39 ms·

The economics of the Birkin handbag

190 points by wallflower 2y ago

tromp 2y ago
https://archive.is/wwZ1k https://archive.is/wwZ1k
BJones12 2y ago
> A Birkin bought at auction in 2010 would sell for around 50% more today... Hermès’s own stock has been a much smarter investment than the Birkin, rising more than 20-fold since 2010. The more time goes on the more I think a good rule would be "however much I spend at the company, spend on the company (in shares)". I look at my Spotify sub, my MSFT sub, and an Apple IIgs sitting in a box and wonder 'what if'.
- nimish 2y ago
  Shares do nothing except gain or lose value. The other stuff can actually, you know, do things! Some people value the ability for things to do other things.
  - paulcole 2y ago
    I think it’s not buying the shares “instead” of buying the thing, it’s also buying the shares and the thing. Because yeah, not buying things you want to watch your money high score go up is a pretty sad way to go through life.
  - lotsofpulp 2y ago
    An expensive bag or watch “does” nothing different than a less expensive one, so it is not functionally different than a share in that its purpose is to gain or lose value, so the owner can show off. Except a publicly traded share is much more liquid. An expensive watch does even less than less expensive watches, especially smart watches.
    - deleted 2y ago
      [deleted]
- parhamn 2y ago
  Thats a good idea. Portfolio of your own verified consumer sentiments. Quick check: iPhone 1 was $500 at launch. Apple shares were $5, apple stocks 41x'd since. If you bought the same amount in shares you'd have $20k, not bad.
  - amelius 2y ago
    Does not scale. If everybody followed this rule ...
    - teruakohatu 2y ago
      Also, Apple shares also do not replace the functionality of a phone, so the true opportunity cost of buying a premium phone instead buying a cheaper phone and spending the remainder on shares. Nobody bought a iPhone because they thought it would appreciate in value.
      - samatman 2y ago
        It isn't nobody, as evidenced by the continued existence of new-in-box original iPhones, which sell at auction for nosebleed prices. The trick is to identify products which will be considered iconic, while they're still on the market. This is crystal-ball-gazing, and that kind of game isn't for everyone, but it only takes one smash hit to make a profit on the total investment. There are certainly people who do this as a hobby / side hustle.
    - Retric 2y ago
      > If everybody You can absolutely guarantee everyone isn’t going to follow that rule so why bother considering it? Also, nothing says you need to keep investments forever, a rolling fund where after X months you sell the stocks and repurchase based on current spending habits could work just fine at scale.
    - rch 2y ago
      Everybody is more than welcome to buy into my long positions.
    - 2y ago
- Frummy 2y ago
  Yeah I figured Id do that after watching a video of a summary of ‘one up on wall street’. I bought tons of stock in my newest favorite energy drinks brand as well as my favorite nicotine pouch brand. i sold after half a year because it went down slightly. Now, the energy drinks stock has tripled, and the nicotine pouch company got sold and went private, buying out all stock for a lot higher as well.
- jliptzin 2y ago
  Essentially that’s what I do. I’ve made more on company shares than what I’ve spent on the companies’ products, including Tesla. This is especially true for Costco and Apple.
- GrantMoyer 2y ago
  The Efficient-market Hypothesis[1] posits that someone with more resources than you has already made a similar analysis, so the prices of those shares already reflect the true value, including the value of potential future returns. Lucky for you, all those stocks are probably represented in large index funds, which are much less volatile than individual stocks. [1]: https://en.wikipedia.org/wiki/Efficient-market_hypothesis https://en.wikipedia.org/wiki/Efficient-market_hypothesis
  - WorkerBee28474 2y ago
    The thing about hypotheses is that they can be either true or false. And seeing NVDA triple in the past year, even while there are many people devoting their working lives just to do financial analysis of the stock, tells us the hypothesis is false.
    - Iulioh 2y ago
      The Nvidia situation wasn't predictable as they sell an unique item with pratical applications. There are no alternatives to Nvidia GPUs if you want to efficiently train an AI, they have an effective monopoly. Personally i would have invested in TSMC/ASML or Intel as this point. Buy the shovel maker.
      - bluecalm 2y ago
        NVidia make those things for quite some time you know? They also have done heavy investments in software side and had total dominance there for years. It's not like your needed to know 10 years ago. >>TSMC Relatively low margins, few good well negotiating customers. Can't grow fast. >>ASML What do you think market could have missed there? Good company with simple business model. Very unlikely to grow fast. >>Intel Terrible company with long track record of stupid decisions and deception. What make you think they will suddenly turn around and start innovating?
        Iulioh 2y ago
        Good points but they have the fabs. That's why my bets are on them. Everyone is reliant on ASML and unlikely to change. Intel has fabs and is too big to fail, the us government won't let it happen. I'm making a safe bet on the long term, not a speculative one based on a technology that will or won't be worth that valuation.
- xwolfi 2y ago
  But if everyone does this, companies have no client and only shareholders. Like GME.
- Temporary_31337 2y ago
  A much better strategy is to just buy an index for the equivalent amount every time you decide on a disposable / luxury purchase. That way there is no guilt about being able to afford it and generally you hit your savings rate etc.
- rsynnott 2y ago
  I mean, on average you would expect this to be true if only because the markets tend to go up, whereas the value of an actual item tends to go down.
- TacticalCoder 2y ago
  > The more time goes on the more I think a good rule... That's my main investment rule. I invest in companies who's products I like and own. But then I also buy the dip. So when a company I like/whose product I use is at a discount, I invest. It makes me feel better too when I buy something from them: "oh, some of that money I just paid is going back to me"! There are people here who bough NVDA at a bargain with the same reasoning. I did an exception for Meta (no FB, no WhatsApp, no instagram: all the Meta CIDR blocks are blocklisted by my firewall and all the Meta domains are blocked by my DNS resolver: that's how much I hate that turd) which I hate with a passion because the stock at $100 in 2022 (was it 2022?) was just too good to be true. But then I do use React so there's that!
  - ragazzina 2y ago
    >There are people here who bough NVDA at a bargain with the same reasoning. There are people here who bough Blackberry, Kodak and Blockbuster at a bargain with the same reasoning.
The28thDuck 2y ago
I find the habits of the very wealthy fascinating. What incentivizes your behavior when you have own all the traditional incentives?
- medion 2y ago
  Depending on your definition of very wealthy, a lot of luxury spending over the last decade is not from actual ultra rich, but mostly the middle class trying to signal something.
  - pineaux 2y ago
    LMVH is very succesfull in selling luxury to the middle and lower classes. They really found a growth market there.
  - Ekaros 2y ago
    Problem with selling to ultra-rich is that there isn't actually very many of them. On other hand there is plenty of middle-class and even lower class that are ready to sacrifice other things for specific signal... So targeting them makes lot more sense.
    - chasd00 2y ago
      Plus, a fool and their money are soon parted.
  - arethuza 2y ago
    The "ludicrously capacious bag" thing in Succession makes fun of this very point - Tom (who is from a relatively modest background and therefore sensitive about such things) makes fun of Greg's girlfriends bag: https://www.theguardian.com/fashion/2023/mar/30/succession-burberry-bag-bridget https://www.theguardian.com/fashion/2023/mar/30/succession-b...
  - VirusNewbie 2y ago
    I'm in a weird bubble, because I don't know anyone in my friend group who does this, despite most of my friends in their late 30s early 40s being successful tech professionals. Many have bought fancy houses (and some modest houses), a lot of them have nicer cars, but I literally don't know anyone who would fit the 'upper middle class' definition who spends money on high fashion, expensive watches, high end wine, etc. The only people I know in my extended circle who buy that sort of thing either have many millions liquid from successful tech exits (as in, coudl retire) or inherited millions.
medion 2y ago
I’m glad the author pointed out rock bottom interest rates - basically free money has created a nightmare and we are in the adjustment period now - curious to see how the luxury sector goes.
- llamaimperative 2y ago
  The luxury sector will crush it. The wealthy have become wealthier across the board.
  - medion 2y ago
    It’s not the wealthy making LVMH stock rise. Look at the stock max history and you’ll see it 100% coincides with low interest rates - in a low interest rate economy it’s those who can’t afford it and borrow that spend the most. The genuine wealth class are not spending more because they can borrow more, although they are likely making more money because they are an asset class who’s assets are then artificially inflated.
    - llamaimperative 2y ago
      I'd be very cautious of trying to read stock charts like this. There were literally countless other things that happened during this period as well, including for example the birth of the wealthy Chinese consumer class.
- OfficeChad 2y ago
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cletus 2y ago
