Thursday, March 13, 2008

Business Musings - Declining Sales?

Perusing the SL forums, I've noticed several posts regarding declining sales. These range from advice on how to get your sales back up, to inquiring to other merchants if their sales have been slumping.

Now, if most merchants are anything like myself, while I do keep sales records, I don't keep particularly *accurate* sales records. I don't do spreadsheets to keep track of what sold when, or how many sales I did per month, etc. So its actually hard for me to say, except for in very general terms how I'm doing in a particular time period. I can anecdotally say I do so any sales per day, but that's a very general figure. We all have good days and bad days, and as long as I make tier by the end of the month, I'm good. I don't make oodles of cash, but I do make enough to pay for my own in world expenses, which is enough for me.

However, I know there are many other merchants out there for whom this is a lot more serious issue than just making tier once a month and having some extra money to spoil your friends and yourself with a new outfit or hair. And missing sales can amount to missing bill payments IRL for those who depend on the income. So if you suddenly seem to be doing a lot less business, what can you do to get it back?

The first thing is to eliminate any technical reasons you can that might be deterring customers from your store. Have you recently remodeled? changed vendors? Did LL release a new client? Did you recently move your store? Did someone new move into your sim? Are all the textures in your area optimized? There can be many factors that can prevent a customer from completing a transaction with you, and depending on the cause, there is a different solution for each.
If you've recently redecorated or changed your vendor set up, customers might have some trouble either dealing with the new set up, or they just don't want to deal with the type of setup you have. A lot of customers get impatient having to scroll through hundreds of products, even if there are category buttons and such. Also, the less visuals you have around, the less people see your selection, and showing your products is very important to tempting people to buy them. The less they see, the less they are inclined to buy. If you think this might be the key, try putting out some of your old displays and see if your sales pick back up. If they do, you know that the customers didn't respond well to however you were redesigning your shop's look.

SL has a bit of a history that after a new client release, sales often take a short nosedive as people work out all the new and lovely bugs that come with each update. So if its just been after a new client release, don't panic and just wait a bit. People will come back.

One thing that really deters customers is lag. If someone has to wait twenty minutes to load the huge textures you have in your store, or there are too many scripts running in the area (such as in a mall situation), or some one has moved into the plot next to you and is running scripts and high textures it could cause a lot of lag in your sim. Try to keep your sources of lag to a minimum by keeping your textures to 256x256 at 72 dpi and find a balance to displaying your products and how many textures a person has to wait to load. If you find lag is an issue, check the scripts you are running, and other scripts in the area. You can try using single prim venting if you find that running scripts is just too much for your area to handle, and see if it helps. Otherwise, you might want to look for another location. When you move, you might find your sales drop off as well for a bit because people can't find you right away and might think your store has closed. This is why it is very important to have a group for your store, so you can keep your customers informed about such things.

If you have ruled out technical problems, you can then turn your attention to your actual store and your offerings. If you had a unique offering, perhaps someone has duplicated and is selling it for less. Maybe competition has moved in up the way. Maybe you just need some fresh items to bring people back to your door step. Even if you have competition, there is nothing saying you can't do a better job of making a given product or service available. This is especially true if you tend to have more expensive prices for items ( things over 500L) if people can get a similar item for less. You may have to make it more clear to the casual consumer why they should consider buying your product over others. Having an event or sale can help, but its a temporary solution. It won't help you build long term customer loyalty to your store unless you can keep in contact with the new people you meet, give incentives to join your store group, such as special offers and exclusive freebees. That way, you can keep in contact with them and continue to promote your products to an audience that is already proven buyers.

