Ghost stock – how to utilise scarcity to boost eCommerce conversions

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Ghost stock – how to utilise scarcity to boost eCommerce conversions

Post by Expandly on 7th January 2020

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Scarcity is a well known psychological tactic for boosting eCommerce conversions. If you have plenty of items in stock, then customers are tempted to mull it over, wait for payday or even shop around. If you have limited stock, however, then suddenly customers need to buy that product right now before they miss out. 

But as a good online seller, you use reliable inventory management software and techniques to ensure that you never run low on stock. So, how can you benefit from scarcity without worrying about selling out?

The psychology behind scarcity

Humans naturally attribute more value to scarce items. Diamonds, Glastonbury tickets and 1996 Buzz Lightyear are all examples of items that people willingly pay more for, stay up all night for and physically fight for.

In contrast, rocks, the local open mic and your average space ranger are all readily available, and, therefore, not in demand or worthy of a huge price tag.

Why does this happen? When something is scarce, a number of psychological triggers come into play. These are:

Risk aversion

The majority of people subconsciously spend their lives avoiding risks large and small. Scarcity increases the risk of missing out on something. In response, the subconscious makes people want that ‘something’ more, to minimise the risk of missing out.

Control

The human brain also loves control, especially when committing itself to something. When that control is taken away from the brain, and it’s unable to have what it committed itself to, suddenly it wants it more.

Social proof

Finally, humans love following the crowd and looking to others for confirmation. Scarcity suggests that a product or service is recommended by other people, merely because it’s nearly sold out.

The benefits of scarcity in eCommerce

This psychological phenomenon translates well into the world of eCommerce.

When a product is running low in stock, the subconscious mind recognises the scarcity and takes control to avoid losing out. This often results in quick decisions, impulse purchases and higher conversions.

As already mentioned, scarcity also implies that people are buying your product in bulk because it’s so good. This can lead to similar assumptions being made about your other items.

The risks of scarcity in eCommerce

So the answer is to buy less stock? Not quite. Implementing scarcity when selling online is challenging because there are many risks involved.

Firstly, scarcity can have the adverse effect of suggesting that you’re a disorganised seller who can’t keep onto of their inventory. As your stock numbers dwindle, so can consumer trust in your brand.

Secondly, buying less stock isn’t always a great financial move. Depending on how you source product for your eCommerce business, more orders of fewer items can cost more and result in excessive delivery fees.

Buying less stock isn’t a great customer move either. With less stock, you’ll quickly sell out, and this can lead to frustration, unhappiness and lost custom.

How ghost stock can help

Ghost stock is when you list a small quantity of stock on your sales channels, but in reality, have plenty more stock than advertised in your warehouse.

You benefit from scarcity-induced conversions, while also avoiding the need to constantly re-order stock. But this still isn’t ideal.

In busy periods you can quickly sell out on a sales channel, despite holding plenty of stock in your warehouse. If you can’t update stock levels quickly enough, this can deter customers and result in an overstocked warehouse that’s quickly losing money.

We know that isn’t great, which is why we’ve updated Expandly to help.

How we’ve updated Expandly to help

When listing a product on Expandly, you can now add ghost stock quantities to individual sales channels, that automatically readjust upon a sale, ensuring that you don’t sell out.

In practice, this works as follow:

1. You enter an overall product quantity to your main product details in Expandly (your actual stock level).

2. You enter a ghost stock quantity for each individual sales channel on the product details page in Expandly (the stock level your customers see).

3. Upon a sale, Expandly automatically readjusts your sales channel listing up to the ghost stock level, while reducing your overall product quantity down to reflect the amount purchased.

4. This process repeats until your overall product quantity falls below that of your ghost stock quantity.

By using Expandly to manage your ghost stock, scarcity can be induced and conversions increased, without the risk of selling out or the hassle of constantly updating your sales channels.

If this sounds good, then take a read of our user guide or book in for a demo.


About Expandly

Expandly multi-channel management software makes selling online simpler. From managing multiple sales channels and shipping carriers to managing ghost stock and updating your inventory – Expandly is here to help.