In 2016, a popular fashion brand released a limited edition collection in collaboration with a renowned designer. With only a limited number of items available for purchase, the brand heavily marketed the collection as being extremely scarce and highly coveted.
But there were challenges. For starters, due to high demand and limited production, the brand faced challenges in meeting customer expectations. In addition, the website experienced significant technical difficulties after customers rushed to make purchases. Scores of outraged, frustrated and disappointed potential buyers made their presence known. To make matters worse, even customers who were able to get products reported encountering errors, crashes and long waiting times during the checkout process.
The situation caused negative feedback and backlash on social media platforms, with customers accusing the brand of creating artificial scarcity to generate hype. To quickly try to make amends, the brand apologized to affected customers, and provided compensation or alternative solutions to rectify the situation. It also implemented measures to improve its website infrastructure and customer support for future releases.
Haley Slade says the story highlights the challenge of managing customer disappointment and the potential risks associated with creating a perception of scarcity. Slade, founder of Copy House, believes that brands must carefully plan and prepare for high demand scenarios, ensuring their systems can handle increased traffic and communicate transparently with customers to manage expectations effectively. Failing to do so can be the mother of all brand catastrophes.
“If scarcity is not properly executed or perceived as artificial, it can damage your image,” Slade says. “Brands need to ensure transparency and authenticity in their scarcity strategies to maintain customer
trust and loyalty. Implementing a scarcity strategy requires careful management of production and supply chain processes. You must consider the ability to scale production, meet demand, and maintain consistent quality while still creating a perception of scarcity. Failure to handle these challenges can lead to product shortages, delays or compromised quality.”
More than anything else, scarcity can create a sense of psychological ownership among consumers even before they buy a product. When consumers believe an item is scarce, they tend to feel a stronger sense of connection and attachment to it. This emotional connection drives their interest and desire to possess the product, increasing demand.
Scarcity also enables a brand to create a sense of exclusivity and status. When consumers perceive a product or service as limited, they associate owning it with a higher social status or membership in an elite group. This desire drives customer interest and demand.
Anna Stella, founder of BBSA, says that brands use scarcity to influence consumer behavior by capitalizing on their desire to be admired and coveted by others. “When individuals aspire to be envied, they are naturally drawn to exclusive products in limited editions. Humans have wants, needs and desires that form our consumer behavior’s foundation. The notion that something may be accessible today and gone tomorrow instills a sense of urgency among the consumers, influencing the decision-making process.”