Differences between Small Shops and Large Stores

largesmallstoreThe factors that affect whether a visiting avatar spends money in a small shop versus a large store is similar in some aspects within virtual worlds, but also different in other ways when compared to the real world. One example of differences is the price paid for a product. Unlike the real world, large stores do not have the advantage of purchasing products in volume in which the lower price can be passed onto consumers because copyable items (or items sold through an affiliate vendor) has a near non-exist cost associated with them once the initial product is created.

However, the similarities between virtual and real world retail locations does include the square footage advantages as well as increased prim allowances which can result in a wide product offering as well as demonstration products that are rezzed more often than not. Large stores with their expansive space means that products are more likely to be sold via individual product vendors rather than a vendor with navigation arrows used to browse products like a catalog. Having more products visible at a time can also psychologically increase the chances of impulse shopping which can only benefit the bottom line.

Larger parcels also allows demonstration models to be either permanently or semi-permanantly rezzed so that the visitor can interact with and inspect the product instead of just looking at pictures or watching a video. Even though more prims are available, permanantly rezzed items tend to be the less-prim items and more of them while the semi- permanantly items will have a space set aside for them to be made available via a temporary rezzer that does not count against the static prim allotment.

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Considerations when Setting a Price

priceconsiderEstablishing the selling price of an item requires research into environmental factors in order to support the final decision. Such research identifies which customer base to target and further determines what are the expectations of those customers at different price levels. The current status of the economy can affect this too because if the economy is on the upswing then prices might be tolerated at the high end , conversely if the economy is in or recovering from a recession prices are likely to be at the low end since customers are likely cutting back.

Sales promotions such as discounts and coupons may result in a quick sale or two, however they should be reserved for products at either the beginning or the end of their existence. Once the standard price is determined utilizing a lower “introductory” price for a limited time period after product release is reasonable as long as the limited time period is honored resulting in a higher price later. Another benefit of offering a product at the lower price is it increases market share for the sell against competitors. At the opposite end of a product existence are “close out” sales which in the real world the purpose is to sell remaining stock and free up shelf space while in the virtual world it generally means the product will no longer be offered for sale through an automated vendor or web site. However, nothing prevents the content creator from selling virtual goods on a case-by-case basis upon request unless the creator closes their account and no longer logs into the virtual world.

Premium product pricing, on the other hand, can project value to the prospective end user if it is apparent that the post-sales service and support of the product is better than the rest. This is similar to generic versus name-brand products in a grocery store. For example, some who have worked in the hot dog industry have revealed that the same exact product is being packaged with a generic name on the outside as are the name-brand and yet the former sells for a much lower price than the latter. The latter benefiting from their established brand name and service justifies the higher pricing. Another example is in the computer industry in that while you can buy a computer from a competitively priced small business at the local strip mall that is only open specific hours and closed on the weekend, there are also similarly-equipped computers selling for much more that make available a dedicated 24/7 toll-free call center staffed with knowledgeable service technicians held to strict performance metrics.

Unlike products resold in the real world, merchandise sold within the virtual world are generally only available from the creator themselves. While it’s true that some creators allow franchise stores and others to rez an affiliate vendor the price is generally locked and the commission structure is usually at a fixed rate. Some items sold in the virtual world can be manufactured from supplies offered by the creator and then a levelling system is used to determine the cost-of-goods. Those who have higher experience at manufacturing have the advantage of having a lower cost and therefore can offer the final product at a reduced price.