I find these systems fascinating. Hermes does make high-quality bags but really where they shine is in marketing. You see a similar thing play out in the mechanical watch world. Rolex is the master of marketing. They make a good product, make no mistake, but they don't over-produce models, still have scarcity despite selling millions of watches a year and have a limited inventory so Rolexes have the strongest secondary market. Compare this to Omega who simply produce too many watches and too many watch variants such that you just don't have the strong secondary market that Rolex has. This is despite Omega producing in some cases a better product in utility purposes (eg Planet Ocean vs Deepsea Sea-Dweller). But there's a dirty little secret with all these brands, including Hermes. As much as they say it's about spend ratios and the like, ultimately it comes down to whether or not they like you. If, as a woman, you're attractive, stylish and likely to be seen with their products (eg red carpet events) you will have WAY more offered to you than your spend ratio might otherwise warrant.
- FpUser 2y ago
  >"but really where they shine is in marketing." I guess they do since they can sell their stuff. But not to people like me. When I see product priced just for being status symbol my first reaction is - fuck off, go find yourself some suckers.
  - pineaux 2y ago
    I am not saying you shouldn't tell them to fuck off, but have you entertained the idea that the person who is the sucker is actually you? These watches are part of a status and this status allows these people to dictate to the rest of us how they'd like their omelette.
    - FpUser 2y ago
      Well I work as an independent company, I find clients, develop products for them on my own premises and get paid, sometimes it is licensing fees. I am not rich but do well enough and can retire. So no, except the government nobody tells me what to do and as long as I pay taxes the government not really interested in people like myself.
jemmyw 2y ago
I don't really get it. I thought oh yeah I guess I buy expensive for my income so why not. But if I want a bag I research to try and find the best one for me, not for prestige. Same with every item. I guess people buy fancy watches and jewellery, and that's fine, but what I can't imagine is having all that money, meaning you have freedom to do pretty much whatever you like, and spending that freedom hanging around a posh clothes store frivolously buying shit in order to ingratiate yourself to buy a bag.
- AlotOfReading 2y ago
  To put it in a way that might be more familiar to someone in tech, it's like buying an absurdly powerful computer to show off to friends. In all likelihood you don't actually need a 64 core, 128gb monster with dual 4090s, but you might want to be the kind of person who does need it and use it for the kinds of activities you imagine such a person might do. For computers, that might be playing a game at 16k at 240hz. For a purse it might having something appropriate to a gala or looks good in Paris. That's why luxury brands sell lifestyles, not extol the product itself.
  - jemmyw 2y ago
    Yah but you can just buy that. You don't need to waste your time sucking up to the sales rep, and if you did you could go get another, just as powerful a system from someone else.
    - achenet 2y ago
      because in this case, there's only one company making that special computer, and it's either suck up to their sales reps or buy an 'inferior' product. I guess probably like periods when NVIDIA GPUs or Raspberry Pis get scarce, and people go on eBay to buy them.
      - immibis 2y ago
        The bags aren't special high-quality bags. They're just bags. Even if they were made of tougher material, Sam Vimes Boots Theory doesn't apply at this massive price difference. Their main purpose is showing off that you schmoozed the sales rep - nothing at all like how a computer works. "Check out this super rare thing I managed to get" does happen occasionally, like Intel Larrabee graphics cards - but only occasionally.
mankypro 2y ago
A fool and his money are quickly separated.
- knorker 2y ago
  The people who buy these bags cannot spend all they have, even in 10 lifetimes. Don't worry about them. They'll be fine.
  - teruakohatu 2y ago
    This is why scarcity works so well for this target market. Its something they cannot just walk out and buy. They must instead earn it (buy spending lots of money and becoming friends with the sales assistant).
  - Ekaros 2y ago
    The actual target market is probably the one that burns all the money they have during their lifetimes.
AndrewKemendo 2y ago
The existence of absurdities like this, and everything there surrounds it is beyond obscene when there continues to exist poverty - in the same places where these are being carried Everyone involved at every level should be ashamed of themselves and should be significantly questioning whether or not their life is a net negative on the world
- arcticfox 2y ago
  I think these things are stupid, but they cost about the same as the difference between a pretty good car and a mostly good car. It doesn’t seem like the most insane hobby to me.
- surfingdino 2y ago
  When Omega and Swatch did a collab and released a series of plastic watches it was the poor who stood in lines around the block to get them and immediately resell at an obscene profit. There is a benefit to the poor if the figure out how to play that game.
  - achenet 2y ago
    this is true. I suppose it still might be interesting for people considering spending 10,000 on a handbag to ask themselves if they might not overall be happier donating that money to help the homeless in their cities, however (because not having to step over homeless junkies on your way to the Hermes store is also kind of a luxury good?)
    - Ekaros 2y ago
      If 10k is all you have. Something durable like hand-bag allows you to visibly signal for weeks if not months... Same can't be said about donation... Can you even check such thing? So would anyone in peer group even believe?
      - noitpmeder 2y ago
        Sounds like we need some way for someone to display their charitable donation amounts that are public and verifiable. Then more people could use their donation amounts as status symbols.
whatever1 2y ago
[flagged]
- loloquwowndueo 2y ago
  Lucrative, not ludicrous, right?
  - whatever1 2y ago
    See? Swipe predictive keyboard needs improvement but everyone is making bags instead.
- klabb3 2y ago
  At the extremes of each sector you’ll find ridiculous things. This is true in tech as well. Let he who has not sinned cast the first stone.
- surfingdino 2y ago
  Europe was making luxury goods before the USA existed. You could just as well say that the US threw the towel in having a good taste or knowing what's beautiful and just saw it's more lucrative to monetise science and technology and resell it to the masses buried up to their necks in debt.
- Ekaros 2y ago
  Europe makes plenty of technological and manufacturing advancements. Those are not just visible to average person. Or get the massive scale of pure software services.
- danpalmer 2y ago
  Err, I suspect Fraunhofer would like a word, huge engineering/manufacturing research group, famously European. There are hundreds of universities and university spin-offs that would also say they're making significant technological and manufacturing advancements.
  - oldpersonintx 2y ago
hristov 2y ago
It is funny how there are so many articles purporting to explain the economics of a Birkin handbag, without actually explaining it. Here it is, I will actually and finally explain the economics of a Birkin handbag. It is all about convincing the buyer to consider a consumer good to be an investment. People treat consumer goods and investments very differently mentally and rightfully so. A consumer good is something you use for you own enjoyment or necessity. An investment is something that is supposed to pay you back more in the future. You do not get to use or enjoy the stocks and treasuries in your investment account. But you do hope that they will bring you more money in the future. So what if consumer good can also be an investment? It seems like a great deal. First of all you get to enjoy it. If you are woman (or a man that likes to wear handbags, I guess) you can walk around with your Birkin bag and show it off while it appreciates. Stocks and bonds are the often recommended investments, but you need a large and complex political system to ensure your stocks and bonds are worth the money. They are after all just pieces of paper (and nowadays you usually do not even get to hold the paper yourself), but to get these pieces of paper to convert to ownership rights of large enterprises you need, as I said a large and complex political and legal system. A Birkin bag on the other hand, is something you can keep close to you. In your closet. So the sales potential of something that is both a consumer good and an investment is great. Hermes saw this potential and decided to make the Birkin that thing. If the Birkin can be sold for more in the secondary market than what it sells for in store, it becomes an investment all of a sudden. And then you get all kinds of new demand. So Hermes made that happen by good marketing and (probably) by buying out Birkins in the secondary market. But that is also a very unstable situation. If you can just buy a Birkin in a store and then turn around and sell it immediately for a profit, everyone would do that and the secondary market price would collapse. And that is where the exclusivity comes in. The plan for Hermes is that they would only sell Birkins to rich people that do not need to resell their bags in the secondary market even if there is a profit. Thus, the ideal client is a woman that feels good that her Birkin investment is appreciating in value but has absolutely no desire to sell it because she does not need the money and she loves her bag. She just likes to consider how much money she is making in her mental profit and loss statement by keeping her bag, while continuing to wear and use it. So that is why sales of new Birkins are so restricted and are based on a personal relationship between a salesperson and a client. The salesperson judges the client on whether they are the type of client that will turn around and flip the bag. And meanwhile the company, Hermes, judges the salesperson on whether they can keep their clients in check. Of course some bags get flipped, and that is necessary to keep a resale market going, and thus to keep up the evidence of higher resale values. But it is important to keep the flips