One question we at PurseBop are repeatedly asked is about the value of our handbag collections. This is particularly true regarding Hermès bags, which are some of the most expensive handbags on the market. Readers wonder whether and why their Birkins and Kellys are worth less – no longer commanding prices nearly double retail on the secondary market. As discussed below, the answer is not so simple, with many factors in play.
The Bourgeoning Secondary Market
@baubles_bybb
There is no denying that in the past year we are seeing more new and preloved Birkins and Kellys on the streets, and available for sale both in Hermès boutiques and among the increasingly robust secondary market. Before 2019, it still felt special to carry an Hermès coveted quota bag. Does it still feel special, or has the abundance of available bags changed that?
Social Media Overdose
@bullies.n.birkins
The eye candy on Instagram is plentiful, and the walls containing various sizes, shapes and colors of Hermès bags in the secondary market stores are growing, as is the number of resellers on social media. Is all this affecting the “investment value” of Hermès bags? We answer these questions below.
Increase in Production
@rinyks
Let’s break it down. Since 2010, Hermès has added nine leather goods workshops in France. And, they recently announced plans to open several more workshops over the next three years and train over 2,000 new artisans (Read: Sales in China Buoy Hermès Half-Year Financials).
As Pursebop reported, Hermès is following a path of higher production equals higher sales. Previously, they operated under the philosophy of “manufacturing scarcity” which maintained the uniqueness of its products and kept availability low. The result was high demand and even higher prices.
Hermès is now facing the dilemma of how to maintain its exclusivity while making more products available, at least to its VIPs (Read: Hermès Rides High with Increased Production and Chinese Demand).
The FSH System
@boptalk
When Hermès increases production of its iconic bags, there is likely to be future ramifications that will affect the entire market in both a positive and negative way. The ability to “score a Birkin” in Paris has been well documented on Pursebop, (Read: Birkin Reveal: An Inside Look Into the New System in Paris). Increased production has made it easier to obtain one. First time buyers and regular clients (not just VIPs) are being offered these elusive bags, especially in Paris with the new system in place.
The prices are lower in Paris so resellers have more flexibility with their prices. For example, one reseller on Instagram recently posted a brand new black Birkin 35 in Togo leather with rose gold hardware (a very popular combination) for sale for $14,999 including shipping and tax. To purchase this bag in an Hermès boutique in 2019 in the U.S. would cost $12,100 plus tax. (Read: Hermes Birkin Prices 2019: USA vs. Europe). Assuming 10% tax in some major cities, the total would be $13,310, thereby generating a $1,689 premium by the reseller. Do sales like this cause the once unattainable bag to lose its allure and investment value? Not yet we believe.
Shortcut to Success
@luxbagsupply
It is true that on the secondary market, buyers can search for the exact color, hardware, size and leather they desire. They can pay a premium and thereby avoid the purchase profile (often costing thousands of dollars) as well as the relationship they must maintain with an SA at their local boutique. And best of all, they do not have to feel obliged to accept the bag offered for fear that another one will not be forthcoming soon.
In Pursebop’s Boptalk, Discussion: Are Resellers Bringing Down Birkin Prices? Pursebop contributor @el4bz said it best:
“… Hermès, consumers and resellers are all responsible
for the dip in stature of the once elusive Birkin for the following
reasons. Hermès increased production in the hope of increasing
profitability; customers who are fickle (and because things are easily
available) can buy and sell without losing much; and the resellers are
snagging the bags that customers are bored with and then flooding
the resale market with them. Look at any reseller’s website. The
inventory is not moving. Excess supply has led to lower resale
prices. The future is uncertain. The way I see it, savvy customers will
not shell out astronomical amounts for a used bag however
gently if they can get a brand new one straight from an Hermès store.
Having said that, the Birkin and the Kelly are the only bags that even
hold their value in the resale market currently. Question is – for how
long?”
There is no denying that Birkins and Kellys are more readily available on the secondary market in all shapes, colors and sizes. As a result, reselling Birkins and Kellys has become big business. You can now walk into one of many new brick and mortar reseller stores and see a wall of bags available for you to touch, try on, and experience the feeling of carrying a Birkin or Kelly on the crook of your arm – something you could not do just over a year ago. Although prices may have softened a bit on the larger or more used Hermès bags, the value overall remains strong. As such, the allure for the still unattainable Hermès holy grail bag lives on.
Are you worried about the value of your collection?
Stay tuned for Part II tomorrow.
Updated: August 28th, 2020
Comments