Scarcity Effect in e-Commerce
Do you know what the scarcity effect is? Do you know it is also used in e-commerce to persuade people to purchase?
Have you ever been on a website and seen a notice stating that there are only 5 left in stock? Maybe they even go one step further and state there are only 5 left and 10 people are looking at it right now.
Now for the more tech savvy, they will understand this is of course sometimes complete nonsense designed to get a customer to purchase. Yes, it’s true, lots of places that employ his tactic are straight-up telling customers porky pies (lies).
Scarcity can be real, there may be only a few left in stock, but scarcity can also manipulated by businesses.
Now we won’t judge here, only discuss the theory scarcity marketing and its effectiveness.
The Scarcity Effect is a Psychological Trait
We have some physiological traits ingrained in all of us that clever marketers can use to influence us.
It happens subtly and we may never know we have been tricked or should we say, persuaded to make a decision. Unless of course, you know the tricks.
The scarcity effect can influence our purchase decisions, basically, when something is in short supply or about to be no longer available, our human instinct kicks in and we want it more.
This trait could go back to the earliest times of human evolution. If you a hunter gather a desirable item, say an Apple falls from a tree. You can either pick up and consume the apple, or a competitor can come along and pick up the Apple.
You don’t know when the next Apple will be available, maybe not for months so our instinct kicks in and something tells us to get it. It’s survival of the fittest in the jungle.
Now there are varying degrees in which retailers use this knowledge, but the most basic forms of scarcity manipulation are:
Limited Time Scarcity
Here you have to get the offer now. Think Black Friday or Cyber Monday messaging. Maybe you have landed on a website and you get a message such that you can get 10% off if you purchase in the next 24 hours.
Limited Availability Scarcity
Here the item has low availability, with maybe only two left in stock. The scarcity of products can influence us. Everyone wants a limited edition item for example. Like collector’s items, they can seem more precious to us due to the scarcity effect. If you don’t get it someone else will and the chance of owning the item will seem lost forever.
Introducing Competitive Factors
Dr Robert Cialdini explained this example perfectly in his book “Influence” which talks all about these hidden psychological traits that marketers use to sell items.
He explained the process of renting out a home. If say you have prospective tenants turn up at intervals say 1 every hour, they will come to the house, look around and be on their way after the viewing.
But if you invited tenants where they would cross paths, say we reduced the appointments to 20 minutes. When a prospective tenant turns up to see the house and somebody else is already there looking at it our instinct makes an appearance. Our brain starts to tell us, that if we don’t get it, they will, and we unwittingly become competitive.
Our outlook will now change as we have introduced a competitive element. It’s subtle but very effective. The house might even be that great, but just adding competition will also make the property in question seem more desirable.
The surprising thing is that millions of people are being persuaded by such tricks every day, without even knowing.
Scarcity Applications in Web Design
So we know the scarcity effect is real, and as such most web platforms provide applications that let you tap into some of this human instinct.
Some themes on Shopify now come with a scarcity module as an option to apply to your product pages.
Here we can enable fake orders such as 3 sold in the last hour. We can also enable fake visitors such as 2 left in stock, and 5 people looking at this item right now.
All this creates a sense of urgency for an end user and may persuade them to purchase.
This will add these sections to the front end in the front-end code and we can place them close to the add-to-cart buttons.
In fact, you can find fake customers or demand scarcity on many platforms.
You can buy a plug-in for your WordPress website or one for your Magento store. Businesses with their own developers can easily develop a function to produce these messages on-site and prompt the scarcity effect on end users.
Now all of these plug-ins can be of different levels. Some sites can be legit in saying that items have been purchased in the last 24 hours and also show the correct stock. But they are still using the scarcity tactic, whether this is true or not.
Big retailers like Amazon even use the tactic more subtly. Here we see you have to purchase within a set time to be eligible for purchase tomorrow.
While this does not seem unethical, it can still persuade us to check out now, especially if there is only one or two left. You could argue it is useful information and simply letting them know the cut-off time for delivery on a certain day. This is true, we find it useful in this scenario, but the countdown and order by a certain time still triggers our instinct.
They could just give the delivery date and after a specific time show the new delivery date. But by doing this they would not be triggering an effect that we may lose something unless we do it now.
Our Opinion on Scarcity in e-Commerce
We don’t look down upon businesses who do use these tactics, but it’s not the best start to a relationship with customers if you are straight-up misleading them. But it is not always totally unethical as in Amazon’s case, if a store really does have so many in stock or has a cut-off time on certain products or services. We would argue it is good marketing.
But we think it’s a bit small time when organisations use these features to invoke scarcity when they patently are not true. If you want to use this tactic, develop the functionality to show an honest representation of the availability or demand of the product.