to a very small number. It is a very clever system, but it was not invented by Hermes. It has been tried before with art, fine wine and ferraris. And for those of you that might think that the Birkin madness is somehow related to women's lack of financial sense, keep in mind that Ferrari was doing the same thing with limited addition Ferraris marketed mostly to men long before Hermes hit upon their Birkin scam. The problem, from the point of view of the consumer, is that it is a very unstable system. It seems great and safe to have your investment in your closet, but keep in mind that the value of that investment is being kept alive by Hermes doing hard work and spending a lot of money to keep up the secondary market for Birkins. If Hermes changes strategy or some new CEO makes some mistake, then the value of your Birkin will disappear in a second and you will have no legal recourse. If the fashion changes, the value of your bag may plummet even if Hermes does their very best to do everything right. Etc. So my recommendation for someone considering a Birkin or another consumer good/investment combo is to stick to actual investments for investing and to actual consumer goods for consuming. An asset that produces value (such as stock in a good company) is a naturally appreciating investment (as it produces value) and it does not need to have some kind alternative reality created around it by a corporation in order to appreciate. Of course one has also to make sure he/she is a good citizen and exercises their responsibilities to keeping up their nation as a stable democracy with a stable well functioning legal system and well established property rights.
user_7832 2y ago
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virtualritz 2y ago
If you're interested in the craft/quality that goes into these products (or frequently doesn't), "Tanner Leatherstein"'s YT channel is a suggested watch. https://www.youtube.com/@tanner.leatherstein https://www.youtube.com/@tanner.leatherstein He dissects luxury leather products. Tanner has two recent videos on Hermès that seem related enough to mention here: What does Hermès actually sell? A closer look into astronomical price tags of the luxury legend. https://www.youtube.com/watch?v=D_f0jFs22Ts https://www.youtube.com/watch?v=D_f0jFs22Ts Discover the real value of Hermès: Unraveling the mystery behind luxury prices. https://www.youtube.com/watch?v=6fkzpyHJ77g https://www.youtube.com/watch?v=6fkzpyHJ77g
- yobbo 2y ago
  The reason behind value is similar to the value of a military/exclusive medal. It's a "legitimate" way for the owner to signal prestige.
  - jsty 2y ago
    In economics terms - a Veblen good https://en.wikipedia.org/wiki/Veblen_good https://en.wikipedia.org/wiki/Veblen_good
  - virtualritz 2y ago
    True but not entirely. There are big quality differences and often luxury brands do use material and labor that makes a bag cost hundreds of dollars or euros to produce. But not all do and sometimes they flounder or cheat on certain products. The margin between that production cost (Tanner always gives an estimate) and the actual price is definitely a function mainly of the prestige associated with the brand. I.e. other factors such as shipping, display (think flagship stores), advertising & sales labor costs play much less of a role in the luxury segment.
    - deleted 2y ago
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  - rvba 2y ago
michael_vo 2y ago
I went to a buy. Hermes gives you 24 hours to go into the store and buy the item. Otherwise the bag goes to the next buyer on the rolodex. Buyers call their friends and make it into an event. They’re literally giddy and excited to go. It’s like winning the lottery. You’re ushered into a private room with nice couches, mirrors, a phone. You choose a scarf and wrap the scarf around the strap. Buyers text their sales rep almost daily. In a way it’s like a drop in the NFT space.
- GaryNumanVevo 2y ago
  Comparing a Hermes appointment to clicking "buy" on an NFT is hilarious. Nonetheless, I've gotten three appointments, have spent around 150k EUR on bags. So far I've made $30k after VAT and US duty. No idea why Paris original Hermes bags go for so much more in the states. If I have an appointment, I'll fly round trip to Paris, buy the bags, and hold them until I go to the states. Great experience, very high class!
  - GaryNumanVevo 2y ago
    First appointment they have a limit, IIRC it's like 2 bags, but subsequent appointments you can buy a lot more
    - deleted 2y ago
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  - 1oooqooq 2y ago
    so you're their sales rep?
    - GaryNumanVevo 2y ago
      No? It's a fun luxury item to flip, that can make some decent money. Rolex's used to be good to flip if you had a good rep with an AD, but now the resale market is down.
gadders 2y ago
RIP "Rep Ladies" on Reddit, where there was a whole community talking about buying "replicas" (very high quality fakes) from China. Bag purchasing aside, the whole community had a very specific and enjoyable vibe to it. It was like every poster was Charlotte from Sex and the City. The Reddit was killed by this article: https://www.thecut.com/2022/04/repladies-fake-luxury-bags.html https://www.thecut.com/2022/04/repladies-fake-luxury-bags.ht...
- coldfoundry 2y ago
  And TikTok too. I used to frequent RepLadies just for the incredible review quality some years back that users were writing. Incredible pictures, auth vs replica comparisons, and total detailing of every step of the order/shipping process with a dated timeline. Ironically it felt like the “Hermes” of the replica community because of its level of quality - such a shame it’s no longer, and the child subreddits that popped up to “replace it” just aren’t the same.
  - gadders 2y ago
    Yes, the moderators there did a great job of enforcing a culture and a standard of review of the products. They also had loads of FAQs for all the steps in the process. I hope that it lives on on a secret discord server or something somewhere. Would be a shame to lose it all.
- GaryNumanVevo 2y ago
  Replicas are great! I own a couple of Birkin bags, and I pretty much only wear replicas when I'm out and about. The resale on a vintage Birkin bag is insane, so it's better off sitting in my closet
- et-al 2y ago
  That was a great article and would probably appeal to some of the posters here: > “My friends that spend a lot on authentics have either never worked a day in their life or they’ve married rich guys,” she says. “But if you’re working hard for your money, you don’t want to spend it on stupid stuff. In New York especially, wealthy people just have more interesting things to do with their money. They invest in crypto. They reinvest in their businesses. They invest in their children.” > Still, most of Lisa’s rich friends ignore her suggestions to buy reps. “It’s just a snobbery thing,” she says. “They’ve literally told me, ‘I’m too good to buy reps.’” Instead, “they’re out here buying authentic Hermès, and they are stressing out every single day. ‘Will I get the bag?’ ‘What if it runs out?’ I’m just like, You literally don’t need this stress in your life; you can just be happy.”
graycat 2y ago
> The economics of the Birkin handbag He's very rich and she is VERY pretty!
- 082349872349872 2y ago
  I'll grant you the VERY pretty for Jane, but was Serge Gainsbourg ever very rich?
jamesralph8555 2y ago
This model is not unique to Hermes. Watch and car brands work the same way. Early on in these markets, you can get one of the desirable items without spending too much on undesirable items. Some examples: Rolex - stainless steel models are desirable and appreciate, gold models go for below msrp Porche - Bucking the trend a bit, Porche gives you the option of paying an additional dealer markup rather than making you buy a Macan to get a GT3 RS. Over time, this arbitrage goes to equilibrium and resellers can’t make money. It is relatively easy to get into this market so naturally it gets flooded. Profit goes to 0. Resellers also carry a risk that the item loses market value while they hold it. The only real winner here is the brand.
- mamonster 2y ago
  In the watch market, a lot of the resellers who got in during COVID are still underwater. Know a guy from the alternatives space who bought an 8 figure portfolio of Richard Milles, Pateks and some smaller brands and is still sitting on it. Bidders are coming at 15-20% below his ask at least.
  - htrp 2y ago
    Not a loss til you sell??
    - meowster 2y ago
      Yep! I know a ton of people who never lost money on Beanie Babies because they haven't sold yet and are waiting for the market to rebound! /s
      - BeFlatXIII 2y ago
        What's the conversion rate from Beanie Babies to $GME?
  - pc86 2y ago
    At some point you have to think you'd be better off selling at a loss and reallocating the funds, especially if there are tax implications of being able to show a loss in business inventory (which you may not be able to if it's just some guy buying a box of watches and not an actual business venture).
knallfrosch 2y ago
See also: Inside the Delirious Rise of ‘Superfake’ Handbags Can you tell the difference between a $10,000 Chanel bag and a $200 knockoff? Almost nobody can, and it’s turning luxury fashion upside down. https://www.nytimes.com/2023/05/04/magazine/celine-chanel-gucci-superfake-handbags.html https://www.nytimes.com/2023/05/04/magazine/celine-chanel-gu... An economist’s guide to the luxury-handbag market It is plagued by counterfeits—and information asymmetries https://www.economist.com/finance-and-economics/2024/03/07/an-economists-guide-to-the-luxury-handbag-market https://www.economist.com/finance-and-economics/2024/03/07/a...
aragonite 2y ago
Also, a classic: https://www.styleforum.net/threads/mafoofan-struggles-to-buy-breast-wallet-at-hermes-arises-victorious.215158/ https://www.styleforum.net/threads/mafoofan-struggles-to-buy...
- lelandfe 2y ago
  Wow, that was an aggravating read. I don’t think I would have been able to keep my composure. Is/was that user notable on that forum?
  - aragonite 2y ago
    Yes, he's an accomplished lawyer and quite famous on the style blogs!
    - lelandfe 2y ago
      That helps explain how they were able to stay calm as the assistant stretched the limits of professionalism, hah
vitorsr 2y ago
