Playing Hard to Get

Does Artificial Scarcity Help Build a Brand?


“Supplies are limited, so act now (max two per household).” Consumers in some markets are under pressure looking for certain popular smartphones, only to be turned away empty handed. Is this a proper way to treat the audience?

Xiaomi’s Mi 3 smartphone went on sale yesterday for a second time in India on Flipkart’s Web site. The online retailer says it sold its entire stock of the device after only a few seconds, leaving many potential buyers disappointed and irate. Last week, during the first round of Indian Mi 3 sales, the phone sold out after a few minutes despite a pre-registration which was said to have quickly reached its limit of 100,000. Flipkart and Xiaomi didn’t release any actual sales numbers, but some speculate that shipments were in the range of 10,000 units. Up to 90,000 potential brand ambassadors were left wanting, with money and hat in hand.

Too much demand is a problem other smartphone manufacturers would love to have. If Xiaomi knew that sales would exceed 100,000 units, why didn’t it crank up production to satiate demand? There may certainly have been logistical issues, but Xiaomi had learned from flash sales in other Asian markets that the device would be oversubscribed. Recent sales of Xiaomi devices in Singapore and Malaysia, for example, left many would-be customers waiting for the next round of stock, while it’s likely that others moved on.

Smartphone maker OnePlus demonstrates another approach to creating hype with its invite system — potential buyers of its OnePlus One phone are required to have an invitation to purchase the product. Invitations can be obtained from friends who have already purchased the phone, mined from online forums or won in contests. OnePlus One ownership has become an exclusive club.

These aren’t expensive devices, but do require work to obtain — consumers have to earn the right to buy them. It’s difficult to argue with the success of the viral marketing methods used by manufacturers like OnePlus and Xiaomi, but the use of disappointment and pandemonium as promotion tools could harm the image of the brands in some regions. The vitriol that’s appearing on discussion forums and comment sections should act as a reminder to these companies that not all markets can be treated equally. Disappointment won’t be a successful selling tool on a global scale, and competitors would be wise to use this flash flood of anger to sell their own wares. Playing with emotions could have consequences.