The “Sold-Out” Effect

So provided the sample size is big enough I think it’s a perfectly valid metric.

A product's DEMAND is the ask for a product backed by the ability (& willingness) to PAY.

> "Finally, the word “would” taps into a special place in people’s minds. At the end of the day people are optimistic. I’m sure of it! Think of the most negative person you know and ask them “would you like to be healthier?” They will say “Yes” and then come up with a bunch of reasons they’re not."

My post: https://caseysoftware.com/blog/the-problem-with-would

All this FOMO, "going soon", "few left" and that sort of nonsense relies on what people think. Do they think there's a good opportunity they're passing up, do they think others know more about the future than they do, do they assume others choices are the better choices.

I like to try random international drinks at a local international market, just for fun. I often go in and look at the shelf. I have no or little information and frankly can't even read the labels sometimes aside from ingredients (I don't even really know what I'm supposedly buying), so all the marketing propoganda they can put on the can in the world is ineffective unless it just happens to pick up on something that transcends culture and language and appeals to me. What I actually do is look at inventory: which of these drinks clearly has less on the shelf. It's certainly flawed (could be a matter of poorly restocking the shelf or an inventory shortage cause by something unrelated to demand), but it usually gives me pretty good and interesting drinks to try (I'm happy with random as well). I assume the market knows better than me because I don't have good information to make my own decision, I try to copy other decisions instead which I assume are more informed.

On the other hand, when I go into a shop about something I'm highly knowledgeable of, say consumer electronics, looking for a specific item shortage on a shelf does almost nothing to me. I'm informed and knowledgeable, so I don't care what the market thinks, I think (and often do) know better than the market.

The key difference is knowledge and independent informed decision making ability. This is where perceived value starts to peel away and I'm less influenced by propoganda or demand signals. I know what I want, I know what I need, and I therefore go for it. Alternatives are ignored unless I have fewer options and then I can analyze the options fairly objectively to meet my personal needs/wants.

We have markets with consumers that are becoming less and less informed about specific sectors and lack good decision making for themselves. In some cases, the knowledge barrier is too high and they have to outsource expertise for advise or follow demand signals. In other cases, time pressures push people to follow low hanging decisions influenced by demand signals. Perceived value is becoming far more influential in a lot of purchasing decisions for consumers. We need more informed and critical consumers to avoid these issues. We often instead have markets where it seems perception hits enough people susceptible to these strategies where a critical mass forms, then it sort of cascades down to people with less and less degrees of susceptibility to demand perception signals where they question their own decisions and also cave.

There does seem to be a cut off point where people just look at the market, shake their head, and ignore demand signals. In consumer markets this works fine for them (at least in the short term, the mass can dictate consumer market direction that provides less good options for subsets of consumers). In markets like stocks, it's a bit different because perception often matters--its not just actual value or future value, it's what everyone else thinks the value is, especially for short term investments (the whole, "the market can stay irrational longer than you can stay solvent" dogma). A good case of this are some of the "meme" stocks during the pandemic where valuations made almost no sense but the market spoke through perceived value and culture (and to be fair, these were slightly more nuanced complex issues with the whole short squeeze perception play going on).

Airlines release tickets for a flight in batches of 10, which is why you never see a "only x seats left" message where x is greater than 10. Once all 10 are sold, the next bucket of 10 are released at a new price depending on the demand of the previous 10. (I'm sure there's more to it than this, been a little while since I worked in the industry but that's the gist of it).

There's already existing regulations around purchasing flights (in the US). For instance on a flight results page after searching, you have to show the full price with fees, you can't just show the ticket price. I feel like it can't be that hard to regulate the "x seats left" messages too.

I've worked for two hotel booking companies and as far as I remember, it is not outright banned. It is just that it requires to be truthful and specific. So for example, if you wouldn't be able to say that a room was recently sold out, but you could say that it was recently sold out on YOUR website. You just had to specify things.

This was some 2-3 years ago and it varied based on country the current hotel/user was in as well.

Clear cookies and refresh, guess what, its 6 people looking again and the time limit has reset.

Here is a classic reference from 35 years ago: https://en.wikipedia.org/wiki/Influence:_Science_and_Practic...

Note that it covers tactics from door to door salesmen.

In this case they are using scarcity and a form of rushing the sale before the buyer realizes what they have done. There are plenty of scarce items. But usually if the seller is telling you they are scarce and you only have minutes to decide, ignore them. It is an old trick. It works very well on someone who feels they will be left out in some way.

If you're set to buy brand B and brand A is sold out, you probably don't even notice it. But if some variations of brand B are sold out (like some colors, one of the examples in the article) than maybe you might commit to the purchase.

Anecdote: When I was looking to buy a Keychron K2 it was sold out, both standard and premium model. I was set to buy the standard model, so I asked to be notified when it was back in stock. First to get back in stock was the premium model, I chose to wait it out. Next day I got an email offering a 10% discount for the premium model - the standard model was still out of stock, so I bought the premium model.

I'm happy with the purchase, but that circumstance made me spend 10-15€ more for a nicer keyboard: out of stock standard model + price discount.