Related: The secret economics of the Birkin bag (2016) (https://www.economist.com/1843/2016/07/28/the-secret-economics-of-the-birkin-bag https://www.economist.com/1843/2016/07/28/the-secret-economi...)
ianpurton 2y ago
The economics of purchasing new are fairly simple, you walk out of the store with something worth more than you paid for it. The people in the secondary market take all the risk by paying an inflated price that may go down and the risk of fakes. It reminds me of the Rolex market.
deleted 2y ago
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eadmund 2y ago
Has Hermès trademarked the design? I would love to get my wife an homage Birkin, but every time I google for such a thing I don’t really find anything. The only thing that makes sense is that they aggressively shut down every competing maker — or just that my google-fu is lacking. There’s no way that she would be happy with tens of thousands for a purse, but if I could find one with the look and utility for a few hundred then I think she’d be delighted.
- melling 2y ago
  “homage Birkin” A knockoff? Is that what people are calling knockoffs these days?
  - eadmund 2y ago
    A fake looks like an original, and is something which wrongfully and illegally misuses the original’s logo or other marks: it lies about what it is. A homage is something which looks like an original, but does not use the original’s logo or other marks. I have no problem with an homage. ‘Knockoff’ could refer to either of those. What I would like is a well-constructed reproduction of a Birkin bag, which does not misappropriate Hermès’s trademarks.
- humansareok1 2y ago
  Go to like any large city and people sell knockoffs for cheap on the sidewalk.
  - dboreham 2y ago
    Not necessarily complying with all relevant IP laws of course.
- ragazzina 2y ago
  I can find many results for "Birkin inspired handbags".
s5300 2y ago
[dead]
tkz1312 2y ago
The original NFT
osks 2y ago
I really enjoyed the Aquired episode on Hermès. Not my type of brand, but interesting. https://www.acquired.fm/episodes/hermes https://www.acquired.fm/episodes/hermes
- rando1657 2y ago
  [dead]
- tylervigen 2y ago
  I did too. Actually I was introduced to the Acquired podcast by the WSJ last month[1] and Hermes was the first episode I listened to. I wonder if this was just another WSJ reporter falling down that same rabbit hole. [1] Via https://www.wsj.com/business/media/acquired-podcast-tech-business-history-strategy-90e73603 https://www.wsj.com/business/media/acquired-podcast-tech-bus...
  - malshe 2y ago
    Coincidentally this exact thing happened to me. I checked out the podcast after reading about it here. Luckily I was visiting Europe last month so got some time to listen to this 3-4 hour podcast episode, almost like a half audiobook!
farceSpherule 2y ago
The Birkin bag is nothing but overpriced hype. De Beers operates in the same manner, creating fake demand and spending tremendous sums on marketing to make you think that diamonds are "rare" when in fact they are not. These bags are made by Chinese immigrants, not by Parisian or Italian "artisans." How do you think the Chinese counterfeiters are able to reproduce exact replicas that are indistinguishable to the naked eye? Hermes and De Beers get the last laugh because they know that women are so desperate to appear wealthy that these products sell themselves to these low self-esteem trollops.
- auc 2y ago
  I would recommend listening to the Acquired podcast episode on Hermes. While the bag is very “overpriced”, they are genuinely the highest quality bags on the market in basically every important dimension.
  - causality0 2y ago
    Looking at the gif, it appears the protective feet are placed in such a way as to let the corners drag the ground. Is this not an obvious design deficiency?
  - deleted 2y ago
    [deleted]
goalonetwo 2y ago
anyone spending 20k$ on a handbag lost all touch with reality.
- kjkjadksj 2y ago
  Same with any luxury good really. People are spending 100k on a car thats effectively no different than a $5k one considering driving in a way to actually take advantage of the capabilities of a $100k supercar is entirely illegal. People spend as much on prestigious private college that delivers the same classes as any public school.
  - throwaway2037 2y ago
    > prestigious private college I would disagree here. The point of prestigious private colleges is to mingle with other high status, wealthy people. Plus, you will have a much easier time getting jobs because of your status badge.
    - kjkjadksj 2y ago
      There are wealthy, high status people in the public school too, and employers really don’t care where you got your degree these days. If anything, state flagship public schools skew larger which means economies of scale grow the variety of available internship/research and other opportunities.
  - blantonl 2y ago
    There are such things as tracks where you can drive your super car on the weekend and take advantage of the capabilities.
    - kjkjadksj 2y ago
      What percent of these owners do that? Probably a single digit number if I had to guess. Orders of magnitude more people use that horsepower to drive like an idiot on the public road.
nojvek 2y ago
With the rise of US economy and further wealth disparity, signaling "wealth" is a real thing. We humans aren't that different from other animals that "peacock" to advertise their social status. Interesting how certain brands are able to capitalize on the exclusivity of high end of fashion over the innate need to signal. The problems of ultra rich are very different yet so similar to the poor. Humans gonna human.
fsckboy 2y ago
no matter where you are on the political spectrum, you might enjoy "splitting" the animated gif https://images.wsj.net/im-972116/?width=1278&size=1 https://images.wsj.net/im-972116/?width=1278&size=1 into its component still-images. The credited artist, Eric Helgas, is quoted as saying "My work focuses a lot on iconic imagery and challenges the viewer’s perception of the objects I choose to photograph." https://lvl3official.com/artist-of-the-week-eric-helgas/ https://lvl3official.com/artist-of-the-week-eric-helgas/ Well Eric, I don't feel challenged by this work. I guess you thought that I thought that stevedores, people with dirty fingernails, thick black hair on their arms, a preponderance of upper body fat characteristic of males, etc. would not carry Birkins. HA! jokes on you! Any body can carry a Birkin, and we might expect anybody who is afraid their femininity might be questioned to make sure to carry such an iconic handbag, so I'm sure all you've done is take a random sample. Where's the challenge?
- deanCommie 2y ago
  I don't really understand your last paragraph. It is in no way expected that Art that "challenges" is going to challenge every viewer. Of course some wouldn't be, in this case you. That's not a bug. I wouldn't even necessarily say that the quality of art is measured by the % of audience it is able to successfully "challenge", that also incentivises shock for shock's sake. But I also don't really understand the specifics of what you're saying - There are no fingernails shown in the gif, and I suppose maybe one person with upper-arm fat? To be clear, I'm not advocating for the art or the artist. It does nothing for me either. I'm curious about your seeming vitriol to it tho. (Could be a misread of what you wrote)
fallinditch 2y ago
Status symbol - a weird concept to me. Exhibiting status symbols has various social, psychological, cultural and economic uses and meanings, but it seems to me that they often reflect the existence of a kind of deficiency.
- skulk 2y ago
  True status is your impact on the world, both realized and potential. Being able to waste thousands of meals' worth on food for a mundane everyday item is a cheap approximation of that.
patchtopic 2y ago
I prefer me a excellent condition pre-loved Crumpler bag from ebay :-) almost zero prestige so reasonable prices
maxglute 2y ago
Bliss Foster, fashion youtuber has a great video on Hermes @11 minutes about why Hermes is peak of luxury even compared to other houses https://www.youtube.com/watch?v=3F7Exfsto6Y https://www.youtube.com/watch?v=3F7Exfsto6Y But entire video is a fun watch.
anitil 2y ago
There was an interesting planet money episode on Birkin Bags from 2015, I recommend a listen (or a read) https://www.npr.org/transcripts/460870534 https://www.npr.org/transcripts/460870534
causality0 2y ago
I wonder if there's a long German word for "I'd be mad at these people for selling something so worthless for so much money, except the act of buying it makes you stupid enough to deserve wasting your money on it, so there aren't any real victims"
- WorkerBee28474 2y ago
  'Gold gab ich für Eisen' may be the closest thing to that. https://de.wikipedia.org/wiki/Gold_gab_ich_f%C3%BCr_Eisen https://de.wikipedia.org/wiki/Gold_gab_ich_f%C3%BCr_Eisen
dredmorbius 2y ago
Thorstein Veblen, Theory of the Leisure Class (1899): <https://archive.org/details/theoryofleisurec0000thor_p4x3 https://archive.org/details/theoryofleisurec0000thor_p4x3>
motohagiography 2y ago
closely related, just a few days ago I got a quote for a pair of boots that after taxes and duty would have worked out to about $12,000 and an 8-month wait not including travel costs to be there for a fitting. I'm passing on them for every conceivable reason, but it raised the question of why buy them at all. tbh, I didn't know how much they cost, and I just like them because the maker has figured in stories I've liked for years and there's a kind of actualization to making them part of mine. nobody would ever know as there's no brand or way to tell, it was a personal interest. however, the "economics" of those boots or a handbag are closer to poor-coded aftermarket car accessories, in that they're more of an indicator of economic conditions. You've made good money but it's not life circumstance changing money. It's not actually wasted or surplus, it's just not enough to change anything, so you spend it. whether it's at Hermés or spinny chrome rims, the underlying belief is that below a certain capital threshold signalling is a better strategic bet than marginal savings. it's a bet against future purchasing power of cash, but also a bet on personal growth. And that's how you talk yourself into buying stuff like that.

