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The rise and rise of the Birkin
ONCE upon a time, the Hermes Birkin could arguably have been called the rarest handbag in the world. Urban myths abounded about how to buy and who was allowed to buy; rumours of wait lists were taken as gospel; and the lucky few able to acquire a bag guarded their insider status as if it were a state secret.
Then the fashion resale market took off.
On almost any given day, Prive Porter in Miami has a rotating line-up of nearly 80 of the newest Hermes Birkin bags, in pristine condition and all accessible with the click of a mouse or a tap on a mobile device.
In barely five years, Prive Porter, tucked away in the palm-tree-lined confines of southern Florida, has sold more than US$60 million worth of the bags, the company said, to anyone who wants and can afford one, the vast majority of those sales taking place on Instagram.
The digitally native company is part of the booming resale ecosystem, which has seen a growing number of heavily funded and highly trafficked businesses bringing luxury wares to the web, among them the US$10,000-plus marquee bags of the 182-year-old Hermes empire. And Prive Porter is not alone.
Another digital player, the market-disrupting e-commerce consignment website the RealReal, has more than 300 Birkin bags available for purchase, including a shiny midnight-hued crocodile Birkin and a blindingly bright red Birkin.
StockX, the resale site known largely for its system of selling the buzziest sneakers as if they are stocks, has expanded its offerings to handbags, including the most coveted Hermes bags; it currently has 235 up for grabs.
Together with assorted other resale players, such as Rebag, LePrix, Baghunter and Vestiaire Collective, along with Hermes-specific sellers like Jane Finds, such sites have made it easier than ever for consumers to find what were once almost mythical accessories.
Luca Solca, a senior analyst for luxury goods at Bernstein, an investment research and management company, estimates that there are now more than 1 million Birkins in the market.
It sounds awfully good. But what does it really mean for an accessory whose image and allure is grounded largely in exclusivity and carefully measured supply, in an industry where perception plays an outsize role, not to mention for the people seduced by such rarity? Does it risk dilution and, even worse, devaluation of both value and allure?
After all, few brands have been as successful at positioning themselves at the apex of sheer luxury and creating ravenous demand as Hermes. It is a status symbolised by the Birkin, the virtually logo-less bag constructed from high-grade calfskin that debuted in 1984 after actress Jane Birkin met Hermes chairman Jean-Louis Dumas on a plane in 1981. (Dumas died in 2010.) In 35 years it has become as famous as an accessory can get, in part because of the difficulty of nabbing one.
Before the advent of the Internet, this was said to involve a waiting list, on which one's name would be placed after an inquiry about a Birkin in one of the company's stores.
"There was a waiting list at one point, but because so many people wanted these bags, a list simply became unmanageable," said a former employee, speaking anonymously because of the nondisclosure agreement he signed. Hermes refuses to comment on the method for bringing home a Birkin. Jonathan Rimer, a former floor director at the Hermes flagship in Beverly Hills, California, attributed the bag's elusiveness to a simple problem of supply and demand, as did Robert Chavez, the Hermes president and chief executive for the Americas, who announced at last year's Skift Global Forum that "demand for the Birkin bag continues to be much higher than the supply." That is no longer necessarily the case.
Julie Wainwright, founder and chief executive of the RealReal, said that her company has been able to offer these bags by "unlocking the supply of luxury goods in people's homes globally," a bounty that Bain & Co values at US$307 billion.
Jeff Berk, a founder of Prive Porter, said that his company maintains a stock of the newest Birkins thanks to close ties with a global network of Hermes VIP customers, the big spenders with deep relationships with salespeople who reportedly offer Birkins as soon as they hit the stockroom.
Many of these women, Mr Berk said, buy the bags immediately, regardless of whether they like the colour, size, skin or hardware, mostly because of Birkin FOMO. When a bag isn't a perfect match, some of them turn to Prive Porter to trade, upgrade or sell the bag.
Industry insiders, like Ms Wainwright, are adamant that resale sites can coexist peacefully with luxury brands, and even serve to bolster the luxury market by giving consumers a more affordable entry point to luxury goods as well as the confidence to invest in pricey handbags, knowing that if they tire of one, there will be a market for it.
This paints a pretty picture of a circular system of consumption, one in which resellers are not predators, but a vital part of a larger luxury symbiosis.
The principles of economics, however, seem to suggest otherwise. Scarcity, said Robert H Frank, a professor of management and economics at the Cornell Johnson Graduate School of Management, is achieved only when "goods that are highly desirable are not broadly available."
Flavio Cereda, the managing director of equity research, consumer and luxury, at Jefferies International, said that the resellers are simply filling a void that was intentionally left open by stalwart luxury brands, many of which have been slow to adopt e-commerce and almost all of which have shied away from making their top-of-the-line products available on the Web.
In the past, this allowed companies to control the distribution of their wares and maintain the hard-earned air of exclusivity upon which they - and their price tags - so thoroughly depend.
But now, Mr Cereda said, "some of the most coveted accessories are available on your phone in seconds". At any given point, these resellers tend to "have more Birkins in stock online than Hermes stores," and such volumes are "game changing". Resale is, he said, "the one channel that brands are so far largely unable to mould in terms of either volumes or pricing - and that in itself is hugely disruptive."
Mr Solca agreed. "In theory," he said, the rise of resale "could potentially increase the product and brand ubiquity". But, he said, "If you compare the Birkin to the Rolex Daytona," referring to the Swiss watchmaker's premiere offering, which has also found its way into the resale market, "you wouldn't conclude that Rolex has been suffering for this."
According to Mr Solca, the trick here is the watchmaker's ability to "keep its most iconic creations alive by tweaking and improving them all of the time," while also offering new products to keep consumers, particularly devoted fans of the brand, coming back.
As of now, demand for Birkins actually seems to be rising with supply. The RealReal said that consumer searches on its site for Birkin bags have increased more than 7.5 times over the last three years with sales nearly tripling.
And the Hermes bottom line does not seem to be suffering. According to its recently released 2018 revenue report, it experienced a 10.4 per cent rise in consolidated revenue for 2018, topping $6.7 billion.
At Prive Porter, Mr Berk said, "More and more collectors are opting to pay us US$19,000 to get the exact same - never used - bag" that they cannot get from Hermes for US$12,000.
The individuals consigning these hard-to-get bags are often also the buyers, so the resale market is, Mr Cereda said, "a happy loop of aficionados." Then he added, somewhat ominously, "for now." NYTIMES