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The Scarcity Tactic

I used to be friends with the son of a famous American billionaire. One year for his birthday I asked what he wanted & he said that he’d always envied this painting I had created while living in Italy, so he wanted something similar for his 30th birthday. I created a set of five paintings, he chose his favorite three and added them to his collection. Soon after, an art gallery owner told me that because he had added my paintings to his blue chip art collection I could use this to solidify a strong position within the art world. The number one rule was that moving forward, I could not create more than 10 paintings per year. The ending is a story for another time, but the point is that scarcity drives sales. It justifies high prices.

How can you use scarcity in your own company?

What is it?

Also known as FOMO, The Scarcity Tactic is the act of intentionally decreasing available sellable inventory to drive sales (and sometimes prices too).

Examples of FOMO in marketing include:

  • “75% off for the next 24 hours!”
  • “This opportunity disappears at midnight!”
  • “Only 3 tickets left at this price.”

For the scarcity tactic to be effective you must:

  1. Combine fear of loss with a sense of urgency.
  2. Always sell completely out of inventory

Why does this work SO well?

Humans are far more motivated to take action to hoard a scarce resource than they are to act on something that could help them.

…When we use FOMO, we wield this psychological lever to get your clients to buy in a frenzy, until you are sold out

Loosely quoting Alex Hormozi, $100M Offers

The Three Pillars of Scarcity

  1. Limited Edition
  2. Limited Supply
  3. Limited Time

Limited Edition

Real world example: My favorite MTC supplier only sells their peppermint & pumpkin flavored coffee creamers in November & December.

Take action: If you sell products, you can easily replicate this by releasing a limited edition: color, design, flavor, collection, etc.

Limited Supply

A popular example of limiting supply in the fashion world is the famous fire sale scene from the movie Shopaholic (embedded below).

Here is a less chaotic example you could also consider copying: When I went to the Tory Burch store (to buy shoes) a few weeks ago, I was told that every shoe I had chosen to try on was either the last or second to last. I walked around the showroom for a few minutes to see if this sales tactic was used with any other patrons. It was. Every person who requested a shoe in a certain size was told that it was the “last” or “second to last”. This scarcity tactic is also used by Chanel, Marshalls, Burlington & TJ Maxx.

  • Chanel commits to scarcity, they send each of their locations only 1-2 units of any single item.
  • Marshalls, Burlington & TJ Maxx do it a different way. They hide inventory in the back. Years ago, when I wanted five copies of a particular black shirt (for my adaptation of the capsule wardrobe), I just went to three of the same store to buy the “only” black Tahari dress shirt, two days in a row.

Each of these stores has a different selection and every item is (or appears to be) the last or second to last item in stock.

Limited Time

Here are a few companies that are doing this so well, you can copy them:

Software: AppSumo is a software discount store that has this one perfected.

Online courses: Udemy has frequent sales that drop $200 courses to $9.99 for three days.

Products: Unlike many retailers who change their inventory just a few times per year, Zara changes their inventory every three weeks.

Digital goods: On websites it is not uncommon to see a fake timer letting you know that a digital item is 75% off, for the next three hours.

Browse the images below and on MD9™’s FOMO mood board here.

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