Limited Drops in Retail - Everything You Need To Know

Limited drops provide a unique twist on how retailers view inventory management. Here are 9 brands reaping the benefits of well-executed limited drop releases. Learn more.

Limited editions. Teaser campaigns. Hype. 

Limited drops create a sense of urgency and scarcity that leave customers craving more. The result: merchandise flies off shelves. 

“Drops” are special release products that are either scarce in quantity (due to intentional limited production) or scarce in availability (due to a limited-time purchase window). Often they won’t be restocked, either.

The rise of drop culture—while not an entirely new concept—has recently gained momentum and capsized traditional production cycles. 

What’s more, it’s bringing renewed enthusiasm to the retail space (both offline and on) and is making a profound impact on retail by generating audiences of raving fans excited to snatch up these special edition items. 

Why are limited drops becoming popular?

To understand the big picture and answer questions about the rise of limited drops, we have to look at it from two sides: 

1. Why this strategy is so popular among brands
2. Why customers are excited about drops

Let’s look at brand strategy first. Drops work well for companies because:

• They tap into FOMO. Instead of using discounts and racing to the bottom with competitors, drops offer brands the chance to leverage exclusivity and scarcity, which generates FOMO and often justifies a higher price point on merchandise in customers’ minds.The end result: more sales and higher margins. 
• They simplify inventory managementand forecasting. Drops give brands full control over inventory. Producing small batches that sell out quickly means very little guesswork around stocking and sales projections, which makes inventory forecasting ultra-simple.
• They create a community of collectors. Brands that leverage limited drops are typically ones with avid support from their customers, meaning it’s a logical next step for those with loyal followings. Avid fans often become collectors of these special, coveted items.
• Word of mouth. A successful drop release can create a positive word-of-mouth buzz (and sometimes even press) for brands, thus attracting new audiences and potential customers.

On the other side, customers seem to love product drops as well. Some are even willing to wait in line for hours, compete with bots online, and enter countless raffles just to get products from a limited collection. Here’s why: 

• The power of social media. We can’t deny that social media has a transformative influence on our shopping behavior. According to Instagram, 70% of shopping enthusiasts turn to this social media platform for product discovery. Limited drops ride the wave of hype that only social media can create. In other words, social media is at the core of this strategy. 
• Scarcity is a powerful sales motivator. 60% of people make purchases because of FOMO (often within 24 hours). For some, the fear of missing out on a scarce item is so intense they’re willing to pay more to get what they want on marketplaces like Goat and Stockx if they missed out on the initial launch date. This behavior is heavily influenced by social media, collector culture, and the pressure people have to own something they identify with. 
• A generation shift. Customers from different generations have different needs, behaviors, and expectations. It’s not just because of life stage and income differences; it’s more a mindset distinction, especially when it comes to using technology. Data from the Census Bureau shows that more than half of the US population is now within the millennial generation or younger. In other words, the predominant customer today is always “on”: they’re active on social media and shop across channels and platforms, giving brands more touchpoints in which they can interact with them.

Limited drops are data points for a product roadmap. They allow brands to test emerging trends and gather feedback from customers on products and qualities that might eventually warrant inclusion in their core SKU lineup. They also allow brands to partner with influencers and other like-minded businesses to mutually expand each other’s core audiences. Finally: limited drops are a boon to retention because they activate excitement amongst top customers and recapture the attention of customers who are at risk of churning.

Chris Cantino, Partner at Color Capital

Benefits of limited product drops

Drop culture creates excitement and something to look forward to for shoppers. At the same time, it brings significant benefits for brands. Let’s take a look at a few. 

Generates demand and hype

Launching creative and well-timed promotional campaigns has the potential to make your brand go viral. This is a cultural change for many retailers who’ve long had a semi-annual release mentality. Creating the feeling of scarcity and urgency generates hype and demand, which can make products fly off the shelves almost instantly after release.

I wish every merchant would try a limited edition of their bestselling product. It prints money, especially after you’ve sold out a few times and customers learn the scarcity is real.

Kurt Elster, Ecommerce Consultant

Gamifies shopping

The human need to belong is strong. It dictates how we behave, socialize, and shop. Limited drops create buzz that’s hard to resist. The reasoning is simple: people want the feeling of exclusivity and uniqueness. Dropping limited editions gamifies the experience, allowing customers to hunt and earn what they want before it sells out. 

Creates social media buzz

As social media is often one of the core pillars of limited drops, brands that lean into social media consistently have a competitive edge. What’s more: new features and functionality are cropping up. For example, Instagram recently launched a new feature that lets businesses promote their product drops and generate hype. With Instagram Drops, consumers can browse these special items and receive launch reminders about limited-edition products they’re interested in.

Lowers overhead and minimize risk

Not knowing how many products you can sell and tying up cash in excess inventory can put businesses at risk. With limited drops, brands can plan small-scale product batches and sell out quickly, which helps minimize financial risk and overhead costs.

Examples of retailers using limited drops

Today businesses from around the world and across verticals use limited drops to achieve virality and boost sales. Let’s look at nine brands reaping the benefits of limited drops.

Sporty & Rich

What started as a mood board on Instagram has evolved into a full-fledged lifestyle and activewear label. Founded by Emily Oberg, Sporty & Rich offers thoughtfully designed products focused on longevity over fast fashion, with releases that arrive in curated drops throughout the year. The added reason the brand uses limited drops is because it reduces excess inventory and helps it achieve its goal of being a zero-waste brand.

