← The Foundr Podcast with Nathan Chan
The Foundr Podcast with Nathan Chan
604: (Solo) What Labubu and Apple Can Teach You About Scarcity Marketing
00:12:43
Think scarcity is just a marketing gimmick? Used properly, it’s one of the fastest ways to increase perceived value, build community, and grow sales—without racing to the bottom on discounts.
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Hey, Founder fam. I want to talk to you about something super exciting. We're officially partnered with Omnisend, the email marketing and SMS platform built specifically for e commerce founders. We've been recommending Omnisend to founder students for a while now because it just works. Whether you're launching your first store or you're scaling to seven figures, it really helps you automate your marketing and get real results. Did you know on average, OMNISEND customers make $68 for every one, one dollar they spend, which is an insanely good return on investment. And because you're part of the founder community, you get 50% off your first three months with the code FOUNDER50. Just head to omnisend.com forward/founder without the e to get started. All right, now let's jump back into the show. Hey guys, Nathan here. Welcome back to another episode of the Founder2Founder podcast. These are small bite sized episodes where I share everything I'm learning as I build founder for the past 10 plus years and speaking and learning and networking, connecting with some of the greatest entrepreneurs of our generation. So today I want to talk to you guys about the power of scarcity in your marketing and also in your product. And I want to give you some examples of companies why they are doing so incredibly well and give you some takeaways on how you can build this into your product and into your marketing to really help you boost sales, boost the value and the perception of your product, hear the stories, learn the proven methods, and accelerate your growth and future through entrepreneurship. Welcome to the founder podcast with Nathan Chan. Here's the thing, right? Scarcity isn't new when it comes to using in your marketing. You look at Apple, they have people camping overnight to get the new iPhone. They strategically limit the amount of iPhones new iPhones that they put out. You look at Leboo, that's a company that I'm very, very interested in. Like, how did this little doll become like this worldwide sensation? And everyone is trying to get a labo. You know, the fifth watches created by my really good friend Greta Van Real. If you're selling that product on the 5th of every month. And nothing proves this more than just like totally different products in totally different markets, speaking to totally different segments. How you can use this as a strategy to increase the perceived value of your product and get people to want to buy now and also to build a cult like following. And so the reason I want to talk to you guys about this today was it's been really interesting with Labu's I really, really wanted one and I got my brother to get me one when he was in Japan. And it was kind of weird because I didn't really know why and I just wanted one because they were so scarce and I like to collect things and I thought that looked kind of cool. But what am I going to do with it? I'm not going to put it on my bag because that's just not really me. But I like collecting things and that, that's why I thought this would be a really good episode today. And it got me really thinking and reflecting and learning and looking back on these successful companies and founders that I've interviewed on how they use scarcity, in particular the drop model, as a method to Dr. Drive ridiculous amounts of sales in their business. So let's start with Labubu, like what makes them special? So the first thing is they're hard to find. The second thing is they're randomized in each box, which makes it fun, which makes it exciting, which makes it an experience. So you don't know what you're going to get. And then they are restocked unpredictably. So if you take the combination of all of those things, that creates scarcity, that creates a buying behavior and that buying behavior has created a multi billion dollar company which is really, really wild. Like Pop Mart, the company that are behind Labubu, they, they're a massive, massive company. But what has really taken off is this concept around these Labubus and why everybody wants them. It's got, you know, fomo, you know, fear of missing out urgency and social proof. And it's got an incredible unboxing experience, like everyone wants to unbox them. I remember I used to collect Pokemon cards. Pokemon cards were a massive thing. Everybody wanted that Charizard. But it's very, very different now because you've got social media pairing it and people are filming their reactions on Tick Tock. They trade with others, you know, they collect like it's a currency now and it's not just toys. Right. I talked about Greta, what she did with the fifth watches for years. They only sell the product on the 5th of every month. They used to lock the site and you needed a special password. It was really, really clever. No one was doing it. And they made buying a watch feel like an event and they had limited quantities. So the key takeaway I want you guys to have is scarcity can sometimes come off as like a bit of a marketing gimmick or tactic, but you can make it feel authentic and you can naturally Bake that into your product and you can play with that. It's really about positioning your product as something that's worth waiting for. So I never forget when I was talking to Greta, when we first met, we came friends in the early days and I interviewed her and I asked her, how'd you do a million dollars in a day? And she's like, well, Nathan, like first and foremost, we had a wait list of over 10,000 plus people. They had 10,000 plus people waiting to buy that product as soon as the store opened. So that's how it starts, right? It was the fifth watches, they open on the fifth of every month and there was a wait list. So they created this buying behavior and it wasn't anything that was inauthentic. Like they genuinely didn't let people buy until the 5th of every month and they had limited order quantities. And that was how she did a million dollars in a day, which is kind of crazy. And if I think about, you know, when we've done million dollar launches at founder, there