Social Commerce Rule of Thumb, Part 3: Scarce Stuff is Good Stuff

(This is part 3 in a six-part series on social commerce heuristics. (See part 1 and part 2.) The purpose of the series to show retailers how to use these rules of thumb to help consumers shop smarter using their social intelligence – the capacity to learn from others.)

“We’re gonna have to buy more stuff.” – George Carlin

Years ago, I received an early invitation to Gmail, an application that, at that time, was highly coveted among Internet tech types. Since it was long before the app was rolled out to a broader audience, the idea that I was a recipient was a badge of honor that I lauded proudly, quite frankly. When Google gave me the opportunity to invite my friends (Google doled out the invitations in small batches at first), I felt it was a way to not only build social capital, but use as a status symbol.

Such is the psychology behind today’s social commerce rule of thumb: scarce stuff is good stuff – in the sense that scarcity plays a role in the value placed on products by consumers. The scarcer a thing is, the more people want it.

Two principles need to be considered as it applies to this rule.

1. Scarcity is a relative term – It’s the “relative scarcity” of supply versus demand that counts, and it has a social dimension because there are lots of other people wanting stuff (e.g. Five barley loaves and two fish might be plenty for one person, but they’re scarce resources when there are 5000.). Because we so often have to compete for relatively scarce resources, we have a natural desire it. Reduce the supply and people want it more.
2. Ownership of scarce resources – We use our ownership of scarce resources – diamonds, home pools, access to exclusive restaurants – to signal our status and superiority to others. If you don’t believe me, just watch one episode of the Housewives of Beverly Hills. It’s a social badge.

Social Commerce Examples

Marketers have use this type of heuristic thinking for years: limited time offers, limited availability, limited editions and time-sensitive deals. Both Black Friday and Cyber Monday are practical representations of the scarcity model. Social commerce also has its own versions of the scarcity rule of thumb. Here are a few examples:

Facebook Fan Pages and Stores

A common application of scarcity is the use of “like-gating.” The brand has a special offer – discount coupon, free music download, etc – but, in order to access it, the user must first “like” the page. Facebook fan stores offer fan-first or fan-only exclusives.

For example, Victoria’s Secret is offering a Facebook exclusive – 100,000 Secret Reward Cards worth between $10 to $500 each – for a limited-time (through December 15) and only on Facebook. Cards are available one per person and there is a limited supply offered each day. Visitors who miss out on the card one day are encouraged to return the next to try again.

Facebook only, limited time, limited quantity, only so many are made available daily, only one card per person, and, oh yes, the dollar value of the reward is “secret.” What better example of social commerce scarcity could there be? You can bet the daily supply runs out quickly.

Member-only Private Shopping Clubs

There is a reason private shopping clubs such as Gilt, vente-privee, Ruelala and others are so popular. They make access to products exclusive (you have to be a member) and scarce (through time-limited offers).

Group Buying

Groupon, Living Social and the many group buying clones have a business model built on scarcity. Deals are only available for a limited-time (usually a 24 to 48 window) and are available only until supply runs out. Either take advantage of the deal when it’s available or the opportunity is gone forever.

Conclusion

The late comedian George Carlin had it right, it’s all about getting more stuff. And the scarcer it is, the more we want it. Relative supply versus demand leads to an increase of perceived value in the mind of the consumer. Scarce stuff is good stuff! 

FYI – In tomorrow’s post, we discuss another social commerce rule of thumb, affinity.