In this world of recessions, unstable currencies, scheming banks and Bitcoin drama, some people are starting to ask the question: why use money at all? What might sound like an idea from the 1970′s can actually be a stable business model that facilitates community interactions and builds trust and engagement. Popular fashion tech startup Bib&Tuck has created their own online currency, Bucks. In this excerpt from my upcoming book about the future of commerce (The Third Wave of Commerce: How We Buy Now, O’Reilly, 2014), I asked Bib&Tuck cofounder Sari Azout about their model.
What made you decide to use a virtual currency on the site?
We felt strongly about community that was active on both sides (as buyers and sellers) as opposed to just as buyers or sellers. We wanted to create an experience, not just a utility. The virtual currency helped us convert a transaction into a meaningful moment of interaction.
What benefits and challenges have you had?
The benefits are evident in the engagement. The virtual currency introduces an element of gamification which makes the experience fun and addictive. There are definitely challenges – virtual currency systems require constant trade and movement in order to scale. I think the most interesting models are those that combine the elements of a virtual wallet (with the right incentives) with the option to cash out.As far as the engagement, the gamification element of a virtual currency keeps people coming back. 70% of users who buy an item make a second purchase within 45 days, and about 10% of our active users have bought upwards of 20 garments since our launch. I’m hard pressed to believe that those patterns are more prevalent in communities that provide a gamified experience.
What was the learning curve like for your users?
We didn’t have trouble explaining how the system works, which I think is largely due to how intuitive our user interphase is. I also think it helps that we decided to keep the exchange rate 1:1. I’ve seen virtual marketplaces create currencies with varying exchange rates, but I think this doesn’t work well for physical goods.
If you haven’t checked out Bib&Tuck yet, head on over and see how they make it work. And to learn all about virtual currencies, and a whole lot more, be sure to sign up to be notified of my book release.
Liza Kindred is Third Wave Fashion’s founder. Third Wave Fashion publishes monthly Fashion Tech Reports and consults and educates brands, investors, and publishers to help them navigate the intersection of fashion and technology. We also have a database with over 10,000 data points about 750+ fashion tech companies, a meetup group, and a blog. Sign up for our newsletter to stay in touch!