December 17, 2009

A merchant's view: SLX, OnRez and the alternatives

[This is an import of a post I made for Rez Magazine in January 2009. Rez Magazine is closing down, so I imported the post here ]

In a world where we all see different angles and perspectives I have invited Peter Stindberg, owner of Babel Translations (Second Life’s premier translation company), co-owner of GREENE Concept sculpt furniture and also the business analyst for ~flirt~ fine jewellery, to give us his take on these events. -- Trinity Dechou


At the time of writing of this article, I have 150 items listed both on OnRez and XStreet SL, spread among 3 companies I own or am involved with. Those items generated a 5-digit revenue during the time they were listed and therefore selling on OnRez/SLX (as I still am inclined to call them) is a not-to-be neglected part of my business endeavours. One of the businesses I am involved in does not offer transferable items, so we officially encourage users to use one of the web portals to gift someone with our creations. Some merchants report that OnRez performed better for them, some merchants reported that XStreet SL provided better results - for my businesses both performed more or less the same.

Using OnRez and XStreet SL as a merchant

One of the biggest problems using the web services however is creating the listings. Dropping the items into the dropboxes provided by both seems easy enough, but the task of making the product description and web listing is immense. I would not call either web backend ideal, but the OnRez backend is way more advanced compared to the SLX backend. With the OnRez backend, you can easily bulk-edit product listings and the use of AJAX technology allows for parallel image upload. The dropboxes themselves try to detect duplicates, which is meant well but if you offer two versions of a product with different permissions, you need to use two dropboxes - that took us some time and a support call to find out. The only real downside I found in the OnRez system was that offering an updated version of a product requires you to make a completely new product listing. Last but not least, OnRez did not charge commission from merchants, and their advertising options were not only lower priced but also ran twice the time of the comparable Xstreet SL offerings.

The Xstreet SL interface on the other hand looks a bit outdated. Bulk editing items is not really possible, but at least you can adust some parameters on an overview page. Managing large amounts of items was really a stressful task - the implementation of the "templates" a while ago was a little remedy. Still doing mass-listings on SLX requires some planning to make it halfway managable. Mass edits on SLX are a task you really don't want to do... Updating an item on SLX wiht a newer version is pretty simple though, as you only need to select the new item from a drop down list in an existing listing.

Both platforms miss a tool to cross reference listings (for example multiple pieces of a jewellery set) - it's a tedious process to first publish the individual listings, then copy all their listing URL'S, and then going back into the individual listings and add the cross references.

From a merchants point of view my hope is that Linden Lab will incorporate the best features of both platforms, so that listing items will be a less time and work consuming process. From a shoppers perspective there is in fact not much difference between the portals - OnRez looks nicer but is rather slow, Xstreet SL looks more homegrown but has more merchants and the site is much faster despite OnRez using Akamai global caching services.

My wish list for Linden Lab would be:
  • Create powerful bulk-editing tools, so that listing and editing of multiple items gets easier

  • Eliminate the need for users to sign up or verify with XStreet SL

  • Improve the transaction download or...

  • ... splice the XStreet SL transactions into the regular transaction history of SL

  • Link the L$ balances in-world and on SLX

  • Make uploaded textures on SLX available in-world, and make in-world textures available for web-based product listings on SLX (yes, you can keep your 10 L$ fee for that)

  • Maybe think of ways to tie classified listings into the process

From a business person's point of view I am not too happy about this turn of events. The reason behind this is most likely the wish of LL to control the largest 3rd party currency exchange and - as speculated in the SL Herald - to offer inventory "transfer" options across several grids - which goes in fact hand in hand with the announced plans of XStreet SL mid last year to expand into other grids as well. However, buying OnRez and SLX borders to a monopoly, and I firmly believe that monopolies are bad. So what are the alternatives?

