- Limited editions.
- Only gonna be live for another 24 hours.
- [Narrator] Very, very exclusive.
- 48 hours left to buy this limited edition Frosted t-shirt.
- I don't actually get why they exist or why they work.
To figure it out, we're making merch.
And you can't have any.
This is the font you're gonna say okay to.
I hate printers so much.
This video is sponsored by Shopify,
who gave us the money and support
that made this video possible,
even though we did not get them nearly as many views
as we told them we would.
If you want an easy-to-use, all-in-one commerce platform
that stands by their businesses,
check out the link in the description
and get started today.
When I say "limited drops,"
you might think of hypebeasts,
or people lost in the marketing sauce, saying things like,
"If you make less of a thing,
more people wanna buy that thing,
and if more people wanna buy that thing,
I can afford to buy an ugly JPEG of a monkey."
But the bonkers thing is that it works?
There are sneakers being sold for thousands
on the resale market.
There are old TV shows emerging from the cocoon of nostalgia
to sell you some hats.
There are creators and small businesses
that I really respect
making limited products or limited videos for limited times.
It is potentially one of the most random groups of people
that I can imagine,
and yet they are all embracing this limited drop model.
Why?
I know if you ask a person who is very over confident
despite barely passing first year economics,
they might say something like,
"Okay, so there are two lines,
and where they cross, that's how much a thing costs.
And then if you make less of the thing, the line goes up,
and you make more money to buy an ugly JPEG of a monkey."
Well, one, I don't think that's how
the scarcity principle works.
And two, that's not how people work.
Graphs like that are just summaries
of a far more interesting phenomenon
going on behind the scenes,
one that I wanna explore.
So today, in this video,
we are going to figure out why scarcity sells
and why we might not be able to just make more.
The research for this video spanned everything,
from psychology to economics
to business organization guides published in the nineties.
I left the library just so I could tell you
how much I love libraries.
It's like the internet you could touch.
Did that make you feel ancient?
Good.
Let's start by explaining what a limited drop is.
It's when a brand or an individual
releases a limited edition product
for a limited amount of time.
Like, let's say Taha, Melissa, and I
designed a research journal.
We could make this a limited drop in two ways.
One: fixing the quantity.
Like, let's say that there are only 200 of these journals
available for sale.
Two: setting an end date for the sale.
Like, you can only buy a notebook until April 20th.
The use of one or both of these limits
create this implicit or explicit deadline,
where you feel like you need to buy something
with the added pressure that you don't know
if it'll ever come back.
It sounds like this fundamentally manipulative strategy,
right?
But I think it's worth asking, "Why does the limit exist?"
While it isn't uncommon
for businesses to intentionally create scarcity,
there are also less artificial causes.
The most obvious is money and a lack thereof.
There has been a steady increase
in the number of small businesses in the US
over the past five years.
This rising class of entrepreneurs,
defined in part by their limited revenue,
need to be careful with their cash.
By limiting the amount produced
or having a limited sale period,
so you know exactly how many orders you need to fulfill,
you can avoid tying up your cash
in unsold inventory and storage.
Another reason is environmental sustainability.
Nowadays, millennials and younger
are looking for more sustainability
in their shopping decisions.
Now, there are many approaches to achieve this,
but popular production models that minimize waste,
like just-in-time manufacturing or commissions,
often face inconsistent stock volumes
because they rely on fragile and complex systems
or because stock is only created when required.
Finally, the product may still be in development.
In order to prepare a product for the general public,
businesses and developers may want to limit access
to catch bugs and identify room for improvement.
Those are just some of the reasons
why businesses might find themselves
with naturally limited stock.
Nevertheless, they could still benefit
from the limited drop model
and turn a possible shortcoming into a strength.
So let's continue with this hypothetical notebook example.
As a small business,
Answer in Progress has pretty limited resources.
So like, every hour that we would spend
working on this notebook
is an hour that we can't spend on making videos.
The same goes for money.
Money is an even more limited resource.
So we need to avoid wasting that.
We also wouldn't wanna make too many
because if we do, they might end up in the recycling,
and if they end up in the recycling,
there's an approximately 30% chance
that they'll end up in the landfill anyway
because of contamination.