If you haven't put out something new in a while, interest can wane on your products. Also if you don't have very many products, your store isn't particularly large and your products are either very common or somewhat niche-ish, you may find that what you need to do is do some new things. The larger your selection, the more people will come to do a one shop shop for your particular product. This is also why specialty stores tend to be easier to get a steady flow of traffic to, since people make your store a destination for X. It could be hair, jewelry, shoes, glasses, party dresses, Cosplay, skin, whatever it is you sell. Selling a little of everything is nice, but it makes it hard to make you stand out and get people to come for a specific reason. If you like to do different things, a theme such as goth, Elizabethan, victorian, egyptian, horror, fantasy, etc, can help get you in with an audience looking for your products. You might consider branching off ill fitting products (in your main product line type/theme) into their own store. So if you primarily do hair for example, but also sell prefab skyboxes, consider having them with two different identities. People looking for skyboxes probably aren't going to think immediately of going to a hair store.

We all know that SL is notoriously glitchy. It can be hard with many of the teleporting issues, lag issues, rezing issues, connectivity issues, etc. To actually GET to a store. Recently I was noob-makeovering two friends of mine. Since a couple of updates ago, I have been unable to teleport with the main client. It disconnects me everytime I try. I have to log into the sim I want to be in from the get go. This made shopping, quite literally, hellish. Going to people's stores, particularly on private islands was infuriating. Disconnect, reconnect, disconnect, reconnect. And with all the stuff you have to do to craft a look, it became unbearable. So where did I turn to? SLexchange. A quick search, some surfing and an easy delivery to my friend. It was instant and didn't involve me teleporting. So its important, if you don't have your products on one of web based shopping pages (SLexchange, OnRez, etc), that you probably should. Not only does it make you more visible, which is a good thing, it prevents technical problems from getting in the way of people accessing your shop. Even if your sales are coming from something other than your shop, your products are getting out there. Make sure your product boxes have landmarks to your main shop at the very least in them. That way, even if they bought it from an out of world source, they know where they can go INworld for more.

If you have been struggling for some time with low sales, you might have a larger problem than just a bit of a slow down in people visiting your store. There can be many reasons for low sales, including:
- Poor images/look
- Prices too high for product
- Insufficient marketing
- Wrong target audience/area

If you aren't particularly good with photoshop or Gimp, or graphics in general, you might want to hire someone to create your look and feel who is. Your graphics in your store is what make you look professional and if your pictures do not showcase your product well, you are shooting yourself in the foot. Looking professional is as important as being professional. Remember that first impressions, such as when a person walks into your store, is very important. If you don't look like you put much work into your look and feel, people are going to probably assume you don't put much effort into your products either.

If you are new and starting out, its pretty hard to charge huge prices for what is most likely substandard work, compared to what else is out there. If you are relatively new to product making, your stuff generally won't be as good as the stuff made by people who've been at it for a while. Or even if it is, most people aren't going to risk shelling out big bucks to find out. You have to price your products reasonably within your market for both their quality and what the 'median' price of the market is. Most people don't want to pay more than 50L for a t-shirt, so charging 200L will probably mean not many people are going to buy when they can get a potentially BETTER shirt for 50L somewhere else. Also, most transactions these days are fairly low. People don't get stipends like they used to and so money for a good bulk of the active population is tight. If you want casual sales, you have to have a good selection of casual shopper priced items (75L or lower). Once people get familiar with your good work on the cheap, they might consider shelling out for the more expensive pieces.

You do have to make some effort to put your name out there by way of a bit of marketing. Classified, having your store in your picks, also having your items searchable are very important. If people can't find you, they can't shop for you. consider having a weekly classified at 50L on selected products. Host events at your store to draw people in. Giving seminars and such is a very good way to get people to take you seriously. ( and SL is always hurting for quality event content) You may also want to visit and identify groups that would have an interest in your product and hang out in them wearing your stuff (if its wearable) or see if you can locate an outlet store in an area where they hang out. (goth clubwear in a goth club mall for example..) Getting a few satalite stores is a good way to raise your visibility even if you don't make a lot of sales there. people get familiar with your brand and begin to build a relationship with it. They might like your stuff, but not have the money at the time. But later when they do, they will recognize your store and probably buy something.

