What is scarcity?
The concept of scarcity occurs when a product is only available for a limited time or if it is in short supply. People always want more of things that are running out. In fact, products can actually be perceived to be more attractive, more enjoyable when their availability is limited or reduced.
Who stole the cookies from the cookie jar?
Psychologists Worchel, Lee, and Adewole conducted a research study in 1975 that proved this theory. They gave people identical cookies, out of identical jars and asked which they valued more. It became apparent that the cookies from the cookie jar with just 2 cookies in were perceived to be more enjoyable than the cookies from the jar with 10 cookies inside.
Though the cookies and jars were identical, participants valued the ones in the near-empty jar more highly. Scarcity had somehow affected their perception of value.
There are many theories as to why this might be the case; scarcity can trigger an emotional reaction within us, which causes us to react due to the fear of missing out. Or it could be because of social proof, making us think that everybody else must know something about the other cookies that make them better and hence why they are in higher demand.
Putting theory into practice
We can see this knowledge and theory being applied to many ecommerce sites in order to generate demand, evoke desired actions and ultimately boost conversions.
Limited stock/size availability: Booking.com – ‘We have 1 room left!’
Indicating that products are limited or only around for a specified period of time also helps to boost conversions as users don’t want to miss out.
Real time/count down scarcity: Groupon – 5 days, 08:11:00
Having a real time countdown again reinforces the need to make a quicker purchase decision and reiterates that the users have a limited amount of time until it is too late and they have missed out on the offer, deal or product.
Scarcity + Framing (exclusivity) can provide even bigger returns
Amram Knishinsky wrote his 1982 dissertation on the purchase of wholesale beef buyers. He observed that the wholesalers more than doubled their orders when customers were told that because of certain weather conditions overseas, there was likely to be a scarcity of foreign beef in the near future. They saw a 600% increase in sales when customers were told that no one else had that information yet. The exclusivity of the information helped make the offering perceived as even more valuable.
Never fake it!
It is crucial for your sales and brand that you never fake it. Scarcity is a very powerful tool, one that can return dividends when used in the correct way. But much like anything else… with great power comes great responsibility and so needs to be executed properly. Its success depends on your audience and how it gets executed. Overuse can devalue effect, or in some cases may even create the opposite effect and result in customers losing trust in you.
So now that you understand the potential power that this tool harnesses we would recommend that you use cautiously, with care.