Supreme’s recent collaboration with luxury luggage brand Rimowa sold out in between 16 and 34 seconds in Europe, depending on the product and colorway. This outcome is classic Supreme, which produces a tiny fraction of the inventory it knows it can sell, further fueling demand for the company’s products.

In contrast, H&M has over $4 billion in unsold inventory that no one wants. Fast fashion sure looks pretty slow.  

Despite its envious position, Supreme is in an interesting conundrum: to keep growing, it either has to keep making more products or raise the prices of existing ones, but doing so will change the sellout characteristics for the brand. This is especially true of brands that are predicated on scarcity, but not necessarily high price points.

Sure, maybe there isn’t a big difference between something that sells out in a matter of seconds versus a matter of minutes—and, let’s be honest, most of the sellouts right now are driven by users with bots, which complete the checkout process faster than any human can—but over time, the speed of sell outs can meaningfully change how customers perceive the brand.

One interesting solution might be shutting down or severely limiting the stock in Supreme’s online store, and instead shifting more inventory to the brand’s retail stores, which it could keep growing globally. This is a more level playing field since it’s about people who wait in line, not those who buy via bots. Yet this is also quite contrarian to Supreme’s ideology.

But in the age of excess product and endless markdowns, the broader question is why most companies prefer to have more money in inventory instead of leaving money on the table and selling out. Being a full-price business like Supreme should be everyone’s priority—the effects of discounting are nearly impossible to shake once a brand starts to use the tactic. As we’ve written previously, the companies that have less cash flow invested in inventory have more money to invest in the future—because money is not infinitely available, local manufacturing is another answer to help mitigate long lead times and over-ordering that further ties up cash flow.

More broadly, these case studies raise the question of where this all-consuming and possibly corrupting pressure to have more money in inventory comes from. The need for growth is a key culprit—a need that public market investors push even further (and on a shorter time horizon than private ones). But this answer is still not sufficient: Surely, every investor should want more cash flow, less inventory and fewer markdowns.

Regardless, many consumer goods companies still perplexingly offer discounts upon launch or after customers sign up for a newsletter, which is like giving an untrained puppy too many treats. Founders and executives need to realize that in most cases, having a smaller business with excellent margins and cash flow, in addition to full-price customers, is the ultimate goal. It’s better to leave money on the table than on the shelf.