texture and it looks equally horrid.

The last thing I'll mention is to really watch the size of your textures. They should be no more than 512 x512, preferably less if possible. The smaller your vendor textures the quicker they rez and the less lag they cause when someone gets into the area. This is particularly true with prim vendors because there are a BILLION textures to load, all in one go. The computer basically never stops chugging. So make sure you optimize your textures before you upload them. Other ways people do it is to put several vendor panels on a single texture and just move it around on the prim. This is very economical for you because you can get several textures for the upload price of one, and the person only has to load one texture as opposed to many. So its a thought. The faster people can see how great your stuff is, the faster they are probably going to be willing to buy it.

Friday, March 09, 2007

Scam Alert: Return of the Invisiprims

Just a heads up that lately there has been a rash of the Invisiprim scam cropping up again lately. If you don't know what the Invisiprim scam is, this is the original scam description. The most recent victim of the scam that I am personally aware of was the Furnation Skymall, but other malls may be being targeted.

It is advised that if you have a mall, you may want to keep an eye out for this scam since its seeing a bit of a comeback (like it ever really went away..).

A quick way of protecting your mall is to set things up so you can enable auto-return on the land. But its a good idea just to keep an eye out anyway incase someone decides to get tricky.

Wednesday, March 07, 2007

Business Musings: The Zen of Pricing

Uhg, its been a while hasn't it? *brushes the dust off her blog and dredges out the spam* There we go.

So where was I? Oh yes, the zen of pricing.

So I run a small mall where the rent is fairly cheap and the prim alotment reasonable, and mostly I tend to attract small or new businesses as a result. This is fine, I have no problem helping people with their businesses, especially people who are new to business in SL in general. I actively monitor my mall daily, trying to greet as many as my renters as possible. I like to be on good relations with them, and they with me hopefully. I always check out their products to make sure they are in line with the mall's policies as well as their vendor systems and whatnot.

One thing I notice, particularly about new businesses is a lack of thought regarding pricing. Pricing is a pretty big consideration. Actually, its probably one of the biggest, because a good price is going to dictate how people shop for your stuff and what sort of people are going to buy it. Also, I find a lot of new businesses are all glamored with the notion of 'secondlife can make you rich!" and think that people will pay 500L for a t-shirt. Sorry, probably not going to happen.

Let's put things into perspective, and particularly to new business owners, really think about this when deciding on the prices of your items.

There are re-occuring themes in the kinds of products I see people begin selling. The most common I see are T-shirts and furniture. As a result there are a LOT of people selling T-shirts and furnature. Most of it is obviously made by beginners, and its not exactly designer quality. But that's not a bad thing, some are reasonably cute and perhaps witty, or maybe just interesting. But there are a LOT of the same out there, and I'll be damned if I'm going to pay 150L-500L for a t-shirt. I can get an entire outfit by a much better designer for that price.

Your customers are not idiots, nor are the majority of them rich. If you look at the Economic Statistics that are provided by Linden Labs, you will find that the vast majority of the transactions that go on in today's SL economy are below 100L. The decrease in transactions when you get above that starts getting pretty significant. You also have to keep in mind that most people, unless they are paid members, don't get a stipidend anymore. They have to camp/dance/gamble/beg/work/pay real money to get money in the game. Their money is precious to them, and they don't want to spend it in big amounts on a whim. When you are first starting out, people don't know you or your products and likely your products won't be as good as established vendors, so you can't realistically charge the prices of established vendors and expect people to come beating down your virtual doors to pay huge prices for a silly t-shirt or poorly textured bit of furnature. Remember, unlike in real life, you have a virtually unlimited inventory. After you've made back your upload costs and paid for your retail space, everything is profit.

Another very important aspect of pricing is what your competition is doing. Because you are new and your products are probably not as polished as people who've been in the business, your biggest advantage is your pricing. You are also asking customers to take a risk on an unknown. They don't want to spend a lot of money to find themselves scammed or with a crappy product. You need to spend some time in the shoes of your perspective shoppers and see what the median value is for the product you are offering by different vendors. People like a good value for their money, a bargan is even better. If people feel your product is a good value for the price, they will likely give you a try. People are also lazy. If they can use or buy your product for less time and effort than it would take them to make it themselves, they probably will.

