“Some of the items in your cart are out of stock.”
“Sorry. Your raffle entry wasn’t selected.”
“You’re currently in line to check out. Do not refresh the page or you’ll lose your place in line.”
Probably should’ve led with a trigger warning… Many of us know the pain of wanting that elusive product that your favorite brand is dropping one time. The anticipation. The tension. The multiple devices, all ready to load the site at the time of the drop. The race against the bots.
And you know if you don’t get lucky during the release, it’s off to aftermarket purgatory where resellers are looking for double, triple, or more.
That’s right, we’re talking about limited drops.
A retail and ecommerce wave that was pioneered by the Supremes and Undefeateds of the world, limited drops have become hugely popular over the last decade. It’s a business model that has transcended the streetwear and sneaker world as we see more and more brands across various verticals adopting “the drop” to create a massive buzz for themselves.
If you’re unfamiliar, here’s the crash course on limited drops. Certain brands are moving away from consistently restocking their most popular items and moving toward building hype through scarcity. Basically, the idea is, “We’re dropping this super special item one time and if you get it, great. If not, tough rocks, pal.”
Sounds harsh right? And even sounds counterintuitive to the longstanding retail and ecommerce ethos of leaning into your best products, making them available through restocks, and driving customer retention, loyalty, and all that warm, fuzzy stuff that keeps your customers happy.
Despite those traditional retail constructs, brands are thriving with the limited drop business model. It creates waves of FOMO throughout their customer bases and makes their fans flock to their sites all at once with a massive appetite for those exclusive products. And whether their customers miss out or get lucky with a given item, best believe they’ll be back for the next drop.
Younger generations crave unique products. A hoodie or a pair of sneakers that says, “Hey I got this at a limited release and not many people have it,” is far more valuable than a seemingly similar item that’s widely available at multiple retailers.
It’s creativity. It’s status. It’s scarcity.
So this begs the question, can limited drop brands use data to inform their business strategy?
Peel x Limited Drop Ecommerce Brands
When it comes to driving strategy with data, there are some obvious hurdles for ecommerce brands who’ve adopted the limited drop.
Peel is all about using post-purchase data to increase retention and maximize growth. Repetition and patterns in data are everything. Understanding customer behavior through those patterns allows us to inform brands on how they can tweak their marketing experiments or shift their product offerings to retain customers and grow.
A lot of that happens through diving into product data and discount strategies. But limited drop brands are a little different. They tend not to drive sales with discounts, and their data for individual products is one-and-done. That t-shirt isn’t going to drop again.
Plus, they have a built-in retention engine. “I’m going to get the W on the next drop.”
That all said, we’re arguing that there’s always room for optimization. Those waves of FOMO will only carry brands so far. Eventually, the law of diminishing returns will set in and products that were expected to sell out in minutes will sit for a while. Bad for optics. Bad for hype. We’re already seeing it in some of the biggest drop-style brands (we won’t mention names).
We have customers running limited drops who we’re working with to find avenues for growth in their data. Those assumed hurdles aren’t so big when we dig into the data and think about what really matters to them and to their customers.
Here’s a shortlist of what we’ve learned and why!
Segmenting data by specific products isn’t the sauce.
One of the biggest value props in Peel is our ability to dish up your most important metrics while giving you the freedom to segment with really deep filters. One of the most common places to start is products.
Detailed data on what specific products are driving long term value is usually a brand’s bread and butter. But for drop-style businesses, we have to zoom out.
Segmenting by product types is where it’s at. We just saw this unlock super valuable insights for one of our customers.
Comparing t-shirt drops to hoodie drops to jacket drops was more enlightening than looking at a single piece that dropped only once in any given drop. The product type view gives more overarching continuity to how fans of the brand are purchasing over time.
Looking at classic growth metrics like Average Order Value (AOV), Lifetime Value (LTV), and Repurchase Rate by product categories can clue brands into what types of drops are engaging the most high value customers. This can inform product offerings, planning for future seasons, pace of drop types, and more.
Lead times for pre-orders might be killing your mojo.
Another brand we’re working with was wondering what purchasing patterns were like for customers who were still waiting on items from a previous drop. Lots of brands like them will do a pre-sale, still in limited quantity, with a transparent lead time.
Even with lead time transparency on the checkout page, the data wasn’t overwhelmingly encouraging. We were able to dig into Customers Returning Rate and Repurchase Rates, matching that data up with specific time periods for drops. When lead times were 4+ weeks, it lengthened the time it took for customers to come back.
Very few were repurchasing in the short term, a decent amount more were coming back after 3 months, and it wasn’t really until the 6 month mark that customers were back in action making purchases. You don’t want to leave your customers digging your products but licking their wounds left by how long it took to actually get their drop items.
Our advice: if you’re using the drop system, try and shorten lead times as much as possible. Even think about getting your stock in well ahead of your drops to deliver quickly. Lots of brands are doing this and may even be in your vertical. You want your fans purchasing far more than every 6 months!
Don’t underestimate the power of socks…
Okay, it doesn’t have to be socks, but we found that brands who are leveraging the power of their limited drop mainstays while including thoughtful accessories are winning.
Limited drop brands don’t have the usual bag of tricks for upping cart value that traditional ecommerce brands have. Less product bundles, fewer cross selling opportunities, and scarce discounts to get customers to cram their carts with good stuff.
But that doesn’t mean limited drop brands have to give up on AOV. We believe in the pursuit of AOV for everyone.
We’re seeing that brands with thoughtful accessories, that are also dropped in a limited capacity, are seeing a big increase in AOV, which is a win over time. Limited sneakers? Socks (duh). Seasonal candle drop? Matching oil diffuser. Limited hat that’s a collaboration with one of the world’s most beloved trading card games? T-shirt to match.
You get the picture.
Making the most of your Audiences
For a lot of limited drop brands, keeping their customers engaged doesn’t take much more than an Instagram post or story previewing the items and stating the day/time of the drop. Maybe a lookbook here. An editorial there.
But in a general sense, these brands can do so much more to engage and win the favor of their customers in the long term. Peel Audiences can help with this.
Let’s think about shortening that 6 month window we discovered earlier for the majority of customers to repurchase. Create an Audience of customers that hasn’t repurchased in 1-2 months. Add a layer of value to that by setting an LTV or AOV threshold. Now you have a really straightforward task ahead of you: how can you re-engage customers who have not made a purchase in a while but you know have spending power that would make a difference?
Maybe it’s as simple as an email highlighting your next drop. Or maybe that group gets exclusive early access to some products. Could even be a small percentage off their next purchase.
Customers in that Audience may have gotten unlucky on the last drop or been frustrated by inordinately long lead times. You don’t have to scroll far in comment sections to find customers burned by missing out on limited drops. But a show of good faith (however small) can make the difference in getting them to come back.
It’s an especially potent strategy if brands are starting to see limited drop items stagnate on their sites. You can create those hyper-targeted Audiences, push them to your email and SMS marketing platform like Klaviyo and Attentive, engage them with the right messaging, and measure growth right in that Audience page in Peel.
Our customers are already seeing up to 30% higher revenue from Audiences created in Peel. Here’s the full rundown on Audiences, and how it can help you move the sales needle while boosting customer retention and satisfaction.
The Final Drop from Peel
Limited drops are exciting. We dig them and there’s so much to be discovered around how you can better engage your customers and tailor your strategy to what’s going to make the most waves.
Regardless of what side of the drop you’re on, we’ll leave you with this:
If you’re copping…
May your L’s be few and your W’s be many.
If you’re dropping…
Don’t underestimate your data. Seriously hit us up. We can help you grow.