Scarcity marketing is a means of encouraging sales by suggesting a product is in limited supply and may soon be unavailable.
It is incredibly good at making people buy goods they may not require in the short term and pay prices they would not otherwise consider.
Let me explain how powerful scarcity marketing can be with a real life example from back in the day.
Back in the day, in the early 1970s, newspapers and television reported an imminent shortage of petrol coming into the country. There was talk of long-term petrol rationing and mass unemployment among people travelling long distances to work by car.
Within a couple of hours, people who did and others who did not need to fill up their tanks were in queues more than a mile long outside almost every petrol station.
As it turned out, nothing disastrous happened. But the fear of running out of petrol had caused mass panic and made colossal short term gains for suppliers and petrol station owners.
It’s an extreme example, but a good one – and making people fear they can’t have the product unless they buy it right away can be used for most products in numerous different marketplaces.
eBay just happens to be one of the most susceptible to creating panic among potential buyers and encouraging fast sales at unrealistic high prices, as you will hear about soon.
Most scarcity marketing exists by suggesting a product is in limited supply or can only be obtained within a specified time period.
So you’ll hear marketers claiming the likes of:
“Only two widgets left. Buy today or be disappointed tomorrow!”
“Limited edition widgets. Only three of original one hundred left”
“Lowest price ever but only until Sunday next at 12 noon”
But limited availability leading to faster sales is only one benefit of scarcity marketing.
A suggestion of rarity is also associated with higher prices, notably for antiques and collectibles. But the same can be said of numerous different products, old and new – especially where limited supply is backed up by heavy sales numbers and high positive feedback.
That would explain the thinking behind high prices accompanying these examples…
“Five hundred sales in ten days. Only one hundred widgets left”
“Five hundred sales in ten days. 100% positive feedback. Only two widgets left”
Note: High positive feedback is a major seller in its own right, independent of scarcity. But you must not suggest high positive feedback unless it’s true.
Product scarcity, genuine or fake, supports one of the most profitable of all marketing techniques: the chance to grow a mailing list of potential buyers for future product promotions.
So having told customers an item is in short supply or currently unavailable, you can invite them to hand over their contact details in order to be among the first to know when a product returns to stock.
It looks like you are doing sign ups a favour by ensuring they get the product next time round. Compare that to asking people to join a mailing list they know benefits sellers more than buyers.
There is also the implication that sellers and their products are more trustworthy than rivals. If your product is in limited supply while other sellers have hundreds of units in stock, that suggests you are more professional or your goods are better quality.
That may not necessarily be the case, but that’s how some buyers will read the situation. Exploit the assumption by implying scarcity in your titles for fixed price products and setting low stock available figures, even for products with unlimited supply.
Scarcity also helps clear unsellable and low profit stock where it applies to a bonus item and not the principal product. So let’s say you sell hair extensions of the type hundreds of other people have listed online.
Competition is heavy and pricing wars are common. You don’t sell many hair extensions and you want to clear existing stock. How can you imply scarcity of an easily available product and set your listings above those of rival sellers?
You could, for example, buy job lots of multiple different hair ornaments, say ten units of each of ten different designs. Then you create ten different listings for your hair extensions, each with a different bonus gift and something like ‘Only ten available’ in titles and descriptions for your ten different wig and hair ornament ensembles.
Neither extension or hair ornament needs to be scarce, but as long as your bundled combination is in limited supply, that should encourage more sales for your hair extensions than for rival sellers.
Tips for success
– Some items sell faster and achieve above average prices because they are inherently rare and the figures cannot easily, if at all, be faked. Examples are limited edition products bearing individual production numbers, one-of-a-kind items and personalised goods. Specialise in this area and you won’t have to prove scarcity.
– Buyers are not fools, not usually, and most will spot bogus claims of scarcity. When they do, your reputation will suffer and could get you banned from eBay and in legal hot water with outside trading and consumer authorities.
When you say a product is scarce, that is exactly what it should be, and you should give a convincing and honest reason inside your listing. For those hair extensions, for example, which people know are available elsewhere, you might emphasise the rarity of your bundled offer.
Something like this should work:
“Please note only ten of these beautiful and highly desirable hair decorations will be made available with our XYZ hair extension”
– Utilise the power of auction listings on eBay where only one bidder can win the auction and that implies scarcity of the product, which isn’t always the case.
Using short term auctions – 1 or 3 day sales – encourages people to place bids faster than for longer sales and gives potential bidders less time to research the product and determine their maximum bid.
The bidding timer inside auction listings and frequent messages telling viewers and bidders an auction is about to end also encourage poorly researched last minute bids. And that explains why bidding wars and higher finishing prices are more common on eBay for short term listings than long term.
But possibly the biggest benefit of auction listings is that few buyers realise numerous products can be sold to unlimited bidders for the same auction listing.
This is done using Second Chance Offers which apply where an auction listing attracts numerous different bidders, one of which – the so-called winner – pays the highest price for the product. Sellers then make Second Chance Offers to selected underbidders according to number of similar products in stock.
Underbidders pay according to their previously unsuccessful bids. I personally think the process is grossly unfair on the highest bidder, even though sales and profits can be extremely attractive for sellers.
And there you have it: a few savvy ways to make your products appear to be in limited supply and generate high profit margins, even if your local wholesaler has thousands of similar items in stock.
Go grab your share of the profits right away!
This article first appeared on Auction Genie. Read more and comment here