190 points by wallflower 2y ago

https://archive.is/wwZ1k https://archive.is/wwZ1k

> A Birkin bought at auction in 2010 would sell for around 50% more today... Hermès’s own stock has been a much smarter investment than the Birkin, rising more than 20-fold since 2010. The more time goes on the more I think a good rule would be "however much I spend at the company, spend on the company (in shares)". I look at my Spotify sub, my MSFT sub, and an Apple IIgs sitting in a box and wonder 'what if'.

nimish 2y ago
Shares do nothing except gain or lose value. The other stuff can actually, you know, do things! Some people value the ability for things to do other things.
- paulcole 2y ago
  I think it’s not buying the shares “instead” of buying the thing, it’s also buying the shares and the thing. Because yeah, not buying things you want to watch your money high score go up is a pretty sad way to go through life.
- lotsofpulp 2y ago
  An expensive bag or watch “does” nothing different than a less expensive one, so it is not functionally different than a share in that its purpose is to gain or lose value, so the owner can show off. Except a publicly traded share is much more liquid. An expensive watch does even less than less expensive watches, especially smart watches.
  - deleted 2y ago
    [deleted]
parhamn 2y ago
Thats a good idea. Portfolio of your own verified consumer sentiments. Quick check: iPhone 1 was $500 at launch. Apple shares were $5, apple stocks 41x'd since. If you bought the same amount in shares you'd have $20k, not bad.
- amelius 2y ago
  Does not scale. If everybody followed this rule ...
  - teruakohatu 2y ago
    Also, Apple shares also do not replace the functionality of a phone, so the true opportunity cost of buying a premium phone instead buying a cheaper phone and spending the remainder on shares. Nobody bought a iPhone because they thought it would appreciate in value.
    - samatman 2y ago
      It isn't nobody, as evidenced by the continued existence of new-in-box original iPhones, which sell at auction for nosebleed prices. The trick is to identify products which will be considered iconic, while they're still on the market. This is crystal-ball-gazing, and that kind of game isn't for everyone, but it only takes one smash hit to make a profit on the total investment. There are certainly people who do this as a hobby / side hustle.
  - Retric 2y ago
    > If everybody You can absolutely guarantee everyone isn’t going to follow that rule so why bother considering it? Also, nothing says you need to keep investments forever, a rolling fund where after X months you sell the stocks and repurchase based on current spending habits could work just fine at scale.
  - rch 2y ago
    Everybody is more than welcome to buy into my long positions.
  - 2y ago
Frummy 2y ago
Yeah I figured Id do that after watching a video of a summary of ‘one up on wall street’. I bought tons of stock in my newest favorite energy drinks brand as well as my favorite nicotine pouch brand. i sold after half a year because it went down slightly. Now, the energy drinks stock has tripled, and the nicotine pouch company got sold and went private, buying out all stock for a lot higher as well.
jliptzin 2y ago
Essentially that’s what I do. I’ve made more on company shares than what I’ve spent on the companies’ products, including Tesla. This is especially true for Costco and Apple.
GrantMoyer 2y ago
The Efficient-market Hypothesis[1] posits that someone with more resources than you has already made a similar analysis, so the prices of those shares already reflect the true value, including the value of potential future returns. Lucky for you, all those stocks are probably represented in large index funds, which are much less volatile than individual stocks. [1]: https://en.wikipedia.org/wiki/Efficient-market_hypothesis https://en.wikipedia.org/wiki/Efficient-market_hypothesis
- WorkerBee28474 2y ago
  The thing about hypotheses is that they can be either true or false. And seeing NVDA triple in the past year, even while there are many people devoting their working lives just to do financial analysis of the stock, tells us the hypothesis is false.
  - Iulioh 2y ago
    The Nvidia situation wasn't predictable as they sell an unique item with pratical applications. There are no alternatives to Nvidia GPUs if you want to efficiently train an AI, they have an effective monopoly. Personally i would have invested in TSMC/ASML or Intel as this point. Buy the shovel maker.
    - bluecalm 2y ago
      NVidia make those things for quite some time you know? They also have done heavy investments in software side and had total dominance there for years. It's not like your needed to know 10 years ago. >>TSMC Relatively low margins, few good well negotiating customers. Can't grow fast. >>ASML What do you think market could have missed there? Good company with simple business model. Very unlikely to grow fast. >>Intel Terrible company with long track record of stupid decisions and deception. What make you think they will suddenly turn around and start innovating?
      - Iulioh 2y ago
        Good points but they have the fabs. That's why my bets are on them. Everyone is reliant on ASML and unlikely to change. Intel has fabs and is too big to fail, the us government won't let it happen. I'm making a safe bet on the long term, not a speculative one based on a technology that will or won't be worth that valuation.
xwolfi 2y ago
But if everyone does this, companies have no client and only shareholders. Like GME.
Temporary_31337 2y ago
A much better strategy is to just buy an index for the equivalent amount every time you decide on a disposable / luxury purchase. That way there is no guilt about being able to afford it and generally you hit your savings rate etc.
rsynnott 2y ago
I mean, on average you would expect this to be true if only because the markets tend to go up, whereas the value of an actual item tends to go down.
TacticalCoder 2y ago
> The more time goes on the more I think a good rule... That's my main investment rule. I invest in companies who's products I like and own. But then I also buy the dip. So when a company I like/whose product I use is at a discount, I invest. It makes me feel better too when I buy something from them: "oh, some of that money I just paid is going back to me"! There are people here who bough NVDA at a bargain with the same reasoning. I did an exception for Meta (no FB, no WhatsApp, no instagram: all the Meta CIDR blocks are blocklisted by my firewall and all the Meta domains are blocked by my DNS resolver: that's how much I hate that turd) which I hate with a passion because the stock at $100 in 2022 (was it 2022?) was just too good to be true. But then I do use React so there's that!
- ragazzina 2y ago
  >There are people here who bough NVDA at a bargain with the same reasoning. There are people here who bough Blackberry, Kodak and Blockbuster at a bargain with the same reasoning.

The28thDuck 2y ago

I find the habits of the very wealthy fascinating. What incentivizes your behavior when you have own all the traditional incentives?

medion 2y ago
Depending on your definition of very wealthy, a lot of luxury spending over the last decade is not from actual ultra rich, but mostly the middle class trying to signal something.
- pineaux 2y ago
  LMVH is very succesfull in selling luxury to the middle and lower classes. They really found a growth market there.
- Ekaros 2y ago
  Problem with selling to ultra-rich is that there isn't actually very many of them. On other hand there is plenty of middle-class and even lower class that are ready to sacrifice other things for specific signal... So targeting them makes lot more sense.
  - chasd00 2y ago
    Plus, a fool and their money are soon parted.
- arethuza 2y ago
  The "ludicrously capacious bag" thing in Succession makes fun of this very point - Tom (who is from a relatively modest background and therefore sensitive about such things) makes fun of Greg's girlfriends bag: https://www.theguardian.com/fashion/2023/mar/30/succession-burberry-bag-bridget https://www.theguardian.com/fashion/2023/mar/30/succession-b...
- VirusNewbie 2y ago
  I'm in a weird bubble, because I don't know anyone in my friend group who does this, despite most of my friends in their late 30s early 40s being successful tech professionals. Many have bought fancy houses (and some modest houses), a lot of them have nicer cars, but I literally don't know anyone who would fit the 'upper middle class' definition who spends money on high fashion, expensive watches, high end wine, etc. The only people I know in my extended circle who buy that sort of thing either have many millions liquid from successful tech exits (as in, coudl retire) or inherited millions.

medion 2y ago

I’m glad the author pointed out rock bottom interest rates - basically free money has created a nightmare and we are in the adjustment period now - curious to see how the luxury sector goes.

llamaimperative 2y ago
The luxury sector will crush it. The wealthy have become wealthier across the board.
- medion 2y ago
  It’s not the wealthy making LVMH stock rise. Look at the stock max history and you’ll see it 100% coincides with low interest rates - in a low interest rate economy it’s those who can’t afford it and borrow that spend the most. The genuine wealth class are not spending more because they can borrow more, although they are likely making more money because they are an asset class who’s assets are then artificially inflated.
  - llamaimperative 2y ago
    I'd be very cautious of trying to read stock charts like this. There were literally countless other things that happened during this period as well, including for example the birth of the wealthy Chinese consumer class.
OfficeChad 2y ago
[dead]

cletus 2y ago

I find these systems fascinating. Hermes does make high-quality bags but really where they shine is in marketing. You see a similar thing play out in the mechanical watch world. Rolex is the master of marketing. They make a good product, make no mistake, but they don't over-produce models, still have scarcity despite selling millions of watches a year and have a limited inventory so Rolexes have the strongest secondary market. Compare this to Omega who simply produce too many watches and too many watch variants such that you just don't have the strong secondary market that Rolex has. This is despite Omega producing in some cases a better product in utility purposes (eg Planet Ocean vs Deepsea Sea-Dweller). But there's a dirty little secret with all these brands, including Hermes. As much as they say it's about spend ratios and the like, ultimately it comes down to whether or not they like you. If, as a woman, you're attractive, stylish and likely to be seen with their products (eg red carpet events) you will have WAY more offered to you than your spend ratio might otherwise warrant.