And as you might expect,
if the three of us are designing a notebook,
we might have some spirited disagreements
about layouts and design
that we would love some outside opinions on
without necessarily declaring a final product.
- Feels too cartoon-y.
- Melissa
This is Comic Sans.
- No, I don't...
- You motherf-
- N-T-apostrophe-D.
- I wanna break the dot grid format.
- I mean, I don't hate the squares.
- I'm about to lose my gonads over the font thing.
This is the font you're gonna say okay to.
This can change entirely
if we choose not to go with learner.
- I love this font.
- We did it, Sabrina!
- Hypothetically.
Anyway, those causes for limited supply
explains a couple of things.
One: why scarcity exists.
It's not always a marketing scheme.
Sometimes it is just the wisest business decision.
Two: why Taha's couch was late.
It turns out that his couch used just-in-time manufacturing,
and the pandemic was and still is going on,
which is what caused the delay.
And finally, three:
why businesses of such different sizes
and industries and audiences
are all using this limited drop model.
It's because if you have a limited supply,
for whatever reason,
a limited drop is a proven way to get people to buy it.
But why?
All right, let's talk about this graph right here.
This is a supply and demand graph,
and you may have seen it from the worst people you know
pointing at that intersection right there and saying,
"That's why people can't afford to be alive,"
but I digress.
So this line right here represents supply,
how much there is of a thing.
This line over here represents demand.
It is how much people are willing to pay for that thing.
Now, according to pricing theory,
where these two lines kiss...
I'm just gonna draw a little heart there.
That is how much this thing should cost
because that is how much people are willing to pay for it.
Now, the idea behind limited drops
is that if demand stays the same and price stays the same,
but you just make less of a thing...
Like, we just translate this supply line left.
You'll be able to sell your stuff really quickly
because, for that same price, this many people want it,
but, in reality, only this many people can get it.
Now, all of this kind of compounds with the fact
that you can get clout for having a limited or trendy item.
You might fear missing out,
so you'll rush the purchasing decision,
even though you wouldn't buy it
if you had more time to think about it.
And finally, you have a might just do it out of spite
because if somebody says you can't have something,
it kind of makes you want it more, right?
But here's where I feel stupid.
Why are we assuming that this line exists?
"Well, according to economic theory..."
No.
Listen, I love economics as much as the next person,
which isn't very much,
but I did study it for four years at university
and learned that the answer to most things in economics
is things are the way they are
because they are the way they are,
which is just astrology with uglier graphs.
I just don't think that economics alone
can really answer my question of,
"Where does demand come from?"
Okay, so I know that supply and demand graphs
are just representations of measured behavior,
or approximations, based off of market data.
I know that communities and influencers
can perpetuate demand by, like, idolizing certain products.
And I know that marketing can inflate demand
by using techniques like limited drops.
Also, obviously, there are products that, like,
you need to survive,
or they're just, like, the only product that exists
to solve a specific problem you have.
But like, that's not all of the products in the world.
I own plenty of things that I don't need.
And for those things,
I get how marketing and influencing and communities
can make me want things I don't actually want.
But I don't like that answer
because it kind of implies
that I don't have a choice in the matter;
I don't have autonomy.
It reminds me of that one scene in "The Devil Wears Prada."
- Comical how you think that you've made a choice
that exempts you from the fashion industry,
when, in fact, you're wearing a sweater
that was selected for you by the people in this room.
- I don't like that.
Do I only want things
because somebody somewhere in some room
decided that I was going to want it?
It's too late in the day.
I don't have time to handle that existential crisis.
So I went back to my notes to find an answer.
No matter how many times I look, no matter where I search,
the answers came up depressing and technical.
I started to think that there wasn't going to be an answer
that made it seem like my demand was a choice I made.
It was something someone made for me.
It's always based on want and not why we want.
(frustrated scream)
In a last ditch effort,
I decided to email the sponsor of this video, Shopify.
I know.
If you think that it's a red flag
that I'm asking the sponsor of this video for factual input,
you'd be right.
There's a lot of potential for conflict of interest.
But the people at Shopify are undeniably experts
in sales and generating demand, right?
I'm looking at this stats sheet
that they give people who are doing sponsorships with them,
and, like, they power millions of merchants
in approximately 175 countries,
and there are approximately 450 billion total sales
on Shopify.
