Why Luxury Brands Need Scarcity Marketing On The Web

Luxury goods marketers have long understood the value of scarcity. Whether they are selling high-end watches, leather goods or clothing, these brands thrive on their ability to create a product image that is exclusive and only for the most discerning tastes. A carefully honed reputation as a purveyor of high status items allows them to charge above-average prices for a product that may or may not actually be superior to generic competitors.

Yet, when it comes to their online presence, many luxury brands seem to have forgotten the lessons of scarcity. Failing to employ this basic marketing tenet on their websites—which marketing guru Robert Cialdini names as one of six golden persuasion principles in his classic book, Influence—means missed opportunities for e-commerce sales. At a time when retail outlets are waning in influence, luxury marketers ignore this at their own peril. 

Let’s consider the dynamics of scarcity and why it drives sales. Think of two neighborhood restaurants, side-by-side, both relatively attractive and in the same price class. Restaurant #1 has empty tables and bored waiters, while restaurant #2 has a line out the door. Which locale would you choose? Studies have shown that people naturally gravitate to the one where demand outstrips supply, assuming it to be the better choice.

Now let’s transfer this to the online setting. Today, savvy marketers are using the scarcity principle to create a sense of excitement, exclusivity and urgency among potential online buyers. They do this by offering potential customers specific, real-time information on the products featured, such as the product’s availability, the interest it is drawing from other consumers or how many hours are left before a discount on a product expires.

Fashion accessory site Bottica, for example, incorporates a direct call-to-action: “Act now! There is only one piece left!”, while others are more subtle, simply listing the items in stock. Shoe retailer Zappos even lists product availability by size and color. 

Amazon also tells its customers exactly how many hours (and minutes) are left until the product is no longer eligible for one-day shipping, creating a sense of urgency as the clock ticks. And hotel booking site Booking.com tells people browsing the site how many others are looking at the same hotel at that moment—which enhances its desirability—as well as when the hotel expects to sell out of rooms. 

These techniques can be verified using A/B testing, in which companies compare two versions of a web page—shown to similar visitors and at similar times – to see which one performs better. And our experience has shown that it works.

We see endless possibilities for luxury brands in this area. From our experience, mentioning the exact number of pieces available for sale is one sure way to drive demand. But luxury brands can also create a sense of urgency and exclusivity by A/B testing a wait list that will only accept requests for a limited time. If they are feeling adventurous, they could also test pricing based on two different locations, or compare a single pricing point versus an auction to see which brings in more revenues. 

Yet, few of the world’s most prestigious luxury brands have implemented this on their websites. A brief scan of websites including Louis Vuitton, Cartier and Ralph Lauren shows no differentiation on product availability whether in the shopping cart or earlier in the process. Perhaps luxury brands feel that such methods are better left to low-end marketers, or they are simply not keeping up with the times. But increased revenues and conversions is a language that all marketers understand, whether luxury or not. It’s time for the luxury brands to get with the program.

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2 comments about "Why Luxury Brands Need Scarcity Marketing On The Web ".
  1. Neil Mahoney from Mahoney/Marketing , May 9, 2014 at 11:22 a.m.
    Scarcity messages have to be carefully crafted. Think of all the sleazy "act now" ads you see from local car dealers. Neil Mahoney
  2. Paula Lynn from Who Else Unlimited , May 9, 2014 at 4:05 p.m.
    "Everybody goes where everybody goes." and "Everybody wants to go where everybody thinks everybody who is anybody goes." Then there are profits and profits come with more sales than there were the year before rather than just profitable. Luxury means if you can't afford it you can't afford it. If you can you will buy it when you want it based on service, not sales.