A close up shot from one of The 5TH latest editions. (Photo from Alex McBride/The Fifth)
We want what we can’t have. Not just in love. Or at the nightclub. Or when the new smartphone conveniently sells out on launch day. We want what we can’t have in everything. Our brains are inclined to associate scarcity with perceived value, which means that when a specific item is limited the more we will pay, the more we will wait and the more we will anticipate its arrival. An example of an Australian startup appealing to this cognitive disposition isThe 5TH. And they’re taking the fashion world by storm with it.
Founded in Melbourne by Alex McBride, The 5th focus on selling watches. But they’re not just another lifestyle brand looking to feed the insatiable demand of the trendy millennial market. They have a business model that makes customers take notice — which is, psychologically speaking, pure genius. The 5TH only sell watches on the fifth of every month, for five days.
Word play? Tick. Creating scarcity? Tick. Unique point of difference never before seen in the market? Tick. During my chat with McBride, he said that this contrarian approach has been paying dividends from the get go. “We launched on December 5th 2014 and did $100,000 in sales on our first day.” Fast-forward 12 months — quite literally to the day — and the company did $1,000,000 in sales on December 5th 2015. That is a tenfold increase in revenue in one year. And its driven by a red-rope strategy underpinned by anticipation.
The 5TH is building brand exclusivity by simply saying no. And it is making customers want it more.
Our brains are hard-wired to perceive anything that is difficult to obtain as valuable. If it’s hard to get, it must be worth it. Right? McBride explained the motivations behind limiting sales to only five days per month: “We are able to give an exclusive experience to customers that they would normally get from higher price-tag designer items, while keeping our watches affordable.” These supply restrictions create scarcity, but also engender aspirational connotations often associated with such exclusivity.
To create more of an impact, they sell less.
It doesn’t stop there though. To complement the overt scarcity principle, The 5TH also elegantly leverage the power of anticipation. Or more appropriately, the science of anticipation which conjures up a chemical cocktail of dopamine and pleasure emotions in consumer minds. A quick fact about how our brains deal with rewards: when we anticipate a reward our brains experience greater pleasure than when we receive the reward itself.
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A snapshot of The 5TH latest collection. (Photo from Alex McBride/The Fifth)
By making customers wait until the fifth of the month, it builds anticipation and delivers a potent burst of pleasure-inducing neurotransmitters. This ultimately translates to increased demand. So much so, that for eight consecutive months of 2015, Mcbride’s company experienced consistent over 100% month-on-month growth in sales revenue. In December 2015, they peaked at 300% month-on-month growth and to cap off that period, they also increased the number of watches sold every month by a factor of eight.
There is, however, one final component to the brand’s burgeoning success. The 5TH launched their first products by using what McBride labelled as a brigade of “strong brand ambassadors” with “existing Instagram followings”. The benefits of brand exposure and trending hashtags are obvious in the brand’s 440,000 following on Instagram since launching just over 18 months ago. But it was the “cool factor” that packed the biggest punch.
The Australian brand carefully organized a launch campaign where they gave 30 ambassadors sample watches to post on social media. These were influencers that had social currency in the fashion industry, and thus had followers that would likely appreciate a new trendy watch brand. There was brand congruence. The logic was that when customers were exposed to this new accessory over and over and over again, it created instant FOMO (fear-of-missing-out). The quality of the product was validated by the industry’s influencers and its supply was surprisingly scarce. The perceived value of the watches rose again.
Never before has a company so brazenly prevented paying customers from buying their product. But as The 5TH have shown, it has worked. This fashion startup has its sights set on continuing its mission to “inspire people to do more with their time” across product ranges outside just watches. But as the brand continues to expand, McBride reassured me that one thing would stand the test of time (excuse the pun). The anticipatory red rope isn’t going anywhere.
The “5TH Fam” will continue to demand watches. And McBride will continue to make them wait.
Well, at least until the fifth of every month.
