Manufactured Scarcity
The drop model turned sellouts into headlines, waitlists into email lists, and 'you can't have it' into the most effective marketing strategy in beauty.
In 1975, a group of psychologists put cookies in two jars, one with ten and one with two, and asked participants to rate them. The cookies were identical, but participants rated the ones from the nearly empty jar as more desirable, more attractive, and worth more money, even though nobody said they tasted any better.
The researchers then tried something else: they started with ten cookies and removed eight while participants watched. Those cookies, the ones that went from abundant to scarce, were rated highest of all, especially when participants were told the supply dropped because other people wanted them. Social proof plus scarcity, together, was the most powerful combination they tested.
Every beauty brand that has ever sent a “selling fast” email or posted a “back in stock” notification is running the same experiment, whether the marketing team has read the study or not.
Pat McGrath numbered them like sneakers
Before Kylie Cosmetics existed, Pat McGrath was already borrowing from streetwear.
In October 2015, she released Gold 001: a $40 gold pigment, 1,000 units, sold exclusively on her own site. It sold out in six minutes, and two months later Phantom 002 followed: 1,200 kits at $240 each, gone immediately. She numbered her releases like Supreme numbered its drops, packaged them in sequin-filled bags with custom spatulas, and treated each launch like an event rather than a product release.
The beauty industry had never seen this before. Prestige brands launched with broad retail distribution, wide availability, and permanence. Pat McGrath launched with artificial limits, countdown clocks, and the implicit message that if you didn’t act now, you’d miss it. By 2018, investors valued her company at over $1 billion on estimated annual sales of $40 to $60 million, a roughly 17x revenue multiple that reflected hype as much as revenue.
That same company filed for bankruptcy in 2025. The drop model alone couldn’t sustain a valuation built more on urgency than infrastructure.
The lip kit template
Six weeks after Gold 001, an 18-year-old put $250,000 of her modeling earnings into 15,000 lip kits and listed them on a Shopify store.
Kylie Jenner sold all 15,000 in under 60 seconds, and the site crashed within an hour from traffic that kept coming long after the product was gone, generating $420,000 in revenue from a single drop. Earned media value: impossible to calculate, but every beauty outlet covered the sellout, which meant the next restock, months later, sold out in minutes too.
The initial scarcity was genuine because she had $250,000 and a contract manufacturer through Seed Beauty, which meant fifteen thousand units was what the budget allowed. What happened next was strategic: production scaled to 500,000 units in 2016, revenue exceeded $300 million that year, and Coty eventually paid $600 million for a 51% stake.
The lesson every founder in beauty absorbed was that a controlled first run that sells out generates more value than a large run that sits on shelves, because the sellout becomes the marketing, the waitlist becomes the email list, and the restock announcement becomes the earned media.
The waitlist as product
Rhode took the mechanic and stripped it to its cleanest form. When Hailey Bieber launched the Peptide Lip Treatment at $16 in June 2022, all three flavors sold out within three days. The waitlist hit 440,000 people, and subsequent flavor drops pushed that past 570,000.
By September 2023, Rhode had sold over a million Peptide Lip Treatments. The brand generated $212 million in revenue in the twelve months ending March 2025 and became the number one skincare brand in earned media value with $248 million in EMV and 367% year-over-year growth. Three years after launch, e.l.f. bought it for up to $1 billion.
The waitlist wasn’t a failure of supply chain planning, it was the product. Every person who signed up handed Rhode an email address, a signal of intent, and a reason to send a “back in stock” notification that would convert at rates paid advertising can’t touch. Rhode’s unit economics weren’t just good because the product was cheap to make, they were good because the marketing cost was nearly zero.
The math behind the sellout
The economics explain why this became the default DTC beauty launch strategy.
A small production run of 5,000 units costs $25,000 to $75,000, while a 500,000-unit run costs $2.5 million to $7.5 million. If the product doesn’t connect, the small run means you’re out $50,000, but the large run means you’re sitting on millions in unsold inventory plus warehouse costs.
Beauty margins run 60 to 90 percent, which means a $10 drugstore lipstick might cost $1.50 to manufacture and a $60 luxury lipstick might cost $5. A small batch that sells out fast can be wildly profitable on its own, but the real return is the media coverage: Fenty Beauty generated $72 million in earned media value in its first month, and Rhode hit $248 million in EMV in a single year, the kind of attention no brand can buy with paid spend.
The sold-out notification, the restock countdown, the “only X left” banner: these aren’t inventory management failures. They’re the lowest-cost customer acquisition strategy in the industry.
The Fenty contrast
Not every successful launch uses scarcity. Fenty Beauty did the opposite.