The alternatives

First player that comes to mind is Apez.biz - a web portal you probably have never heard of, but which in fact is older than XStreet SL (which started in December 2005). Apez offers a wide range of services and their website is quite confusing, but in fact the timing could not be better for them as I got word from Apez that a relaunch is imminent. Submitting items to Apez reminds a little bit of submitting items to a HippoVend server. The backend process could be streamlined a lot, but the technology is all there and in place. With over 15,000 registered merchants Apez.biz is in fact about twice the size of OnRez, but it seems their PR got neglected a bit in the past as they are not very well known. However their web backend offers many useful features, for example maintaining several virtual accounts (e.g. "personal", "business A", "business B", "alt") or the ability to send L$ from your own account(s) to any avatar in world - a feature I had missed dearly in the past. What is even more important is that via the apezAPI, a merchant can incorporate their own personalized webshop on their own website, and by this offer offline-selling right from the branded website.

I did not have many items listed on Apez, but those I had sold steadily. I shunned the work of listing 150 items on a third portal, but this work seems now to be much more well invested. A merchant who does not want to keep all their eggs in one basket is well advised to take a closer look at Apez, and in fact, during the time I was writing this article the number of merchands on Apez.biz jumped by over 30.

Some number crunching on the official merchant directories of XStreet SL and OnRez - courtesy of Rika Watanabe - provides some astonishing results. In public, it is always speculated that SLX is much larger than OnRez. And with 16,683 merchants featuring 705,252 products - an average of 42 products per merchant - this is truly an impressive size. In contrast, OnRez features 8,718 merchants with 337,427 products and an average of 39 products per merchant - so more or less exactly half the size in merchants and products, but the merchants on OnRez seem to be more the "power merchants". The picture gets complete if you look at Apez.biz, which features 15,934 merchants - almost as much as SLX has - but only lists about 100,000 products, equalling a meager 6 products per merchant.

But maybe competition might arise from a sector that is on nobodies radar - from one of the large vending system manufacturers in SL. I recently spent a lot of time adopting the HippoVend system from UK based Hippo Technologies. The process of filling the vendors and managing product listings on a web backend is very similar to the process required for the web portals. Since Hippo Technologies system is used by a large number of merchants in SL, an open web frontend offering the items of countless HippoVend systems would start with a massive number of objects. Andy Enfield was kind enough to answer to this suggestion on my behalf, but - for now - his answer is little encouraging:
"The purchase by Linden Labs of both OnRez and XStreetSL leaves a huge gap for a potential competitor to come into the market. Web stores are something I've stayed away from, not wanting the headache of dealing with running the financial services required, but it'll be interesting to see if some new company emerges into the potential gap. Collaboration may be the way to go --- it might be interesting to see what would happen if a new web store partnered with an existing vendor maker (either Hippo (one of the Grid's most popular) or any other) to marry inworld and offworld merchant services."
Tapping into the thousands of merchants and the millions of products being offered in Hippo vendors should be an attractive asset. I really look forward if this open invitation by Hippo Technologies gets taken up by someone.

Conclusion

So what is the bottom line? For the time being, I think it wll be business as usual. Most serious merchants are represented on XStreet SL anyways - so nothing changes for them unless Linden Lab changes the way in which XStreet SL works drastically. And I doubt they will. Currency traders, for which SLX was an "insider's tip" in the past, will focus on other 3rd party exchanges trying to get a better deal there. The Electric Sheep Company who operated OnRez was rumoured to abandon SL for quite some time. Of the merchants who were on OnRez but not on SLX, a portion will transfer, and another portion will use the opportunity to stop web sales altogether. For shoppers, not much will change - there might be slight improvements down the road like syncing the user databases so you automatically have an account on XStreet. For merchants, most likely all will stay the same, but ther eis potential for improvement. For market sanity however I hope a new competitor will arise, and my money is on Apez.biz. And therefore my encouragement goes to the readers - merchants and shoppers alike - to sign up with Apez since a market (any market) needs competition.
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