FpUser 2y ago
>"but really where they shine is in marketing." I guess they do since they can sell their stuff. But not to people like me. When I see product priced just for being status symbol my first reaction is - fuck off, go find yourself some suckers.
- pineaux 2y ago
  I am not saying you shouldn't tell them to fuck off, but have you entertained the idea that the person who is the sucker is actually you? These watches are part of a status and this status allows these people to dictate to the rest of us how they'd like their omelette.
  - FpUser 2y ago
    Well I work as an independent company, I find clients, develop products for them on my own premises and get paid, sometimes it is licensing fees. I am not rich but do well enough and can retire. So no, except the government nobody tells me what to do and as long as I pay taxes the government not really interested in people like myself.

jemmyw 2y ago

I don't really get it. I thought oh yeah I guess I buy expensive for my income so why not. But if I want a bag I research to try and find the best one for me, not for prestige. Same with every item. I guess people buy fancy watches and jewellery, and that's fine, but what I can't imagine is having all that money, meaning you have freedom to do pretty much whatever you like, and spending that freedom hanging around a posh clothes store frivolously buying shit in order to ingratiate yourself to buy a bag.

AlotOfReading 2y ago
To put it in a way that might be more familiar to someone in tech, it's like buying an absurdly powerful computer to show off to friends. In all likelihood you don't actually need a 64 core, 128gb monster with dual 4090s, but you might want to be the kind of person who does need it and use it for the kinds of activities you imagine such a person might do. For computers, that might be playing a game at 16k at 240hz. For a purse it might having something appropriate to a gala or looks good in Paris. That's why luxury brands sell lifestyles, not extol the product itself.
- jemmyw 2y ago
  Yah but you can just buy that. You don't need to waste your time sucking up to the sales rep, and if you did you could go get another, just as powerful a system from someone else.
  - achenet 2y ago
    because in this case, there's only one company making that special computer, and it's either suck up to their sales reps or buy an 'inferior' product. I guess probably like periods when NVIDIA GPUs or Raspberry Pis get scarce, and people go on eBay to buy them.
    - immibis 2y ago
      The bags aren't special high-quality bags. They're just bags. Even if they were made of tougher material, Sam Vimes Boots Theory doesn't apply at this massive price difference. Their main purpose is showing off that you schmoozed the sales rep - nothing at all like how a computer works. "Check out this super rare thing I managed to get" does happen occasionally, like Intel Larrabee graphics cards - but only occasionally.

mankypro 2y ago

A fool and his money are quickly separated.

knorker 2y ago
The people who buy these bags cannot spend all they have, even in 10 lifetimes. Don't worry about them. They'll be fine.
- teruakohatu 2y ago
  This is why scarcity works so well for this target market. Its something they cannot just walk out and buy. They must instead earn it (buy spending lots of money and becoming friends with the sales assistant).
- Ekaros 2y ago
  The actual target market is probably the one that burns all the money they have during their lifetimes.

AndrewKemendo 2y ago

The existence of absurdities like this, and everything there surrounds it is beyond obscene when there continues to exist poverty - in the same places where these are being carried Everyone involved at every level should be ashamed of themselves and should be significantly questioning whether or not their life is a net negative on the world

arcticfox 2y ago
I think these things are stupid, but they cost about the same as the difference between a pretty good car and a mostly good car. It doesn’t seem like the most insane hobby to me.
surfingdino 2y ago
When Omega and Swatch did a collab and released a series of plastic watches it was the poor who stood in lines around the block to get them and immediately resell at an obscene profit. There is a benefit to the poor if the figure out how to play that game.
- achenet 2y ago
  this is true. I suppose it still might be interesting for people considering spending 10,000 on a handbag to ask themselves if they might not overall be happier donating that money to help the homeless in their cities, however (because not having to step over homeless junkies on your way to the Hermes store is also kind of a luxury good?)
  - Ekaros 2y ago
    If 10k is all you have. Something durable like hand-bag allows you to visibly signal for weeks if not months... Same can't be said about donation... Can you even check such thing? So would anyone in peer group even believe?
    - noitpmeder 2y ago
      Sounds like we need some way for someone to display their charitable donation amounts that are public and verifiable. Then more people could use their donation amounts as status symbols.

whatever1 2y ago

[flagged]

loloquwowndueo 2y ago
Lucrative, not ludicrous, right?
- whatever1 2y ago
  See? Swipe predictive keyboard needs improvement but everyone is making bags instead.
klabb3 2y ago
At the extremes of each sector you’ll find ridiculous things. This is true in tech as well. Let he who has not sinned cast the first stone.
surfingdino 2y ago
Europe was making luxury goods before the USA existed. You could just as well say that the US threw the towel in having a good taste or knowing what's beautiful and just saw it's more lucrative to monetise science and technology and resell it to the masses buried up to their necks in debt.
Ekaros 2y ago
Europe makes plenty of technological and manufacturing advancements. Those are not just visible to average person. Or get the massive scale of pure software services.
danpalmer 2y ago
Err, I suspect Fraunhofer would like a word, huge engineering/manufacturing research group, famously European. There are hundreds of universities and university spin-offs that would also say they're making significant technological and manufacturing advancements.
- oldpersonintx 2y ago

hristov 2y ago

It is funny how there are so many articles purporting to explain the economics of a Birkin handbag, without actually explaining it. Here it is, I will actually and finally explain the economics of a Birkin handbag. It is all about convincing the buyer to consider a consumer good to be an investment. People treat consumer goods and investments very differently mentally and rightfully so. A consumer good is something you use for you own enjoyment or necessity. An investment is something that is supposed to pay you back more in the future. You do not get to use or enjoy the stocks and treasuries in your investment account. But you do hope that they will bring you more money in the future. So what if consumer good can also be an investment? It seems like a great deal. First of all you get to enjoy it. If you are woman (or a man that likes to wear handbags, I guess) you can walk around with your Birkin bag and show it off while it appreciates. Stocks and bonds are the often recommended investments, but you need a large and complex political system to ensure your stocks and bonds are worth the money. They are after all just pieces of paper (and nowadays you usually do not even get to hold the paper yourself), but to get these pieces of paper to convert to ownership rights of large enterprises you need, as I said a large and complex political and legal system. A Birkin bag on the other hand, is something you can keep close to you. In your closet. So the sales potential of something that is both a consumer good and an investment is great. Hermes saw this potential and decided to make the Birkin that thing. If the Birkin can be sold for more in the secondary market than what it sells for in store, it becomes an investment all of a sudden. And then you get all kinds of new demand. So Hermes made that happen by good marketing and (probably) by buying out Birkins in the secondary market. But that is also a very unstable situation. If you can just buy a Birkin in a store and then turn around and sell it immediately for a profit, everyone would do that and the secondary market price would collapse. And that is where the exclusivity comes in. The plan for Hermes is that they would only sell Birkins to rich people that do not need to resell their bags in the secondary market even if there is a profit. Thus, the ideal client is a woman that feels good that her Birkin investment is appreciating in value but has absolutely no desire to sell it because she does not need the money and she loves her bag. She just likes to consider how much money she is making in her mental profit and loss statement by keeping her bag, while continuing to wear and use it. So that is why sales of new Birkins are so restricted and are based on a personal relationship between a salesperson and a client. The salesperson judges the client on whether they are the type of client that will turn around and flip the bag. And meanwhile the company, Hermes, judges the salesperson on whether they can keep their clients in check. Of course some bags get flipped, and that is necessary to keep a resale market going, and thus to keep up the evidence of higher resale values. But it is important to keep the flips to a very small number. It is a very clever system, but it was not invented by Hermes. It has been tried before with art, fine wine and ferraris. And for those of you that might think that the Birkin madness is somehow related to women's lack of financial sense, keep in mind that Ferrari was doing the same thing with limited addition Ferraris marketed mostly to men long before Hermes hit upon their Birkin scam. The problem, from the point of view of the consumer, is that it is a very unstable system. It seems great and safe to have your investment in your closet, but keep in mind that the value of that investment is being kept alive by Hermes doing hard work and spending a lot of money to keep up the secondary market for Birkins. If Hermes changes strategy or some new CEO makes some mistake, then the value of your Birkin will disappear in a second and you will have no legal recourse. If the fashion changes, the value of your bag may plummet even if Hermes does their very best to do everything right. Etc. So my recommendation for someone considering a Birkin or another consumer good/investment combo is to stick to actual investments for investing and to actual consumer goods for consuming. An asset that produces value (such as stock in a good company) is a naturally appreciating investment (as it produces value) and it does not need to have some kind alternative reality created around it by a corporation in order to appreciate. Of course one has also to make sure he/she is a good citizen and exercises their responsibilities to keeping up their nation as a stable democracy with a stable well functioning legal system and well established property rights.