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Supreme

Supreme is often the first brand that comes to mind when we talk about drop culture. Supreme’s founder, James Jebbia, popularized this type of limited release, and today, the skateboarding lifestyle brand is famous for weekly drops (almost always on a Thursday at 11 a.m.) The $2 billion brand is also known for its special collaborations with other brands, such as Levi’s, Lacoste, Rimowa, Nike, Stone Island, and more. 

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KITH

Streetwear brand KITH was founded by Ronnie Fieg in 2011, and now, every Monday, the brand drops a new series of clothing, both in stores and online. With more than two million followers on Instagram, as soon as KITH announces a new release, it sells out immediately. Aside from its apparel, the brand also has popular footwear collaborations with brands such as Puma, Asics, and New Balance. What differentiates KITH from other streetwear brands is its unique partnerships, like one with HBO featuring a vintage logo capsule collection and another with premium Japanese restaurant, Nobu.

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Poolside FM

Poolside FM is a retro internet station with an ’80s vibe. To add a new layer to the brand, it recently launched a new sunscreen—Vacation. In line with PoolsideFM’s branding, the new sunscreen is all about a retro vibe—from product packaging to visuals to website design. Its drop-style rollout generated huge buzz for the brand and its new product.

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Aime Leon Dore

New York fashion label Aimé Leon Dore made its debut in 2014 and became instantly popular among streetwear fans. The brand is known for its refined style as well as popular collaborations with partners such as New Balance, Woolrich, and Porsche. Aimé Leon Dore leverages the power of social media to announce its new releases, which has proven wildly successful.

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Outer

DTC furniture brand Outer disrupts the furniture industry in many ways. Aside from introducing an online-first outdoor furniture shopping experience, it also has brought drop culture into the furniture space. With limited-edition product releases, Outer generates excitement and attracts new customers while also monitoring the pulse of its customers to help it develop new products.

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Billionaire Boys Club

Billionaire Boys Club is a men’s streetwear line launched by Pharrell Williams and NIGO in 2003. The brand mantra is “Wealth is of the heart and mind. Not the pocket.” The brand is known for its spaceman logo, which signals customers when there’s a new drop.

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Saturdays New York City

New York–based clothing and lifestyle brand Saturdays New York City has significant, influential power. It all started in 2009 from a small SoHo store. More than a decade later, Saturdays NYC has grown into an international lifestyle brand. For one of its collections, it partnered with the British luxury lifestyle brand Barbour, for a capsule collection that brought a combination of surf and city culture with iconic motorcycling heritage.

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Last Crumb

Think limited drops are impossible for some industries, like food/beverage? Think again. Last Crumb is a luxury cookie company offering Michelin-star-quality desserts sold in limited editions. Its secret to success is organic marketing through owned channels, such as email and social media, in parallel with influencer marketing campaigns. Everyone who wants the inside scoop and to be among the first to find out about a new drop has to join its email list.

If I had $1,000 to give to a lawyer, I probably could’ve had a better lease. But when you’re really under-financed, you take shortcuts.

Andrea Hernandez, Snaxshot

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How to get started with limited drops

Do limited drops sound like something you’d like to test? If you want to emulate this strategy, here are six simple steps that will help you with a successful drop release. 

1. Create a sense of urgency. If it’s not urgent, it can wait. And if it can wait, it’s not that important. That’s psychology. Announcing the exact date and giving customers a limited time frame makes your product exclusive and desired. 
2. Make an illusion of scarcity. People always want something that not everyone can have. Again, psychology. Most of the examples you’ve seen in the previous section are scarce by choice, not because they’re hard to produce. Adding a scarcity dimension makes the hype greater and influences customers into buying.
3. Leverage the power of social media. It’s been proven time and time again that social media has the ability to fuel growth through virality. If you want success with your limited drops, make sure to build a solid base of social media followers excited about your brand and your products in general. 
4. Don’t overdo it. Timing is an essential part of the equation. While there are many examples of brands releasing new drops every week, the only way to keep exclusivity is to offer small batches that won’t be restocked soon after they sell out. 
5. Make sure it’s worth the hype. All the brands we’ve talked about have one thing in common: quality. You can’t bet on a limited drops strategy for the long run if you’re not focused on high-quality products. Once customers get disappointed in your brand, there’s no going back. Don’t be afraid to create a buzz, but make it worthwhile. 
6. Get ready for the craze. Preparation is the key to success. Customers that are willing to wait in line and pay a lot of money to get your product expect a world-class customer experience from start to finish. Aside from checking if your website can handle spikes in traffic and a solid enterprise resource planning system, you need to create a frictionless experience with a versatile retail POS for unifying in-store and online sales.

The future of limited drops

Limited drops may be the next ecommerce battleground, as more tech-savvy brands figure out how to generate hype to stand out within a crowded social media feed.

Limited edition drops FAQ

What does limited drop mean?

A limited drop is a new product line release that’s only available for a limited time. Many businesses use limited drops to create buzz and hype around new products, increasing short-term sales.

What does drop mean in retail?

Drop typically means “launch,” as in a new product launch or collection launch. It’s also another word for a release, like when you’re releasing new products out to the public.

Why do brands do drops?

Brands do limited drops in order to generate excitement around their products and create a unique, limited-time offering for their customers. This is a great tactic for increasing short-term sales in order to stay on target for your goals or to reach a new one.

What is a drop strategy?

A drop strategy is a documented plan on how your company plans to create, promote, and release drops to your customers. It’s a good idea to have major limited drops every so often; however, you don’t want to employ this tactic too often or your customers will become numb to it.