So you want to start a PSS, Part 1 of ?

So you want to start a PSS... the very idea is daunting, because the possibilities are so overwhelmingly huge. Where does one even start to think about it?

There are two rational ways to consider the idea, the micro and the macro. The micro is, you've got a specific item or service in mind and you are wishing that a PSS existed for it. I previously posted along these lines, because I was sitting around wishing that a PSS existed for baby toys and baby clothes. The services which these products provide -- entertainment, or warmth and modesty -- are useful, even necessary, but the products which provide them are not very good at doing it. (Wouldn't it be great to have clothes that grew with your child? Or toys that grew with your child? For all that, products that promise this don't typically deliver.)

Alternatively, you can have a macro-level goal, such as reducing waste or allowing more choices, and you're right now sitting around trying to come up with a candidate product or service system that would let you accomplish this.

Whether you're working up from the micro level or down from the macro level, there are a few things to keep in mind when designing your PSS.
Guideline #1: Any durable good is a candidate for a PSS

Things that stick around are good candidates, because they typically outlast their service to you. Even if you've watched a movie 32 times and you are about sick and tired of it, a DVD endures (arguably, but let's not get into planned obsolescence). A squash is a very poor candidate, while an heirloom squash seed is a much better candidate. Books last a very long time, while stamps are single-use. Sure, you can collect stamps, but what I'm focusing on in this blog is products that provide a service to you, and the service that a stamp provides is one time only.

Guideline #2: If it doesn't make sense to ship it, then localize it

Bored with your current dishware, but don't want to buy and store a set for every season? Maybe you could start a PSS, so you could have red snowman plates in December, pastel yellow in April, and recycled glass jeweltones for July dinners on the patio. The cost to pack and safely ship these items would be outrageous, however, so this might be better organized as a local bulletin board, a get-together and swap, an email list, or (if you have the resources and code to put towards it) a full-blown trading website.

Guideline #3: Commodity items are easier to price (extended discussion)

The easiest pricing structure you can adopt is simply to make everything free. This is a policy of Freecycle groups. However, when everything is free, it becomes much more difficult to figure out the worth of individual items to you. I belong to a high-volume freecycle list, and it is simply not usable for the sort of grocery-list shopping that most people are used to. It becomes much more useful when you have a specific but non-urgent need. For example, if you would like to pick up a bookshelf sometime so you can put away all those books that are in boxes in your garage, Freecycle is useful; sometime in the next 3-6 months, there are going to be some bookshelves posted, and one of them might suit you.

Once you move away from a system where the only rule is that anything goes as long as it is free, you can start to run into pricing issues.

Local Currency

A common solution among the more structured PSS sites is to have a local currency. A movie trading PSS might issue MovieBux, a clothing site might value things in Shoe Credits. Points, credits, bux -- these are all just local currencies. That said, it can make a big difference to the user whether the site sets the value of an individual item, or whether the user sets the value.

To contrast two examples:

Kizoodle allows you to post an item (typically clothing) to be sold in exchange for "credits". You can charge shipping credits as well. As these accrue to you, you can spend them on other items on the site. As an interesting note -- the fact that shipping is paid for in "credits" was a design choice that caused Kizoodle credits to settle at an exchange rate of roughly 1:1 with USD.

Bookmooch, on the other hand, set up a point system which values behaviors rather than items; an international book shipping transaction accrues 3 points to the seller while shipping a book domestically gets the seller 1 point. The buyer pays 1 point for a domestically shipped book. Point fractions accumulate when the user adds a book to their available inventory, or acknowledges receiving a shipped book.

The reason that Bookmooch can do this is that most used books are roughly worth the same amount (within an order of magnitude), and are similar in size and shape. It is because books approach the ideal of a commodity item that the Bookmooch PSS designers can focus their time on tweaking a point system that rewards behaviors necessary to a successful PSS network.

It's still possible to do that with items that can vary widely in value (like jewelry, or power tools), but it's much easier to do with commodity items like DVDs, games, books, and other media. This is why there are abundant media PSSs.

Lending Tiers

Another way to structure a PSS so that items are fairly valued is to group similarly-priced items into tiers. I've only ever seen this done on centrally operated PSS sites, not on peer-to-peer lending sites like Paperbackswap or Bookmooch. The handbag and jewelry clubs are a good example -- if you join at the lowest level, you are granted access to their least expensive or desirable items. If you increase your monthly subscription to one of the higher tiers, you are given progressively more access to more expensive items.

In a peer-to-peer setting, this would be difficult to arrange, but not impossible. In theory, you could set up some simple tiers and allow everyone to moderate items. If an item is put into the wrong tier and three or more peers mark the item as mis-tiered, your posting could be moved or deleted. To grant access to the various tiers, you could use a user's ratio (items given away vs items gotten) as the key to entry, with the most generous givers getting access to higher levels.

Whichever way you structure your system, and you do want to structure it to make it fair, you also want to keep it as simple as possible. When the system becomes complicated, people will start trying to "win" by beating the point system, rather than participating in the underlying service system. A reasonably fair exchange that doesn't impose a lot of transaction cost on your user will result in lots of use and lots of users!



Next time in Part 2 of ?... Reputation, Signal vs Noise, Curated Collections, and Centralized vs Distributed storage