user_7832 2y ago

[dead]

virtualritz 2y ago

If you're interested in the craft/quality that goes into these products (or frequently doesn't), "Tanner Leatherstein"'s YT channel is a suggested watch. https://www.youtube.com/@tanner.leatherstein https://www.youtube.com/@tanner.leatherstein He dissects luxury leather products. Tanner has two recent videos on Hermès that seem related enough to mention here: What does Hermès actually sell? A closer look into astronomical price tags of the luxury legend. https://www.youtube.com/watch?v=D_f0jFs22Ts https://www.youtube.com/watch?v=D_f0jFs22Ts Discover the real value of Hermès: Unraveling the mystery behind luxury prices. https://www.youtube.com/watch?v=6fkzpyHJ77g https://www.youtube.com/watch?v=6fkzpyHJ77g

yobbo 2y ago
The reason behind value is similar to the value of a military/exclusive medal. It's a "legitimate" way for the owner to signal prestige.
- jsty 2y ago
  In economics terms - a Veblen good https://en.wikipedia.org/wiki/Veblen_good https://en.wikipedia.org/wiki/Veblen_good
- virtualritz 2y ago
  True but not entirely. There are big quality differences and often luxury brands do use material and labor that makes a bag cost hundreds of dollars or euros to produce. But not all do and sometimes they flounder or cheat on certain products. The margin between that production cost (Tanner always gives an estimate) and the actual price is definitely a function mainly of the prestige associated with the brand. I.e. other factors such as shipping, display (think flagship stores), advertising & sales labor costs play much less of a role in the luxury segment.
  - deleted 2y ago
    [deleted]
- rvba 2y ago

michael_vo 2y ago

I went to a buy. Hermes gives you 24 hours to go into the store and buy the item. Otherwise the bag goes to the next buyer on the rolodex. Buyers call their friends and make it into an event. They’re literally giddy and excited to go. It’s like winning the lottery. You’re ushered into a private room with nice couches, mirrors, a phone. You choose a scarf and wrap the scarf around the strap. Buyers text their sales rep almost daily. In a way it’s like a drop in the NFT space.

GaryNumanVevo 2y ago
Comparing a Hermes appointment to clicking "buy" on an NFT is hilarious. Nonetheless, I've gotten three appointments, have spent around 150k EUR on bags. So far I've made $30k after VAT and US duty. No idea why Paris original Hermes bags go for so much more in the states. If I have an appointment, I'll fly round trip to Paris, buy the bags, and hold them until I go to the states. Great experience, very high class!
- GaryNumanVevo 2y ago
  First appointment they have a limit, IIRC it's like 2 bags, but subsequent appointments you can buy a lot more
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- 1oooqooq 2y ago
  so you're their sales rep?
  - GaryNumanVevo 2y ago
    No? It's a fun luxury item to flip, that can make some decent money. Rolex's used to be good to flip if you had a good rep with an AD, but now the resale market is down.

gadders 2y ago

RIP "Rep Ladies" on Reddit, where there was a whole community talking about buying "replicas" (very high quality fakes) from China. Bag purchasing aside, the whole community had a very specific and enjoyable vibe to it. It was like every poster was Charlotte from Sex and the City. The Reddit was killed by this article: https://www.thecut.com/2022/04/repladies-fake-luxury-bags.html https://www.thecut.com/2022/04/repladies-fake-luxury-bags.ht...

coldfoundry 2y ago
And TikTok too. I used to frequent RepLadies just for the incredible review quality some years back that users were writing. Incredible pictures, auth vs replica comparisons, and total detailing of every step of the order/shipping process with a dated timeline. Ironically it felt like the “Hermes” of the replica community because of its level of quality - such a shame it’s no longer, and the child subreddits that popped up to “replace it” just aren’t the same.
- gadders 2y ago
  Yes, the moderators there did a great job of enforcing a culture and a standard of review of the products. They also had loads of FAQs for all the steps in the process. I hope that it lives on on a secret discord server or something somewhere. Would be a shame to lose it all.
GaryNumanVevo 2y ago
Replicas are great! I own a couple of Birkin bags, and I pretty much only wear replicas when I'm out and about. The resale on a vintage Birkin bag is insane, so it's better off sitting in my closet
et-al 2y ago
That was a great article and would probably appeal to some of the posters here: > “My friends that spend a lot on authentics have either never worked a day in their life or they’ve married rich guys,” she says. “But if you’re working hard for your money, you don’t want to spend it on stupid stuff. In New York especially, wealthy people just have more interesting things to do with their money. They invest in crypto. They reinvest in their businesses. They invest in their children.” > Still, most of Lisa’s rich friends ignore her suggestions to buy reps. “It’s just a snobbery thing,” she says. “They’ve literally told me, ‘I’m too good to buy reps.’” Instead, “they’re out here buying authentic Hermès, and they are stressing out every single day. ‘Will I get the bag?’ ‘What if it runs out?’ I’m just like, You literally don’t need this stress in your life; you can just be happy.”

graycat 2y ago

> The economics of the Birkin handbag He's very rich and she is VERY pretty!

082349872349872 2y ago
I'll grant you the VERY pretty for Jane, but was Serge Gainsbourg ever very rich?

jamesralph8555 2y ago

This model is not unique to Hermes. Watch and car brands work the same way. Early on in these markets, you can get one of the desirable items without spending too much on undesirable items. Some examples: Rolex - stainless steel models are desirable and appreciate, gold models go for below msrp Porche - Bucking the trend a bit, Porche gives you the option of paying an additional dealer markup rather than making you buy a Macan to get a GT3 RS. Over time, this arbitrage goes to equilibrium and resellers can’t make money. It is relatively easy to get into this market so naturally it gets flooded. Profit goes to 0. Resellers also carry a risk that the item loses market value while they hold it. The only real winner here is the brand.

mamonster 2y ago
In the watch market, a lot of the resellers who got in during COVID are still underwater. Know a guy from the alternatives space who bought an 8 figure portfolio of Richard Milles, Pateks and some smaller brands and is still sitting on it. Bidders are coming at 15-20% below his ask at least.
- htrp 2y ago
  Not a loss til you sell??
  - meowster 2y ago
    Yep! I know a ton of people who never lost money on Beanie Babies because they haven't sold yet and are waiting for the market to rebound! /s
    - BeFlatXIII 2y ago
      What's the conversion rate from Beanie Babies to $GME?
- pc86 2y ago
  At some point you have to think you'd be better off selling at a loss and reallocating the funds, especially if there are tax implications of being able to show a loss in business inventory (which you may not be able to if it's just some guy buying a box of watches and not an actual business venture).

knallfrosch 2y ago

See also: Inside the Delirious Rise of ‘Superfake’ Handbags Can you tell the difference between a $10,000 Chanel bag and a $200 knockoff? Almost nobody can, and it’s turning luxury fashion upside down. https://www.nytimes.com/2023/05/04/magazine/celine-chanel-gucci-superfake-handbags.html https://www.nytimes.com/2023/05/04/magazine/celine-chanel-gu... An economist’s guide to the luxury-handbag market It is plagued by counterfeits—and information asymmetries https://www.economist.com/finance-and-economics/2024/03/07/an-economists-guide-to-the-luxury-handbag-market https://www.economist.com/finance-and-economics/2024/03/07/a...

aragonite 2y ago

Also, a classic: https://www.styleforum.net/threads/mafoofan-struggles-to-buy-breast-wallet-at-hermes-arises-victorious.215158/ https://www.styleforum.net/threads/mafoofan-struggles-to-buy...

lelandfe 2y ago
Wow, that was an aggravating read. I don’t think I would have been able to keep my composure. Is/was that user notable on that forum?
- aragonite 2y ago
  Yes, he's an accomplished lawyer and quite famous on the style blogs!
  - lelandfe 2y ago
    That helps explain how they were able to stay calm as the assistant stretched the limits of professionalism, hah

vitorsr 2y ago

Related: The secret economics of the Birkin bag (2016) (https://www.economist.com/1843/2016/07/28/the-secret-economics-of-the-birkin-bag https://www.economist.com/1843/2016/07/28/the-secret-economi...)

ianpurton 2y ago

The economics of purchasing new are fairly simple, you walk out of the store with something worth more than you paid for it. The people in the secondary market take all the risk by paying an inflated price that may go down and the risk of fakes. It reminds me of the Rolex market.