I'm hoping that these numbers mean
that they know something that I don't
because I'm stuck right now.
So yeah, I emailed and I asked,
knowing that if they were gonna turn it
into a product pitch for Shopify,
I would not use it.
However, I was pleasantly surprised.
- My name is Hamza Ayach.
I am a producer at Shopify on the creator team.
Last year, we helped Jimmy Butler launch Big Face Coffee.
He just basically bought his own coffee machine,
started making his own coffee.
Trinidad James, he's got a brand called Hommewrk.
He designs a set of school uniforms,
and he donates them every semester.
It feels like you have, you know, this thing
that's much more than just a pair of shoes or a t-shirt
or a hoodie.
You've sort of bought into this moment.
You've bought into this, you know...
Bought into the storytelling.
- And I'm kind of embarrassed
because the moment he started talking about storytelling,
I was just like, "Duh, obviously."
It sounds kind of corny,
but, like, the thing that really confirmed it for me
was the 20 minutes of interview footage
that I just needed to cut from this video
of him talking about these different stories
behind products he didn't even work on.
Sneaker collabs, clothing drops,
all of this history, this story,
this narrative that is about so much more than a product
stuck in his head.
Part of me is tempted to restart this video
because now that I know the answer, it's obvious, isn't it?
Why does scarcity sell?
Well, if we want something
and then somebody says we can't have it,
we want it more.
And why would we want things in the first place?
Well, as much as marketers and markets
might try and conspire to convince us to buy something,
ultimately, it's us as individuals who decide
if we like the story we're hearing;
if we believe in it, if we wanna be a part of it,
if we wanna give it some of our money
in exchange for goods and services.
So with all of that in mind, can I tell you a story?
Taha, Melissa, and I started Answer in Progress
because we were burnt-out students
who missed the freedom to explore our curiosity
without being burdened by homework and assignments.
But then we graduated, and it was great.
We had that freedom!
Unfortunately, it was a little too free.
The lack of structure that school provided
meant that we often lost our way,
got overwhelmed, got distracted,
and you can see it in a couple of our videos.
- It's just miserable, and I don't wanna do it anymore.
- Man, it's hard.
- I've done a bad job.
There are some where we start the video with one question,
and then the answer we present doesn't answer it.
A couple of you called us out on that.
Fair.
So we started developing this research process
that utilizes what we learned at school,
what we learned while making videos,
and what we learned while learning about learning.
While we were doing that around August of last year,
Shopify hit us up to sponsor a few videos,
and they also asked...
"Have you ever thought about merch?"
Now, we knew that if we were ever gonna make merch,
we would wanna make sure that it is useful to you,
the people who watch our videos.
We didn't wanna just make a logo on a t-shirt.
Then we started noticing how many people were asking
how do we find questions?
How do we organize our research?
How do we do what we do?
So we figured that if we were gonna make merch,
it would be a curiosity journal.
Now, I don't know if a curiosity journal is a thing.
It sounds like it's a thing,
but basically think of, like, a planner or an agenda,
except instead of recording your day,
you record your research process,
that journey from question to answer.
But the really cool thing about it would be
years later, after you finished it,
you can pick it back up again,
and you could flip through it
and you can remember what you learned,
you could remember what surprised you,
and you could also remember
what you found interesting enough
to, like, push to the edges of the page.
You can remember how you felt
while you were discovering something new.
That seems cool, right?
So that was the idea we had back in August,
but, like every Answer in Progress endeavor,
it was harder than we expected.
So here's how we launched merch the Answer in Progress way.
Step one: spend the first few weeks
you have for research and development
working on a completely different project.
The good part is that you get to work
with a bunch of talented researchers
and learn their process.
The bad part is that you make no progress on the journal.
Step two: you finally sit down as a group
and come up with rough specifications for the journal.
You take those specifications to a manufacturer,
and they tell you, "Cool.
Just order thousands of dollars worth of copies
that you don't know if you'll ever sell."
Not that. Scary.
Step three: you realize you need to do a limited drop,
and part of that means working with a local print shop.
You find one, you realize that they watch your videos,
very cool,
and then they ask you for a design and you're like,
"Oh my god, I need to design it."
