The “Sold-out” effect

Topics: Ecommerce | Retail store
For: B2C
Research date: April 2021
Universities: School of Economics and Management, Tsinghua University; School of Management and 2 others.

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📝 Intro

We commonly come across “sold out” options when shopping (e.g. empty shelves in a store, unavailable color options online).

How does seeing these impact our impressions and the chances that we’ll buy?

Two competing factors come into play. One is more likely to make us purchase, the other has the opposite effect.

So here’s what we should do as marketers to maximize sales.

📈 Recommendation

Keep showing some sold-out products (e.g. different sunglasses models) and options (e.g. colors) instead of hiding them.

People will be more likely to buy the remaining options (unless they were looking for that exact product, of course).

Try to keep the proportion of sold-out products between roughly 10% to 30%. If you go above this the effect may backfire.

🎓 Findings

• Previous research found that people perceive “sold out” products (or options, such as colors) as a signal of high quality - of both the products sold-out and other products sold in the same place.

• This study found a ∩ shaped relationship between the number of sold-out options and the likelihood of purchase. Showing some sold-out options increases sales, but when there are too many the effect backfires.

• For example, in one experiment:

  • 73% of participants said they would buy a USB cable when no sold-out options were present. 

  • That increased to 95.7% when 50% of options shown were marked as sold out (2 out of 4 colors). 

  • It went back down to 83.3% when 66.7% of options were sold out (4 out of 6 colors)

• The negative effect of too many sold-out options is weaker when people are buying for someone else (e.g. a gift). That’s because finding the exact option isn’t as important.

Two contrasting effects influence how likely people are to purchase based on the proportion of sold-out products - Click to zoom in

🧠 Why it works

• When we’re browsing products, options that are sold out but still shown (also known as “phantom options”) influence our decisions even if we can’t choose them.

• Sold out options increase the chances we will make a purchase because:

  • They increase our quality impressions of the sold-out product as well as the wider range of products on offer.

  • This happens because we believe that other people have better information than we do, so if others bought it to the point of selling out it must be good. It’s a form of social proof.

• But too many sold-out options reduce the chance we will purchase because:

  • We react negatively to constraints on our freedom of choice (known as psychological reactance). In this case, the freedom to choose from product options we might be interested in

  • So we abandon or defer our purchase to avoid the threat to our freedom

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✋ Limitations

• At times, people shop looking for a specific product and may find it sold out (e.g. a specific videogame). This is not the focus of this research.

• The point when having sold-out options starts to backfire is not fixed and depends on the importance of the sold-out attribute (e.g. a core feature is usually more important than a color option).

• The effect is unlikely to hold when all sold-out products have a certain attribute. For example, a specific material (e.g. all handmade ceramic plates) or price (e.g. all low-priced products) is sold out.

• The study did not analyze the effect on services, such as what happens if many appointment slots of a doctor are already booked. However, based on previous research, showing some already booked appointments should have a positive effect.

🏢 Companies using this

• It’s common for stores to leave labels on the shelves even if the product is sold out. Similarly, car dealers still display vehicles even if they don’t have any available in stock.

• Amazon, Zara, Costco, and Marshalls are among the many retailers that make use of this effect.

⚡ Steps to implement

• Monitor what % of sold-out options you display in your offline or online store.

• Try to still display a few out-of-stock products. Don’t automatically remove them from display if they are unavailable.

• If too much of your inventory is sold out (roughly 30% or more), consider removing some products from display or do a better job at improving your supply chain.

• Remember that this effect does not apply when an entire family of products with the same attributes is sold out (e.g. all products of a specific brand).

🔍 Study type

Online experiments.

📖 Research

Tian, J., Chen, R., & Xu, X. A good way to boost sales? Effects of the proportion of sold-out options on purchase behavior. International Journal of Research in Marketing (April 2021).

🏫 Affiliations

School of Economics and Management, Tsinghua University; School of Management, Hainan University; and Agricultural Bank of China. China

Remember: This research could be proven wrong in the future (although this is rare). It also may not be generalizable to your situation. If it’s a risky change, always test it on a small scale before rolling it out widely.

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