‘Accidental scarcity model’ gives startup fast rise
After building a dedicated following across social media and becoming known for selling items for strictly five days of a month, The 5th has now launched a 24/7 retailing venture. Founded in Melbourne, Australia by Alex McBride and Gretta van Riel, the brand designs and sells watches, frames, bags and journals to 75 countries.
After being ‘born on Instagram’, the brand did $100,000 in sales in its first day of business in December 2014. One year later and the socially-savvy millennial brand went on to pass the $1 million mark in a single day’s sales, on its first birthday.
It’s been a fast rise for the company, which now has over 270,000 database subscrivers and over 440,000 Instagram followers. Selling for only five days a month was an accident after selling out so quickly on early orders. But it’s this accidental scarcity business model and promise of exclusivity by time rather than price, which has fuelled consumer demand for the brand.
Speaking to Inside Retail, founder and CEO of the accessories brand, McBride, said the brand’s fast success could be attributed to a number of factors.
“Along with good marketing, product is key – for the first eight months of our business, half our sales came from one product. That product isn’t our most popular now but it definitely helped propel our business,” he said.
“We also live in a day in age where there is so much choice out there, which is made accessible through social media. Customers expect variety and newness to stay engaged with your brand.”
McBride said that having mass appeal and holding exclusivity is what drove the business to experience such success in its first year. “So as much as product is king, you also need to drive desire for the product and manage that desire through exclusivity,” he said.
“In our first year of business we achieved exponential growth and that saw products selling out within a few hours when released.
“The fact that you couldn’t buy our product every day of the week drove enormous desire for our products.”
According to McBride, there are numerous examples of brands that experience initial, sizeable success, but find themselves oversaturating the market and losing their exclusivity and appeal. “Consumers want to feel special in this day in age, they want to by into a brand that they feel connected to but they also want to feel like an individual,” he said.
When asked if there might be concerns about moving away from the limited time frame element and whether consumers might be deterred by the change in value proposition, McBride said evolving with consumer demand was the imperative – particularly when demand necessitates the opportunity.
“We’ve had mixed feedback from customers about the business model change, but in actual fact it’s not too different, we are just offering our audience more,” he said.
Customers can now shop the brand’s core ranges permanently, however the exclusivity angle is still dangled in front of consumers on the fifth of every month, when a new limited edition watch is dropped.
“Customers who want to get that exclusive piece that not everyone else has can shop these products,” said McBride.
“Our first ever ‘5TH LTD’ watch release sold out in 41 minutes after our website crashed due to traffic, so the demand for our more exclusive products is still there.
“Customers who miss out on the release have the ability to vote if they like it, which informs our future designs.”
The e-tailer works with different designers and manufacturers around the world to design and refine its products, then works with manufacturers in Italy and China to make “sure we’re producing the best possible products” before shipping to company warehouses before sending directly to customers when they order.
“Our goal in the medium term is to reach more people with our brand message ‘time is what we make it’,” said McBride.
“We design our products with function in mind and we want our watches to be a physical reminder for our audience to make the most of every moment. So we are continually looking to connect with people who are making the most of their time, finding out what makes them tick, and connecting their story with our audience to inspire them too.”
Also on the pipeline for the accessories label are plans to expand its product range to offer more things to help people make the most of their time, with new developments for new bag releases and new frames in the mix for coming months.
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