It's January now, you have to design this notebook,
and you are confronted with the fact
that this neat system that you thought you had all together
was in fact scattered across documents and templates
and messages and memories,
where you know that you had to write something down,
but you never did,
and now you can't remember what you were supposed
to write down.
Step five: but you manage to wrangle it all together,
and you are so excited to show your business partners,
your friends, and their first thought is...
- What does it look like in lowercase?
Is that weird?
- I said no to the Serif font.
It wasn't sharp enough.
- Taha, you might just need to die.
They also had more helpful notes,
but you really cling on to the font thing
because, honestly, you like the font.
Step six: but after a couple more weeks
and prototype after prototype...
I hate printers so much.
You finally have a final design.
I'm gonna just try and FaceTime Taha and Melissa.
Three, two, one.
(Melissa and Sabrina gasping)
- What?
- Look at it!
It's a simple saddle stitch notebook that can lie flat.
It contains a system
designed to keep your research on track
and provides advice on how to maintain
an academic standard and stay coherent
after you emerge from your research haze.
We use page limits like speed bumps
for where we think you should make a conscious decision
on whether or not you wanna keep falling
down the rabbit hole.
And we try not to let you forget your initial question
as we progress through your sources.
So that's that; we're done, right?
Wrong.
Step seven: even though you are totally going to use
this research journal while making your videos from now on,
the whole point of making it was to make sure
that other people can get it.
So you open a Shopify storefront
because they offer the most control, customization,
and ability to scale that you are able to find.
They are also sponsoring this video, and it's easy.
It is the easiest part of this process so far,
in no small part because of their ecosystem
of third party apps and theme customization
that really makes a storefront feel like you built it.
It also reminds you of the simplicity of youth
and the times spent making your blog look cute.
Step eight: But you're an adult now,
and you need to think about logistics
that you never even considered until Shopify was like,
"Hey, you need to include a public mailing address.
You need to include a public phone number.
You should consider international shipping fees.
You should think about credit card processing fees."
Listen, I am so grateful that Shopify's systems
flag those gaps,
but what a vibe killer.
Step nine: so you get other people to solve those problems,
specifically your business partners
and an ex-roommate you dragged into this
because the work did get overwhelming.
- I've been sent on a mission to set up a PO box.
- While they're doing that,
you are taking product photos in your sweatpants
because teamwork makes the dream work.
Step ten: and it's now and the store is live,
and you feel like you are about to have a heart attack
because you are proud of this thing you made.
You know exactly how much went into it.
Literally how much because you helped make the budget.
And you know that you are selling it basically at cost,
ignoring all of the hours you and your friends have spent
making this thing.
And yet you still worry, "Does anyone want it?"
Because it's out of my control now, right?
I have told you this story,
and now it is up for you to decide.
Is it good enough?
The moment this video went up,
our storefront, shop.answerinprogress.com,
should have gone live with 200 print copies
of this Curiosity Journal: Version Zero.
We're calling it that
because we wanna continue developing this journal
with the people who buy it.
We wanna hear your thoughts about the layouts,
the page ordering, the look and feel.
If that sounds interesting to you,
you can buy it now for $25, free shipping worldwide.
Now, if you aren't interested or able
to get a physical copy,
there's also a digital download.
There are two layouts, depending on your needs,
whether or not you wanna print a copy at home
or you just wanna use it on a tablet.
That is available for $5
or free if you support us on Patreon.
Finally, if you aren't interested in version zero
and you wanna wait until we've received some feedback
from people like you on how we can improve this journal,
you can subscribe to a mailing list on our storefront,
where we will send you one email.
It'll let you know when the final journal
is available for sale.
After that, we will burn that email list,
and never bother you again.
The three of us think, or we hope,
that this curiosity journal will be useful for you.
So please consider buying it at shop.answerinprogress.com.
Or don't.
We didn't invent the idea
of being organized while you research.
This is a system that we find works for us,
and we wanted to share it with you,
but it's ultimately pretty simple.
So you don't need to buy it if you don't want to.
That's totally fine.
Thank you again to Shopify for sponsoring this video
and making an easy-to-use, all-in-one commerce platform
to start, grow, and manage a business,
even if you are totally inexperienced,
like the three of us.
You could learn more about them
by visiting shopify.com/answerinprogress,
but either way, have a lovely day.