has been some scarcity around bonuses for our programs, There has been limited time offers. These are things like live events or certain collaborations with partners that we cannot do. That's why you have to move now. That's why you have to enroll now. And I think it can be taken as this kind of fake scarcity and you don't want to do that. That's the worst thing you want to do. So when you're looking at your marketing and wanting to use scarcity and adding that as a component, think about your product. Think about how it's uniquely placed and how you can position in the marketpl where it is something different, where it does stand out. And perhaps you do genuinely only have limited order quantities. When I think about one of our students, Lily Lou, she created a pet hair resistant loungewear brand and she had a limited order of stock. She genuinely launched the product. She only could afford a limited amount of stock, so she had a low amount of MOQs and. And then she built up hype. And then off one TikTok video, boom, $6,000 worth of product sold out. Then it was just like, okay, well then this is the drop model. So she did limited orders and that drop model, it's really, really powerful. So one thing to think about is when everyone has access and the opportunity to buy, there's no reason for them to buy right now. But when they have a limited time and there's a scarcity element to it, where the product is positioned in a way that if you don't buy now, you might miss out then. That's what gets people excited. That's what's really, really fun. But, like, I can't stress enough. You don't want to make this a fake scarcity marketing type gimmick, because that doesn't feel good. That feels deceitful, and that makes the customer feel really crappy. That's really, really important. So when we look at Pop Mart or the fifth watches or Lily's brand, you had to act now you don't know when it'll be back in stock. And you want it more because it's rare. And I think that's the big marketing takeaway. And the marketing sales psychology part of it is you want it more because it's rare. I really, really wanted to get a black Labu. Now I didn't get it. So that wants me to keep buying because that's the rare one. So they've built in all these psychological triggers where it's not only they have limited drops, but when they do have limited drops, you don't know whether you're gonna get the rare one. And they only produced a small amount of that rare one. You don't know what you're gonna get. So it's a whole experience, it's a whole mystery. Same with Pokemon cards. It's very, very, very clever. Now, the next thing to think about, and another great lesson when I think about Labubus, is when it's paired with community, that's when it works best. So this is something that Greta and Labubu understand so much deeper is the community element. There are people trading Labubus online. The fifth watches used viral loops. So basically, as people shared the special wait list code, it allowed more people to get on the list, which is really, really clever. So during a certain time period, they opened up the store where you could buy the watch, or during the other days of the month, you could sign up to the wait list and you could get yourself higher up on that wait list to be notified if you shared the wait list with other people. And you got points. So it's got that viral loop component, which was absolutely genius. Same with Labubu, right? They're traded, they're shown off, they're discussed. There's a culture around it. You know, everyone wants to get that black rare one. So the key takeaway here is scarcity without community is also a missed opportunity. So you want to lean into the buzz, lean into the chatter, lean into the culture. Now here's where a lot of brands mess up it's perhaps they do the drop model or they do something around scarcity, but then they restock too quickly or they extend the window, or they train their audience to expect more. So what makes Labubu very, very special is their uncertainty. You know, they just launched this new kind of doll thing. And like my brother showed it to me and I'm embarrassed to tell you guys this. My brother's like, oh, there's this new doll thing. It's like 100 bucks, 120 bucks. And I just got engaged and it holds this ring. And I was going to put the fake ring that I gave to Miriam and all this kind of stuff. I was like, all right, I'll get it. Why not? Like, I don't know whether it will sell out or not. So I just bought it. So it's that uncertainty that they have trained me to buy. And that's kind of really, really, really, really clever, right? So that unpredictability builds anticipation. Same with the fifth watches. You could buy the watch on the fifth of every month for five, five days. No more, no less. It was exactly five days. Then the doors shut. So that consistency made people trust the scarcity. They trusted that it was real. So the key takeaway here is if you break your own rules, your audience will stop trusting you. You will lose faith. Another great brand is like supreme and they have fun with it as well. Like, I never forget, they sold this brick just for a joke and people actually tried to buy it because it was just funny. This is where you kind of have that unpredictability. You know, throw some salsa dancing into the mix around the products that you're launching or when they're dropping. But like, make it scarce. Don't go crazy. So what can we learn from Labubu and the fifth Watchers and Lily's brand? One of our students that I mentioned, it's that scarcity isn't a gimmick. And whatever you do, don't create fake scarcity. What you want to do, if done right, it creates a urgency, it builds community, it adds perceived value, and it really positions your product in a really, really strong way. And it makes people feel something. It makes that buying experience so much more fun than just the product itself. And at the end of the day, that is what great marketing is all about. So if you want more help on the marketing side growing your e commerce brand, we have so many next level trainings, live workshops, and an amazing community of like minded people that are all trying to grow their e commerce brand to selling physical products online so you can get a 14 day trial for just $1 if you go to founder.com membership. All right, guys, I hope you enjoyed this one and I'll see you in the next episode.