Another common mistake is putting your store in the wrong place or trying to cater to the wrong audience with your product. No one is going to be able to attract *everyone* to their products, so to save yourself time, L$, and frustration, make sure that you are putting stores only in the malls, sims or areas that specifically will attract the kind of people who will buy your products. Having a stand alone 'main' store is good, but make sure the decor fits. Make sure your keywords are words that people in that particular clique would be looking for. Sponsor events that are aimed at the same audiences you are targeting, and generally become a part of their community. People are more willing to buy stuff from people they know, like and trust personally than a stranger. Many malls or venues promise 'traffic' to merchants, but a smart merchant knows to check it out first and see if the clientelle matches their product lines. If traffic doesn't translate into sales, it won't be worth the price of the rental, especially since the more traffic the landowner claims to have, the more they tend to charge for the rental.

SL is just like any other business in the sense that there are good days, and there are bad days. You can only do as much as you can, but if you are doing everything here, you should see more good than bad days. Try to look over longer periods for trends, I suggest monthly targets. Days are too short, even weeks are too short to really get a good pulse on whats going on. But don't panic, just because your stuff isn't selling today, doesn't mean it won't sell tomorrow.

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Monday, March 10, 2008

Business Musings - Newbie business

Seeing as I rarely get new reports of scams, (and so forget to post here) I think I'll just be using this blog as primarily a vessel for my business musings and rants regarding doing business as a vendor in secondlife. It seems people get the most use out of it.

So, my topic today is newbie businesses, and I don't mean new businesses, I mean business for the newbie. I get a lot of questions about starting businesses by new residents, and I thought writing down what that advice might be helpful for everyone who might be afraid to ask. This article is primarily aimed at those new to secondlife and wish to start their own businesses to earn some Lindens.

Many new residents ask me 'how do I get money in secondlife?'. While there are several options (money trees, jobs, camping, go premium...) The only way one can generate a steady 'income' in the game is to start a business. This can be a rather daunting task for someone who's still in the process of learning the interface. I honestly suggest that a newbie take some time to explore and get used to the actual world and tools before trying to start a business. Your ability to manipulate the tools inside and outside of secondlife is going to greatly influence WHAT you are going to be able to do for your business.

There are many options for a business in SL in both service and retail. Service type businesses would be things such as running:
- Clubs
- Consulting business
- Event Planning
- Sim Design
- Custom scripting, building, design
- Land management

Where as Retail would be content creation and sales. Some example of 'products' sold by SL retailers are:
- Textures
- Hair Styles
- Pre-made buildings
- Clothing
- Shoes
- Skins
- Eyes
- Animations
- Scripts
- Furniture
- Poses & Gestures
- Sounds
- Pre-built avatars
... and the list goes on.

Each business has their own varying degrees of complexity and audience. Those who lack artistic skill or the inclination to learn the tools in SL to build sometimes turn to their RL job training, offering RL services such as fitness consulting, financial advice, photography, wedding planning, and so on through SL. Some people become facilitators for other groups, such as putting together Sim design teams of skilled individuals to do private sim development, handling the hard business of getting customers and accounting, letting the creative teams do what they do best. Obviously this has varying degrees of success. There are some 'businesses' that rarely make any money, clubs being one of them. I've heard of very few successful clubs since the gambling ban. Service jobs do require a lot more time from you, since you have to actually meet with clients, deliver the service, and its a new 'job' every time. Great if you have a lot of time and enjoy it. But you will have to definitely develop your connections and market yourself well.

The most consistently successful type of business I hear the most about is the retail side of things. Content creation is a fairly reliable way to generate a regular source of income on SL. The upside is that your 'store' is never closed and doesn't need sales people. You can keep selling things even if you aren't online. The trade off with this sort of business is that it actually does require you to learn some programs outside of SL as well as the quirkiness that is SL itself. Even experienced content creators find times where building is very very frustrating. However, if you are already familiar with some of these programs, you may find that its the easiest track to getting some regular L$ without having to purchase them yourself. Obviously original content sells the best, however, if you lack the time and skill there are such things as 'business in a box' of content you can sell, as well as 'affiliate' programs from some of the big retailers offering you a percentage of the sales from the vendors you put out. However, I'll elaborate on these a little later, lets assume you are interested in making your own unique creations.