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eadmund 2y ago

Has Hermès trademarked the design? I would love to get my wife an homage Birkin, but every time I google for such a thing I don’t really find anything. The only thing that makes sense is that they aggressively shut down every competing maker — or just that my google-fu is lacking. There’s no way that she would be happy with tens of thousands for a purse, but if I could find one with the look and utility for a few hundred then I think she’d be delighted.

melling 2y ago
“homage Birkin” A knockoff? Is that what people are calling knockoffs these days?
- eadmund 2y ago
  A fake looks like an original, and is something which wrongfully and illegally misuses the original’s logo or other marks: it lies about what it is. A homage is something which looks like an original, but does not use the original’s logo or other marks. I have no problem with an homage. ‘Knockoff’ could refer to either of those. What I would like is a well-constructed reproduction of a Birkin bag, which does not misappropriate Hermès’s trademarks.
humansareok1 2y ago
Go to like any large city and people sell knockoffs for cheap on the sidewalk.
- dboreham 2y ago
  Not necessarily complying with all relevant IP laws of course.
ragazzina 2y ago
I can find many results for "Birkin inspired handbags".

s5300 2y ago

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tkz1312 2y ago

The original NFT

osks 2y ago

I really enjoyed the Aquired episode on Hermès. Not my type of brand, but interesting. https://www.acquired.fm/episodes/hermes https://www.acquired.fm/episodes/hermes

rando1657 2y ago
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tylervigen 2y ago
I did too. Actually I was introduced to the Acquired podcast by the WSJ last month[1] and Hermes was the first episode I listened to. I wonder if this was just another WSJ reporter falling down that same rabbit hole. [1] Via https://www.wsj.com/business/media/acquired-podcast-tech-business-history-strategy-90e73603 https://www.wsj.com/business/media/acquired-podcast-tech-bus...
- malshe 2y ago
  Coincidentally this exact thing happened to me. I checked out the podcast after reading about it here. Luckily I was visiting Europe last month so got some time to listen to this 3-4 hour podcast episode, almost like a half audiobook!

farceSpherule 2y ago

The Birkin bag is nothing but overpriced hype. De Beers operates in the same manner, creating fake demand and spending tremendous sums on marketing to make you think that diamonds are "rare" when in fact they are not. These bags are made by Chinese immigrants, not by Parisian or Italian "artisans." How do you think the Chinese counterfeiters are able to reproduce exact replicas that are indistinguishable to the naked eye? Hermes and De Beers get the last laugh because they know that women are so desperate to appear wealthy that these products sell themselves to these low self-esteem trollops.

auc 2y ago
I would recommend listening to the Acquired podcast episode on Hermes. While the bag is very “overpriced”, they are genuinely the highest quality bags on the market in basically every important dimension.
- causality0 2y ago
  Looking at the gif, it appears the protective feet are placed in such a way as to let the corners drag the ground. Is this not an obvious design deficiency?
- deleted 2y ago
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goalonetwo 2y ago

anyone spending 20k$ on a handbag lost all touch with reality.

kjkjadksj 2y ago
Same with any luxury good really. People are spending 100k on a car thats effectively no different than a $5k one considering driving in a way to actually take advantage of the capabilities of a $100k supercar is entirely illegal. People spend as much on prestigious private college that delivers the same classes as any public school.
- throwaway2037 2y ago
  > prestigious private college I would disagree here. The point of prestigious private colleges is to mingle with other high status, wealthy people. Plus, you will have a much easier time getting jobs because of your status badge.
  - kjkjadksj 2y ago
    There are wealthy, high status people in the public school too, and employers really don’t care where you got your degree these days. If anything, state flagship public schools skew larger which means economies of scale grow the variety of available internship/research and other opportunities.
- blantonl 2y ago
  There are such things as tracks where you can drive your super car on the weekend and take advantage of the capabilities.
  - kjkjadksj 2y ago
    What percent of these owners do that? Probably a single digit number if I had to guess. Orders of magnitude more people use that horsepower to drive like an idiot on the public road.

nojvek 2y ago

With the rise of US economy and further wealth disparity, signaling "wealth" is a real thing. We humans aren't that different from other animals that "peacock" to advertise their social status. Interesting how certain brands are able to capitalize on the exclusivity of high end of fashion over the innate need to signal. The problems of ultra rich are very different yet so similar to the poor. Humans gonna human.

fsckboy 2y ago

no matter where you are on the political spectrum, you might enjoy "splitting" the animated gif https://images.wsj.net/im-972116/?width=1278&size=1 https://images.wsj.net/im-972116/?width=1278&size=1 into its component still-images. The credited artist, Eric Helgas, is quoted as saying "My work focuses a lot on iconic imagery and challenges the viewer’s perception of the objects I choose to photograph." https://lvl3official.com/artist-of-the-week-eric-helgas/ https://lvl3official.com/artist-of-the-week-eric-helgas/ Well Eric, I don't feel challenged by this work. I guess you thought that I thought that stevedores, people with dirty fingernails, thick black hair on their arms, a preponderance of upper body fat characteristic of males, etc. would not carry Birkins. HA! jokes on you! Any body can carry a Birkin, and we might expect anybody who is afraid their femininity might be questioned to make sure to carry such an iconic handbag, so I'm sure all you've done is take a random sample. Where's the challenge?

deanCommie 2y ago
I don't really understand your last paragraph. It is in no way expected that Art that "challenges" is going to challenge every viewer. Of course some wouldn't be, in this case you. That's not a bug. I wouldn't even necessarily say that the quality of art is measured by the % of audience it is able to successfully "challenge", that also incentivises shock for shock's sake. But I also don't really understand the specifics of what you're saying - There are no fingernails shown in the gif, and I suppose maybe one person with upper-arm fat? To be clear, I'm not advocating for the art or the artist. It does nothing for me either. I'm curious about your seeming vitriol to it tho. (Could be a misread of what you wrote)

fallinditch 2y ago

Status symbol - a weird concept to me. Exhibiting status symbols has various social, psychological, cultural and economic uses and meanings, but it seems to me that they often reflect the existence of a kind of deficiency.

skulk 2y ago
True status is your impact on the world, both realized and potential. Being able to waste thousands of meals' worth on food for a mundane everyday item is a cheap approximation of that.

patchtopic 2y ago

I prefer me a excellent condition pre-loved Crumpler bag from ebay :-) almost zero prestige so reasonable prices

maxglute 2y ago

Bliss Foster, fashion youtuber has a great video on Hermes @11 minutes about why Hermes is peak of luxury even compared to other houses https://www.youtube.com/watch?v=3F7Exfsto6Y https://www.youtube.com/watch?v=3F7Exfsto6Y But entire video is a fun watch.

anitil 2y ago

There was an interesting planet money episode on Birkin Bags from 2015, I recommend a listen (or a read) https://www.npr.org/transcripts/460870534 https://www.npr.org/transcripts/460870534

causality0 2y ago

I wonder if there's a long German word for "I'd be mad at these people for selling something so worthless for so much money, except the act of buying it makes you stupid enough to deserve wasting your money on it, so there aren't any real victims"

WorkerBee28474 2y ago
'Gold gab ich für Eisen' may be the closest thing to that. https://de.wikipedia.org/wiki/Gold_gab_ich_f%C3%BCr_Eisen https://de.wikipedia.org/wiki/Gold_gab_ich_f%C3%BCr_Eisen

dredmorbius 2y ago

Thorstein Veblen, Theory of the Leisure Class (1899): <https://archive.org/details/theoryofleisurec0000thor_p4x3 https://archive.org/details/theoryofleisurec0000thor_p4x3>

motohagiography 2y ago

closely related, just a few days ago I got a quote for a pair of boots that after taxes and duty would have worked out to about $12,000 and an 8-month wait not including travel costs to be there for a fitting. I'm passing on them for every conceivable reason, but it raised the question of why buy them at all. tbh, I didn't know how much they cost, and I just like them because the maker has figured in stories I've liked for years and there's a kind of actualization to making them part of mine. nobody would ever know as there's no brand or way to tell, it was a personal interest. however, the "economics" of those boots or a handbag are closer to poor-coded aftermarket car accessories, in that they're more of an indicator of economic conditions. You've made good money but it's not life circumstance changing money. It's not actually wasted or surplus, it's just not enough to change anything, so you spend it. whether it's at Hermés or spinny chrome rims, the underlying belief is that below a certain capital threshold signalling is a better strategic bet than marginal savings. it's a bet against future purchasing power of cash, but also a bet on personal growth. And that's how you talk yourself into buying stuff like that.