Let’s talk about popularity, novelty, and scarcity, and why scarcity is the most important thing to manage…

The popularity of an item is important, I grant you that. The more people that want something, the higher it’s price will go, that’s basic supply and demand. And if you’re fortunate enough to have created something popular, congratulations. But there are two serious problems with just focusing on popularity. Here they are:

  1. What if there are only two people that want something, and their names are Bill Gates and Warren Buffet? As the auctioneer, do you care if no one else is interested? Think the auction will do well? You don’t need popularity to be successful.
  2. In almost all cases, if something is popular, manufacturers in China, (or elsewhere), will have figured out how to flood the market with a reasonable substitute, imitation, or ‘good enough’ copy and dilute the demand for the product significantly. Nothing popular stays un-manufactured for very long.

Let’s take a look at novelty, is it important for creating the perception of ‘worth’ and generating bid action? Sure. There are good reasons why the Hard Rock Café displays guitar’s played by rock legends like Jimi Hendrix. That‘s stuff‘s interesting to look at and talk about! Lots of people enjoy having something unique and special. A Penny that was mis-stamped, a stuffed 3 headed alligator, a pair of 501 jeans worn by James Dean, a small ghost town in Eastern Washington. People love to have something to talk about, show people, obsess over, and enjoy.

The problem with Novelty is that many times it’s very difficult to get people to pay the premium for the authentic item, if there are reasonable substitutes available. If you’re in the market for a 3 headed alligator, is it really worth the added $4,000 you’ll have to pay to get a real one, compared to the $79 you can pay for a fake? If you’re the auctioneer, novelty doesn’t usually pay the rent.

If there is one single piece of information that dictates bid action more than anything else, and makes bidders get into a good old fashioned show-down – it’s the scarcity of the item. Scarcity fuels bidder rivalry. Your job as the auctioneer is to manage the scarcity, or perceived scarcity very carefully.

Perceived Scarcity Radically Impacts Bidder Decisions

There have been millions of journals scribbled in over the centuries, right? But Bill Gates was willing to bid 31 Million dollars for the notebook of Leonardo Da Vinci.
If you’re the maker of hand-crafted goods, you are responsible to manage the scarcity of your inventory. Flood the market, and you’re not going to do well. Control distribution very closely and you’ll have a better chance of doing well.

Popularity, novelty, and scarcity.