The Retail Business

Most content can be broken down into a few categories ( or some combination there of):

Textures - This includes clothing, skins, eyes, as well as original textures for things like buildings. Textures are basically a picture that is specifically designed to wrap onto a prim or mesh (such as clothing or skin) to give it a particular look and feel. Most textures are either .tga files (targa), or jpgs. These are generated with a graphics program, such as theGIMP or Photoshop.

Animations - This includes poses and gestures. Basically these files make an avatar move in a particular way. Walking, standing, sitting, all controlled via poses and animations. SL uses .bvm files which can be generated out of commercial software such as Poser, or there are some free tools floating around like QAvimator ( there is a full listing in the forums here.)

Sounds - Sounds as in audio recordings. There aren't many people that specialize in this, but it involves recording sounds and processing them for use in SL.

Building - The actual creation of objects using primitive objects IN secondlife itself. Many things are built from 'prims', from clothing to hair to buildings. Currently there is no way to import complex creations from other 3D applications into SL, there are however, 'scuplty' prims, uniquely shaped prims, which are created from UV maps which can be generated from several commercial and open source 3D apps. The basics of building in SL are very simple, and almost anyone can learn this skill.

Scripting - The creation of scripts that allow interaction with objects using SL own scripting language, called LSL. Scripting can be done right inside SL using 'notecards', and requires nothing but the investment to learn the language. A good way to go if you are more logically and less creatively inclined.

You should consider your own strengths and interests when you decide what you'd like to get your feet wet doing first. Its often best to start in one place and branch out from there. For example many people start into clothing by making T-shirts. Making furniture is a popular way to start building. There are many free textures to help you with your beginning builds so you don't have to make your own.

There are a lot of tutorials out there, templates, and examples. Many of them are mentioned on the SL forums, in where there are several forums dedicated to content creators. Many of them have stickies to useful resources including links to templates, programs, and tutorials.

There is one _small_ issue you will run into as a pennyless newbie. To upload anything to SL that's external costs 10L, and if you are just getting started making textures or clothing, you are going to screw up several times before you get something saleable. There are some external applications that help you preview things before you upload, but sometimes there is just NO accounting for how SL is going to take something.

So how do you get around this new challenge? Well, if you are new enough, you can raid moneytrees for starting capital, work a 'job' to get started for a little while while you get enough cash to upload stuff, or you can invest a little in yourself and buy some L$. However, if you are old enough (as an avatar), you can avoid all that and use something called the 'test server'. This nifty thing is very useful because you get free L$, about 1000L$ worth when you login. You don't get to keep it or transfer it to the REAL grid, but you CAN use it to upload your textures, animations, or sounds and try them out without spending your hard earned L$ on your real account. Once you are satisfied with what you've got on the test server, you can upload it onto the real grid and save yourself hundreds of L$ of trial and error.

Another note that will probably help you, particularly in the beginning is that specialty stores (stores that specialize in one particular type or flavor of product) are much easier to establish and get known than ones that are very general. People go to a hair store, a shoe store, a clothing store. When you get more known, starting new lines of items might be what you want to do, but in the beginning, its easiest to specialize in a particular thing. Its easiest for you to learn and become good at, and finding good target markets and customers and such is much easier. Make sure you capitalize on your personal interests and communities you are a part of, having connections already in that community will help spread the word about your store faster.

