Artificial Scarcity

The "Disney Vault" was a term formerly used by The Walt Disney Company for its policy of regularly placing sales moratoria on home video releases of specific feature films. Each Walt Disney Animation Studios film was available for purchase for a limited time, then placed "in the vault", unavailable for retail sales, pending some future re-release. (Wikipedia)

Flash Sale! Limited Time Offer! Today Only! 

We have all seen these headlines, but do most consumers believe them? 

One of the best ways to increase conversion rates is to increase the sense of FOMO (fear of missing out). Scarcity is a well-known marketing principle that can be implemented in many ways, but read on to find a tried and true way of increasing sales on your Shopify store through scarcity.

Are your best sellers always in stock? What about your other products or services? How do you typically handle inventory management? How do you handle product launches? 

Most companies will plan to overstock on new items or best-selling items to ensure that they have enough to meet demand. But what would happen if you intentionally set inventory levels below actual levels? This strategy has shown to not only increase conversion rates - but increase the amount of consumer excitement and how long consumers are interested in your product.

For example:

Let’s say you are launching a new product and you have 10,000 units available. At launch, you typically sell out within three weeks of launching. This comes from advertising, email marketing, sms marketing..etc. 

I would recommend setting the inventory level to 6,000-8,000 units (or less) on the first day of launch. 

Tip - Show your inventory levels directly on your product page. Learn more here. 

When you “sell out” of the first set of units, provide an option for notifying customers when the item will be back in stock. Or use an app like this

Now, when you put the additional 4,000-2,000 back in inventory, you can notify those who “missed out” that the item is back in stock and recommend they order before it goes out of stock again! (False Scarcity…again). You can do this through the following steps: 

1. Run advertising campaigns saying back in stock. 

2. Segment users and email those who haven’t purchased that product

3. Segment users and sms those who haven’t purchased the product

4. Change website banner to showcase how the product is back in stock

Creating this false sense of scarcity allows you to take a single launch day and drag it out into multiple days. Moreover, in my experience, I have seen this tactic produce a 10-25% increase in the first week of sales for that specific launch. 

For example, say you typically sell 5,000 units on launch day, with this method you will sell an additional 500-1,250 units within the first week. 

This concept doesn’t have to be used just for product launches. Whenever you run out of stock on an item, when you bring it back in stock, you can implement this same strategy to ensure you alert all those who wanted to purchase, that they can now purchase. 

Now go and grow. 

J

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