Why Is Supreme Always Sold Out?

As I joined university I picked up some new hobbies and interests, and unfortunately one of them is fashion. Now don’t get me wrong I love fashion and I think it’s a great way to express creativity, but the reason I regret having such a big interest is because once you really get into it you end up spending all your money on clothes. And its not like the materials of the clothes are expensive, the reason people are willing to pay so much for an article of clothing is because of the brand, and at the end of the day people don’t pay a premium for a shirt because they appreciate the shirt itself, they buy it because the name of the company carries a special weight. So on that note, lets take a look at a clothing company that can sell out a crowbar just in a matter of seconds: Supreme.

For those that don’t know, Supreme is a “streetwear” clothing company that is famous for it’s box logo design (as seen at the top) and its extremely low supply of clothing.Now I’m personally a big fan of Supreme and I genuinely love the designs and aesthetic that it has, but as much as much as I love the brand I don’t really own anything Supreme. As you’ve guessed from the title, the reason I can’t seem to get any Supreme is because their online store is always sold out. Well if I can’t get anything online maybe I can just try to buy Supreme at their physical stores right? I can pack my bags and fly all the way to their New York shop and be disappointed when I realize everything there is sold out too. That’s right, I’d have to fly out all the way to New York just to get me some Supreme, and that’s because despite being such a well known brand, they only have 10 stores worldwide (with only a New York and L.A. store in America). So what’s going on here Supreme? Did someone not learn basic economics and realize that if there is sufficient demand then you should produce more to increase your profits? It seems to me that the reason they’re always sold out is due to one of two things: either the demand for Supreme is that high that they are unable to keep up OR Supreme is willingly limiting its supply of clothing. In order to answer the these questions we must first learn a bit about Supreme itself.

Have you ever owned something that you knew was very rare or maybe even one of a kind- maybe an action figure or a baseball card- and it made you feel special because you felt like it made you stand out? Well imagine something similar to that except almost everything that Supreme puts out is rare. Now this sounds absurd because if everything is limited edition then nothing is limited edition right? Well the way Supreme works is instead of having a constant supply of a popular designs, such as Adidas track pants or Nike Just Do It shirts, Supreme instead makes “drops” on Thursdays where they release new designs. In these drops they release a very limited amount of any design, and after that drop they don’t sell that same design again. For example, Supreme has so far released two types of black box logo shirts, and while they look the same from the front, they differ in design on the back. By altering the box logo shirts, Supreme is able to release something they know has high demand but at the same time not over-saturate their supply.

So while in essence there may be a lot of different Supreme shirts in the market, there are very limited Supreme shirts of a specific design. Now this little marketing trick answers both of the concerns I had earlier: the feeling of rarity boosts people’s demand for the products, and the fact that they release so little at a time reduces the supply. Supreme’s artificial scarcity somehow works like magic, and if they can sell out anything they want in a matter of seconds then that seems like any company's dream, right? Well this special position Supreme is in is a double edged sword, since even if they know a particular design will sell for a lot, they know they can’t make any more of it. James Jebbia, the founder of Supreme said himself:

“…if we can sell 600, I make 400.”

At the end of the day however, the reason Supreme is so popular is exactly because of the fact that they make everything so limited, and their prices aren’t even that high; a shirt will retail for only about $44! So with this extreme demand and tiny supply we now find ourselves in a position of too much demand, meaning that people will be willing to pay more than $44 to get their hands on a shirt that runs in a limited quantity. So if you know that people are willing to pay more than the actual price, why not just buy Supreme for retail and then mark up the price and sell it to make a profit? Well if you were reading this and came to the same conclusion, congratulations you savvy entrepreneur! The only problem is it may be a bit too late to hop onto that idea because almost everyone is doing it. So remember how I mentioned that everything is sold out whenever a drop comes out? Well I forgot to mention that things sell out in literally a matter of seconds online, and for the physical stores, well I’ll let this photo show exactly that looks like.

People camping out for the Nike X Supreme collab. Image from Complex Magazine

If you’re able to buy something online when the new collection drops, then colour me impressed because you’re up against thousands of bots that are set up by people who are trying to buy up as much Supreme as possible so they can later resell it. If you’re somehow able to get something from a physical store then that’s even more insane because you’d have to camp out basically a whole day in an extremelly packed line. The point I’m trying to make here is that the Supreme resale market is so huge because almost anyone can do it and the demand for Supreme is so high you’re almost always guaranteed to sell something. Hell I even know a friend that I met in one of my classes this year who resells Supreme; that’s how big this market is.

Now most of you are probably thinking that the over-saturated resale market hinders everyone else’s ability to actually buy something they want for a normal price, and I totally agree with you. It’s not fair that if I wanted to buy a Supreme Kermit shirt I’d probably have to pay around $200 to a reseller when I know it originally cost $44.

The aforementioned Kermit shirt

However, let me play devil’s advocated here and explain why having such a large resale marketing isn’t the worst thing. As I mentioned earlier, while the fact that Supreme can have anything sell out in a matter of seconds may seem like an amazing strategy, not everything is perfect. When you limit supply to create a surplus in demand, you are always bound to have people that will resell for a higher price. The resale market is a byproduct of artificial scarcity, and if there are people that are willing to pay double the retail price for a shirt, then others will recognize peoples’ willingness to pay and capitalize on it. Supreme is not only selling clothes , it’s also inadvertently creating entrepreneurs who realize that there is a business that can be made off of reselling, and can you blame them? Let’s say however that Supreme finally gets fed up with the people who resell, and they decide to bump up the prices of their products to their true perceived values (so if a box logo resells for $150, the new retail price will be $150). Once the resellers realize they can’t make a profit, they will stop buying from Supreme, and this means no more bots on the online website and no more long lines before every drop. And if the shopping process stops being hectic and you don’t have to purchase online in a matter of seconds, then what’s the point? As I’ve said before, the reason Supreme sells so well is because they are able to engineer excitement, but once the resellers leave, the crazy demand will die down and Supreme will stop selling. So while Supreme is able to basically sell anything they want, they know that they are treading a fine with the demand that they artificially boost.

If there’s anything to take away from this post, I guess it’s that there is a trade-off for everything. While Supreme’s sales are basically guaranteed, they are stuck in a position where they can’t boost their supply or bump up their prices to drive away resellers. At the end of the day however, Supreme is a clothing company and having so much hype surround your brand is much more important than people making a little profit off of your work.