Now, as I said earlier, if you are not the artistically inclined sort, or perhaps you want to start with something to earn the cash to do your own stuff, you can purchase what are often called 'businesses in a box', which are basically a set of pre-made stuff of varying quality that you can sell without restriction. HOWEVER, the caveat here is that ANYONE can sell this stuff, so you don't have any edge in the market place. Sometimes such packages are nothing but poorly crafted freebees stuck in a box (or sometimes nothing at all!), which makes it a poor choice to invest in. Most Box businesses require you buy them upfront, so there might be a large initial investment, not to mention the cost of setting up a store. If you are interested in going the business in a box way, you should research what you are buying. Its easy to get ripped off with these. Some people who aren't interested in being in SL anymore sell their businesses, sometimes you can buy these guy's inventory. If you are lucky, you'll be the only one selling it. But make sure you check your permissions on stuff before you start selling it!

The other option is affiliate programs. Some of the larger retailers have programs where you can join and sell their products. In exchange for you basically running a 'branch' of their store, you get a percentage of the sales from your location(s). You will be required to locate a place to have your store, a mall or similar set up is a popular choice. You won't make a lot of money doing this, as the percentage is generally less than you would make if you were selling your own unique merchandise, but on the other hand you have the power of the brand of products you are selling which is established and already has a reputation among consumers. Most affiliate programs don't have any upfront fees. Its usually a "you make money, I make money" situation, which makes it good for a penniless noob, but you will still have the cost of the rental to front, unless you can find an area that will allow you to sell stuff for free. There are some of these areas, usually 'markets' of some kind. Otherwise a rental will range from as little as 25L a week to hundreds of L$ a week.

No matter what sort of retail business you are starting, you are going to need a place to sell stuff in. You have a choice to either bite the bullet and get some land of your own, or you are going to have to rent some from someone else. When you are starting out, its important to try and get a space as cheap as possible. When I was first starting out, I sold t-shirts and eyeballs. I was lucky to have a friend who had land and let me squat in a little cart in front of her established store for nothing. Mooching a bit of space off a friend is a good way to go if you can, if that friend happens to have a busy store, even better, but be respectful of them and try to get your own space as soon as you can. You will want to establish a place where you can actively drive people to your store. Malls are a good place to find a cheap place to set up shop, and most already have traffic going to them, so it saves you having to start from ground zero to find some customers. A good thing to do is create a group for your business and actively invite people who purchase your products to it. This will give you a mailing list of established customers that you can market new products too and share special promotions with. Building customer loyalty will help you in the long run, no matter what, just be careful not to spam your group. It also lets you inform them if you move, or open a new store. Eventually you will probably want to establish a 'main store', which is usually your largest location with a complete catalogue of your products, but that can wait until you outgrow your small location, either through product numbers ( you just have too many to fit in a small mall stall), or you want a showcase (frequently the case with furniture or interactive objects.). The use of a 'vendor' or scripted object that holds your products in it, showing a texture of the product, can help you maximize the amount of product you can get in the space you have, both in terms of physical space and 'prim usage'. There are many free systems out there to choose from.

Once you've got some products and space to sell them in, you'll probably need a logo and some basic photography of your products to put in vendors or on boxes. Having theGIMP or photoshop is very helpful for making the most of your product photos. After you are all set up, it becomes a matter of getting your name out there.

There are many ways to do this. Posting products to the SL forums is a good start, getting an account and selling items on SLexchange or Onrez or other services is also helpful. Making sure your objects are indexable on the new search is very important. Placing classifies and making sure that your locations are in your picks in your profile is very helpful for people looking for your stuff or the type of thing you sell. You may want to go to some nightclubs or events and sponsor them with your products, or simply go and show them off in sandboxes, clubs, or other social gatherings, having the landmark handy to pass out to people. If you are into the fashion scene, sending items to some of the fashion review folks who have blogs can give you a boost if you've got something good for them.

But it is important, through all this, to be realistic about your expectations. People are not going to beat down your virtual store door simply because you are open. You will have to do a lot of work promoting yourself and your products to build your customer base. You may only have a few sales a month to start. Don't lose heart, but keep at it. Keep building, keep adding to your products, keep promoting. The more you do, the better you will get, the more people will seek your products.

Next time, I'll talk about a service based business.

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