For those of you who are confused about the 'button system' (virtual currency), here's what I think they're going for:
By introducing virtual currency, the money put into the 99dresses stays in the 99dresses system. If real money were traded, a person could easily dump all of their unwanted clothes and be done with it. This isn't what 99dresses want. They want to build a community. They don't want to lose you after dumping your clothes - they want you to engage and interact by picking up secondhand clothes from other members of the community. They want to be your primary clothing provider - or close to it.
It's also worth noting that spending 'buttons' doesn't feel like spending money (even though they are equivalent to real money), which leads to impulse decisions and less friction. For the users, it feels more like an exchange than pouring in your hard earned money. The obstacle, of course, is drawing in new users, but once they're in, they're in.
I have read about relevant studies where people had an easier time surrendering things that symbolized money, even though they were perfectly equivalent, just as soon as they were removed from the actual physical currency:
"Dear Mark,
Why is it that casinos use chips versus real money on most of their games? Dave M.
Because most players do not equate casino chips with real money. It is far too easy, Dave, to be caught up in the game and forget what you are actually betting. Chips possess none of the qualities of real money. A dollar has a more palpable feeling and is more difficult to surrender than parting with a casino chip. Real dollars evoke those hours of employment, mortgages, and dry cleaning bills. But once purchased, chips seem like fun tokens found at the fair, not a medium of exchange. That is why casinos prefer pit employees to "change color" or upgrade your chips. They are not being courteous, just trying to induce larger play."
By using the buttons, 99dresses makes their system more fragile than necessary, and excludes people who could help build the community. Consider that most people won't need more than a few dresses worth of buttons. So someone who has 300 dresses has no incentive to upload them all to the site. Someone else has already pointed out that dresses need to be able to come out of the pool. Again that doesn't happen if money can't come back out. I might not even get to choose a dress I want if I'm worried that I won't be able to trade it again. The flow of dresses in and out is restricted, and that's not a good thing for the company.
Why not allow people to exchange buttons back for money, just at a lower rate?
Why? When you receive a dress, it is set to a disabled state on the site (rendering it unavailable for others). I'm guessing a dress can be in this state indefinitely, if one desires to keep a dress forever.
> I might not even get to choose a dress I want if I'm worried that I won't be able to trade it again
When would this happen? Why would you not be able to trade it again?
It sounds like you're confused about the logistics in play. The system is effectively the same as any other buying and selling marketplace, but virtual currency is used in place of dollars.
You're assuming that the supply and demand of dresses is balanced, and in particular that any particular dress will always be in demand.
You're right - you can keep a dress forever and it's not on the website. That's not really what I mean by "out of the system". Dresses need to be able to come out of the system because they go out of style, or get too used, and nobody wants them again. If I'm trading dresses and then get stuck with one, in a way it's still "in the system" and clogging it up. I can't participate until I buy back in again.
On the other hand, I already can't really remember why I blamed the virtual currency for this particular problem, so you're right about that, too. This problem exists when you use dollars, too.
Yes, and if I upload 50 dresses and they are requested and I now have 5000 buttons, what do I do with them? The point here is just that the button system essentially shuts itself off from say 45 of my dresses because I have no reason to upload them and sit around with so many buttons.
That system sounds nice in theory, but it doesn't work. Even places where virtual currency doesn't buy anything tangible, such as MMORPGs, develop black markets rather quickly.
If the virtual currency is worth real money, then the company issuing the virtual currency can make money by letting people buy into the system. I'd expect 99Dresses to start allowing people to buy "buttons" with real money after that have built up enough inventory in the system.
Sure, black markets are to be expected with any marketplace. Regardless, implementing virtual currency like this is arguably a more effective means to accomplishing their goals (growth/engagement/satisfaction) than not having virtual currency. But I could be wrong.. I guess we'll see.
By introducing virtual currency, the money put into the 99dresses stays in the 99dresses system. If real money were traded, a person could easily dump all of their unwanted clothes and be done with it. This isn't what 99dresses want. They want to build a community. They don't want to lose you after dumping your clothes - they want you to engage and interact by picking up secondhand clothes from other members of the community. They want to be your primary clothing provider - or close to it.
It's also worth noting that spending 'buttons' doesn't feel like spending money (even though they are equivalent to real money), which leads to impulse decisions and less friction. For the users, it feels more like an exchange than pouring in your hard earned money. The obstacle, of course, is drawing in new users, but once they're in, they're in.