I have begun reading Robert Cialdini’s ‘Influence’. Yes, it’s been around for years, but it takes less than a chapter to see why it is considered a (if not the) definitive text on persuasion/compliance.
Every page is a succinct hit of practical advice, and the examples are brilliant. Whoever knew toy companies could be so evil?!
While reading, I have been making notes of things I can apply to the small e-commerce operation my family run.
Lots of the advice is easy to spot being practiced by big retailers, but something that I theorise is an unexploited opportunity is what I am calling the antrifagility of unwanted inventory.
We’ve run our store for a while now and have a good grasp of what moves quickly and in volume. This is where we allocate the bulk of our budget. A minority will be spent on testing new things.
We follow a loose interpretation of the barbell portfolio strategy of Nassim Nicholas Taleb. Keeping allocation to risky new products small means we never lose much when something we try is unpopular.
This inevitably happens, as does the falling out of favour of things that were once popular. To protect against this we purchase smaller amounts of a large, diverse selection of popular products.
We never bet too much on any individual product, no matter how well it has sold for us in the past.
But my point is, we do end up stuck with items no one wants to buy. Traditional retail in my experience deals with this by using discounts, offers or shifting the stock to an outlet.
Despite meaning to for a while, establishing a liquidation strategy for overstock is something I have neglected. All businesses should have one to protect against inventory forecast errors.
However, Cialdini has some principles I believe may allow unwanted products to be used to sell more of what is popular.
The strategy is antifragile because rather than taking a reduced profit or a loss just to clear the stock, it may even help to sell more fully-priced items.
The main principle here is what Cialdini calls perceptual-contrast. Like everything else in Influence, it is a psychological shortcut people take when making decisions to avoid mental expenditure.
People do not evaluate choices on their own merits, but with reference to alternatives they have already seen. This can exaggerate the attractiveness of something they like if they see it after something they do not. And vice versa.
They would evaluate it to be more attractive or unnatractive than if it were seen on its own. The same applies to prices. Seeing something expensive first causes a second, cheaper-but-not-that-cheap item to seem more attractively priced.
The practical application of this is summed up nicely in a quote by Taleb: Sequence matters!
In practice, I am now experimenting with the counterintuitive move of adding a couple of unpopular items to the top of our shop and pricing them higher. These are followed by our top seller.
I am taking care not to go overboard with this. Only six products appear when a customer first clicks on our store. We do not want them thinking we only sell ugly, overpriced stuff and not scrolling further.
One further caveat to this technique is that pricing the initial item unrealistically high will just expose the strategy and cheese people off.
Another place I will be applying this principle is to our social media. Timelines are read downwards, so a top-seller posted first, followed by a dud or two might achieve the same effect.
Facebook used to have a photo carousel feature when you create a post for a page, giving you control over the order in which a visitor sees the photos.
I can’t find that feature now that they’ve moved publishing tools over to the god-awful Facebook Business Suite, but another approach could be to use collages.
It is said that people see images from left-to-right as though they were reading. So a collage with some less attractive or more expensive products followed by something popular might also work.
I’ll mostly be sticking with the first strategy I think, since looking back we’ve had the most engagement from posts with just a single product photo. I also think creating more posts increases visibility.
Additional antifragile benefits of this strategy are that by moving unpopular products from the depths to the top of our shop, we can find out whether they were genuinely unpopular or whether customers just didn’t scroll far enough to see them.
Also, the worst case is that they don’t sell, which they weren’t doing anyway. But now that their prices are higher, if they do sell we’ll make even more.
This is just a theory I am currently testing, but the psychological principles are well supported. I am concerned that something so simple may have already been tested by big players and found not to work.
This may explain why I haven’t seen anyone doing this. Or maybe they just do it subtly enough to be imperceptible. I’m trying it either way because I find this area of psychology fascinating, and I wrote this post because I hope some other people do too.
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