Rihanna launched in 1,600 stores across 17 countries simultaneously on September 8, 2017, with 40 foundation shades, no waitlist, no limited drop, and no artificial constraint on supply. The strategy was abundance: make it available to everyone, everywhere, all at once, and let the inclusivity of the product be the story rather than the exclusivity of the access.
It generated $100 million in sales in 40 days, and the deeper shades selling out first wasn’t manufactured but rather decades of suppressed demand finally meeting supply.
Fenty proved that manufactured scarcity isn’t the only path. When the product itself is the disruption, availability can be the marketing. The problem is that most brands aren’t launching something the industry has systematically ignored for decades. For everyone else, the drop model exists because it works with far less capital and far less risk.
When scarcity gets dark
There’s a meaningful difference between “we made 5,000 units and they sold fast” and manufacturing scarcity after the fact.
In 2018, Burberry disclosed it had destroyed £28.6 million in unsold products in a single year, with more than a third being beauty products, following £26.9 million the prior year and £18.8 million the year before that. Over £74 million in goods burned across three years, not to reduce production, but to ensure unsold inventory never reached discount shelves where it might dilute the brand’s perceived exclusivity.
Kylie Cosmetics faced a different credibility problem when Forbes’ 2020 investigation revealed the company’s actual revenue in the year before the Coty deal was $177 million, not the figures that had been publicly circulated. Coty’s stock dropped 13% after the report, and the scarcity narrative of “sold out, can’t keep it in stock” turned out to have been part of a broader pattern of inflated numbers.
The line between smart launch strategy and deceptive marketing is whether the constraint is real. A founder with $250,000 who makes 15,000 units has a genuine supply limitation. A billion-dollar conglomerate burning products to keep them off the discount rack is making a different choice entirely.
What you can learn
Small runs are a feature, not a limitation. If you’re launching with limited capital, a small first batch that sells out is better positioning than a large batch that sits. The sellout generates press, social proof, and a waitlist you can market to for free. Bootstrapping and scarcity are natural partners.
The waitlist is the asset. Every person who signs up for a restock notification has told you they want your product and given you permission to email them. That list converts at rates that make paid acquisition look wasteful. Build the capture mechanism before you launch, not after you sell out.
Don’t fake it. The brands that built lasting businesses on drops (Rhode, Kylie’s early era, Pat McGrath’s first year) had real constraints driving real scarcity, while the ones that got caught manufacturing it or inflating the narrative around it paid a reputation cost. Consumers, especially younger ones, can smell inauthenticity, so if your product is available, sell it, and if it’s genuinely limited, say why.
Frequently asked questions
Is manufactured scarcity illegal?
Not inherently. Brands can produce whatever quantities they choose. It crosses into legally questionable territory when brands make false claims about availability (“only 50 left!” when thousands remain) or use deceptive countdown timers. The FTC has issued warnings about misleading urgency tactics, and the UK’s Competition and Markets Authority has fined companies for it.
What’s the difference between a drop and a launch?
A launch is designed for broad availability. A drop is designed for limited availability, urgency, and the social proof that comes from selling out. The drop model originated in streetwear (Supreme’s weekly Thursday releases being the template) and crossed into beauty around 2015 through Pat McGrath and Kylie Cosmetics.
Did Glossier use the drop model?
Glossier used elements of it, particularly long waitlists before product launches and store openings that generated multi-block lines. The waitlist for Boy Brow and Cloud Paint generated significant pre-launch buzz. Glossier’s approach was less about artificial supply limits and more about building anticipation through community, but the psychological mechanic was the same: making people feel like access was limited and earned.
Sources
- Worchel, Lee & Adewole, “Effects of Supply and Demand on Ratings of Object Value,” 1975. Cookie jar scarcity study.
- Forbes, “How 20-Year-Old Kylie Jenner Built a $900 Million Fortune,” 2018. Kylie Cosmetics early revenue and production numbers.
- Forbes, “Inside Kylie Jenner’s Web of Lies,” 2020. Revenue discrepancies and Coty deal fallout.
- Business of Fashion, “Pat McGrath Receives $60 Million from Eurazeo,” 2018. Pat McGrath Labs valuation.
- Glossy, “Rhode Closes in on 1 Million Peptide Lip Treatments Sold,” 2023. Rhode sales and waitlist data.
- Fast Company, “Rhode Most Innovative Companies,” 2026. Rhode EMV and revenue figures.
- Hollywood Reporter, “Burberry Burning $38M of Unsold Products,” 2018. Burberry product destruction.
- BuzzFeed, “Kylie Jenner’s Lip Kit Sold Out in 30 Seconds,” 2015. Kylie Lip Kit launch timing.