Prices generally are not arbitrarily set IRL, they shouldn't be set that way in SL either. They take into account the costs of the business and manufacturing with various 'markups' between the manufacturer, the distributer and the retailer. Sometimes there is as much as a 200% markup on the product by the time it gets to shelves in a store. While you shouldn't have that much markup on a product, it is a good way to factor a minimum price for an item. Lets go with our T-shirt example.

What's a fair minimum price?
Assuming you are using a template and a previewer, lets say you only have to upload the texture for the shirt once. That costs 10L. Lets say you've rented a storefront in a mall for 50L a week, which is about 7L a day. So lets say the cost of the shirt to you is 17L, cost of upload+cost of rental. Lets add a 50% markup. 50% of 17 is about 8.5, which makes the price 25.5L. Lets round down to make than an even 25L.

You can sell one shirt and make back the cost of your upload and your day's rent plus an additional 8L which is your profit.

But here's the kicker. The next shirt you sell is still 25L, but you've already made back your 10L for upload, so you are only making up your daily rental cost which is 7L. So now, with every t-shirt you sell, you are making 18L of profit. You are now making well over your 50% margin on each shirt. The price is firmly within the 'most often purchased' price bracket, and we can assume that you probably have more than one shirt for sale. With a price of 25L, most people are comfortable purchasing a couple of items from a shop, even a new one. The likelyhood of sales is very good as it is cheap enough to be in the 'impusle buy' category, where people just see it and buy it, without having to save up for it or come back later with a friend to buy it for them. If people have to go and come back, your likelyhood of sales as a new vendor go down fairly drastically.

Some items, like skins or avatars might take a lot more than one texture to upload or many hours of labor, and possibly outside fees to scripters or other artists. While some of these can be delt with by profit sharing, the entire cost of the avatar or skin should be factored into the price. This is why entire avatars and skins tend to be fairly expensive. I've spend well over 300L on uploads alone for a few I've done. But people tend to be willing to pay more for full avatars or skins because they are expensive in general, but are not so willing to pay the same kind of money for a T-shirt or a table and chair they could make themselves.

Pricing Levels
This is of course not to say that everything you make should be 'cheap' so to speak. If you want to have some expensive items in your store, that's fine. The more affordable items will bring shoppers around to look at the more expensive ones. Vendors often use freebees or 1L items to bring shoppers into a store or as a 'free sample' to build trust with customers that their products are quality products that they want to buy.
However, even with 'expensive' items, you have to keep in mind the market pricing for such things, keeping yourself inline or below what your competition is offering is important for you when building a clientbase. Remember, you can always increase your prices on new offerings as you go along and improve your skills and niche in the market you are tapping.
Other pricing tricks with expensive items is putting it a few L below an even number, so for example, offering something at 799 looks more attractive than 800, or 99 looks better than 100, although I'm personally a fan of even numbers.

Everyone loves a deal
Another way to offer your products at a higher price for a single purchase is to group your items into sets and offer them at a slightly lower price than if you bought them individually. For example, lets say you have 5 elemental t-shirts. (Earth, Air, Fire, Water, Metal). You sell them each individually for 25L (as noted above.). People like to buy things in groups and get a deal. This is how bulk sales work in the real world. Buy in quantity, get a better price. So say we create the 'Elemental Pack', which is all 5 t-shirts in one purchase. Normally it would cost 125L to buy all the shirts individually, so, we sell the package for 110L. This way it becomes a better value to buy them as a bundle for a higher price than individually. This creates further value for the customer to buy in 'sets' from your store, increases your 'big sales' while still creating value for your customers and profit for you.

Can you make profit with lower prices?
Yes, yes you can. Why? Because you sell more. Case in point: Walmart. It also works in secondlife. I can attest to it as I sell eyes for 25L. I sell a LOT of eyes for 25L. I make more than enough to pay for my land, my premium membership, and I have leftovers. Could I make a living? Probably, if I offered more products more frequently. I just don't have time to be as serious about my SL business as I'd like. As you sell more, people show your stuff around. They ask people where they got it, people pass along landmarks or names of shops and other people find your stuff. If you are good maybe even some of the fashion bloggers will stop by and see some of your wares. Its not going to happen overnight, and its also not going to happen without work promoting, writing classifieds, creating mailing groups to track customers, making lots of new and cool products, refining your skills, and doing some personal marketing, but its a good start and greatly increases the chance of people actually buying your stuff when they visit your store.