Woot and the power of limited inventory.

Limited supply + large demand = motivation.

For anyone who doesn't know woot.com, now's your chance. Woot is an online business that takes a single product of limited inventory, discounts it heavily, and releases it every day at midnight.  If the products good it sells out pdq so you have to be quick to the button. Steep & Cheap is backcountry.com's like-concept but offers outdoor stuff.

I found out about Woot from Alan Young when he was working with the University Venture Fund. Allan told me that Woot was changing it's users sleeping patterns since they'd stay up 'till midnight to see what the next Woot was.

Of course it's the limited supply. Limited supply + large demand = motivation.

The problem many businesses have is that they don't really have limited supply, they have lots of supply. It's this factor of being able to offer unlimited supply that exerts a downward pressure on perceived value for internet companies. How much will people pay for email? Nada.

What can a business do to decrease the perceived supply of its offering? Depends. If you're direct competitors also have unlimited supply you're in trouble because your customers will switch. It's only if you're offering is unique enough that the opportunity cost is now perceived by the buyer to be lower with your offering.

It's the perceived value and opportunity cost that buyers use to make purchasing decisions. That's it. It would be really simple if all consumers used the same criteria to judge but they don't. There's slop in the decision making process since every individual use their own criteria. But that's also where the opportunity lies for any business.

Women purchasing shoes are using a very different standard of value and opportunity cost than men. (Way different in my wife's case.)

Woot proves the point. Changing the habits of customers is not easy, but if the perceived value of the offing is there it happens without a second thought.