E-Commerce

Solutions in SL:
A Case Study
Beta Business Park
Fall 2009 Conference
Second Life®, SL®, Second Life Grid® and Linden Lab® are
“Leadership in Business”
registered trademarks of Linden Research, Inc.
No infringement is intended. October 28, 2009
 However...

The company whose case study I

was going to present hasn’t
opened to the public yet! (major
delays)
SL in Business
We are all aware of the typical
uses of Second Life® for business:
training, meetings, prototyping...
sponsoring events, organisations
way more important: forging
strong relationships online
... and still some media splash!
What doesn’t work?
Media splash is “uninteresting”
“Build and they’ll visit it” doesn’t
work at all
Advertising doesn’t work! There
is no mass media!
And the taboo: “you can’t sell
products or services in SL”!
The Age of Fear
Back in 2006, SL residents saw the
new corporate virtual presences
with some fear:
They had unlimited resources
They would compete with
residents selling products and
services
They had professionals to do their
virtual presences!
.. but for no reason!
Building content to sell or give
away in SL was really not worth
the effort — too expensive, little
return; it was limited to giving
away a few gifts and gadgets
that nobody used
Some exceptions: Dell, American
Apparel, Toyota (and others),
Bershka
No events either
... corporations also hardly
competed in the event arena:
they weren’t setting up clubs!
Constant animation and hosting
was too expensive anyway
Early exceptions: contest by
Coca-Cola, Playboy’s island, AOL
video streaming
 The result?
The first-generation corporations
gave up on the “pretty buildings
for media splash” kind of virtual
presence
They were confused about what
worked or not, and why not
Analysts and experts pointed out
the flaws and showed them what
was right for Second Life
Second Generation
Engage the community
Foster collaboration
Meet, present, lecture, discuss,
chat, talk, forge networks
If you’re a techie company, do
prototypes; if not, do market
analysis (see L’Oreal)
Forget media splash and sales!
But why no sales?
It’s far easier to order a product
from the Web!
It’s cheaper to do a snapshot
and put it on a website, instead
of a 3D model!
Payment: how to handle sales of
a computer for L$250,000? (Dell)
Residents don’t have that money
It’s also psychological...
Residents buy digital content for
their avatars, not for their RL
selves
Why buy a computer then? It
doesn’t work “in SL”
This is quite different from
buying online on the Web, where
you don’t have a digital persona!
Exceptions...
If you have a product/service
that “translates well” into SL, it
might have worked
This would suggest that
American Apparel or Bershka (or
even L’Oreal with skins) might
have survived
Problem: it would be a new line
of business
 Cost
Selling products/services in SL is
a new business area for a
company
Is it really cost-effective?
Corporate labour is expensive
(resident labour is not)
How would this be managed?
What profit would be made?
Would it translate to RL sales?
A few exceptions
Some companies already sell
products that can be converted
to SL for a small cost
These products might already be
very cheap and useful for SL
A good example: streaming
videos into SL (AOL) —
advantage: you can watch it
together with friends!
Key elements for success

Product/service is directly usable

in SL by avatars
Already available on a different,
electronic format
Very cheap (remember L$!)
No new business area, but just a
new distribution channel
 ... or almost
There might not be a product in
a company’s portfolio that has all
of these requirements!
Conclusion: e-commerce in
Second Life is not for every
company
... but some might still pull it off!
 AOL Again!
They already sold videos and
audio online on a pay-per-view
base, and had all required
infrastructure
“Renting” a video was cheap in
SL (L$200)
Extra advantage in SL is sharing
the experience with friends, and
chatting while watching!
Sunbelt Software
Florida-based company selling
anti-virus solution
You could buy it in SL and it
would be delivered by email
Gadgets to attract visitors
Lots of community events
Lasted for a couple of years
(external issue, market change)
“People” companies!

The best examples of e-

commerce in Second Life are
from pure service providers!
Consultants, lawyers,
accountants...
... and, of course, teachers!
Language Lab
Language school in Second Life
with conversation classes in an
immersive environment
Advantage: no geographical
boundaries
Business model replicated
successfully from any other
language school
 Universities!
Classes, seminars, and
conferences can be given in
Second Life for a fee
No wonder our academic friends
are so eager to use SL... the cost
of the virtual classroom is next to
zero, and maintenance is
cheap :)
 Is this all?
We’re too used to the web-based
notion of e-Commerce, this feels
like cheating!
What about eBay or Amazon in
SL? Can they survive?
Why would someone log in to SL,
click on an in-world web browser,
pay L$, and get something
delivered by regular mail?
 Hypothesis
Imagine that an online shop
would sell T-shirts for US$1 in RL
In SL, they would sell the same
T-shirt, for L$270
... but you’d get a copy for your
avatar, and the “real” T-shirt at
home too
Incentive to log in to SL!
Of course, I know...
... T-shirts don’t cost US$1 in RL!
Even if they did, there would be
a cost to reproduce the T-shirt in
SL. No matter how easy that is,
imagine doing so for a thousand
T-shirts! Would it be worth the
effort??
How to deal with repeating
customers?
So, we need to find...
... a product that is very, very
cheap in RL (but sold massively)
... where “conversion costs” to
do the product in SL are low
(digital content is best!)
... there is added value to buy
the product in SL and RL
simultaneously (your avatar will
use this product too!)
A few ideas...
Bubble-gum :)
Skins/makeup (they’re
“expensive” in SL, they might
barely cover the costs of the RL
product)
Music, video (imagine a
Magnatune for SL!), pictures
Anything doable with textures
My NDA’d Case Study

... of which I’m not supposed to

talk about...
Mobile comms
Text messages (SMS), ringtones,
backgrounds for your mobile
phone
All these are insanely cheap iRL
Communicate between RL and
SL phones (two-way)
Pre-charging your real phone
 Collectibles
Cheap, collectible RL stuff that
appeals to a niche market, in
printable/digital form
Create equivalents in SL (just
digitise them!)
Use SL as a meeting place for
collectors
Collectibles are “art” you use as
decoration in your SL home!
Personalisation
Let’s get back to the T-shirt
example: you might not be able
to sell T-shirts in SL and RL, but
what about sending a picture
from SL (easy to do) to be
printed on a RL T-shirt?
Some programming is necessary
to create it automatically in SL as
well, but it’s not impossible
This obviously assumes that the
company has means to already
accept digital art to personalise
your things (or is willing to
invest)
Doing it in SL is supposed to be
more fun and interactive than on
a boring Web page!
And, of course, the cost of
personalisation cannot be very
high (again, the T-shirt example
might not be good)
Conclusions...
You’re not going to be selling
cars and houses in SL soon! (but
how long did that take on the
Web?)
Pure service is sellable now
Very low-cost, digital products
which can be turned into a SL
“gadget” are also possible
 Thank you!
Discussion :)

... and don’t forget to be around

at 1 PM for Channels of
Collaboration presented by Neil
Canham (Richard Meiklejohn)