How Secondhand Birkin Bags Sell For $56,000 On The Internet
With the bags in extraordinarily scarce supply, people are willing to pay more than new bags cost. Gilt and Rue La La can't get them from Hermès. So where do they come from?
Over the past two years, online sale sites like Gilt Groupe, Rue La La, Amazon's MyHabit others have successfully sold a broad selection of Hermès's highly coveted Birkin bags. And not at a discount: The bags have sold for up to $56,000 each on the sites. But Birkins are in famously limited supply; they're handmade in France, and customers have been known to wait up to six years for the "privilege" of purchasing one.
"It's very difficult to get a Birkin bag in a boutique these days," explains Tina Craig, the founder and editor-in-chief of the popular purse-obsessed blog BagSnob. "I used to be able to get one in two hours, but that's not the case anymore." In Hermès boutiques, the bags start around $8,000 and go upwards from there.
But Hermès sells only in its own stores and doesn't authorize any online sales. So where do Gilt and the other sites get their bags? And why do these sites go to all the trouble of tracking down these stupidly scarce bags, when scores of other covetable brands — Giambattista Valli, Zac Posen, Pucci — are willing to let them sell their stuff at a large discount?
It turns out that the Birkins are as much a status symbol for the sites as they are for the collectors who quite literally can't wait to get their hands on them. Despite the bags' incredibly high price tags, some suggest the sites aren't selling them for profit.
Since Hermès only sells the bags through its boutiques, the ones you see online are from the secondary market. "They come from people who run very reputable vintage stores," explains Jyothi Rao, General Manager of Gilt.com Women. But she adds: "For competitive reasons, we have to be careful about how much we disclose about the sourcing." (Rue La La and MyHabit did not respond to multiple requests for comment about their sales and sourcing of the bags.)
According to Craig, a regular leather Birkin in mint condition should retail for $7,800 to $9,800. "Ten grand with taxes is fair," she says. A quick look through some of the sales will show you that they've sold for more than that. The 30cm size, which is essentially a "medium," shouldn't be more than $8800 in-store, says Craig. You'll see here a brown one sold for $11,000 on MyHabit in October 2011. And a representative from Gilt confirmed that they sold a leather 35cm for $13,500, as well as a 40cm for $15,500.
In the rarer styles, prices multiply exponentially. Gilt confirmed they sold a $56,000 crocodile skin Birkin – and MyHabit sold an ostrich one for $23,100. While the sites selling them are known for offering cheaper deals, that's not the case with these bags. Original prices aren't listed, so it's hard to know what's a good deal and what's not.
The scarcity of bags stateside is largely explained by ballooning international demand, mostly from China and India, where exploding disposable incomes have made the bags wildly popular. And despite this booming luxury goods market, Hermès won't up its production volume, so the bags are in extremely short supply.
Also contributing to the online sale sites' success in selling Birkins: Hermès stores in the U.S. no longer take phone orders for the bags, according to Craig. So if you want one, you have to physically show up, credit card in hand, to get on the waiting list. "It used to be that people in Oklahoma would call the Dallas store and place an order, but they don't allow that anymore," she says.
But how can consumers know they're actually getting a good piece if they buy one, sight unseen, from a flash-sale site? It's a matter of reputation, mostly. "When we sell pre-owned products, we audit every single piece. We have a lot of security," Rao explains. Consumers know and trust a company like Gilt, so they're willing to pay top dollar for the bags without seeing or touching them. (Just this week, Hermès won a $100 million settlement from a number of sites that were selling counterfeit Hermès bags.)
Flash-sale sites' bags usually come from dealers like Madison Avenue Couture, a large reseller of Hermès and Chanel merchandise, which sells primarily on its website and out of its New York showroom. Matthew Keegan, the creative director there, says the deal sites have approached them (and not the other way around) because of the variety of bags they offer, particularly of discontinued colors or otherwise tough-to-get items. "We are the ones who have been approached," he says. "It's because we offer a good range of sizes and styles that are hard to find." Keegan confirms that Madison Avenue Couture sold to Rue La La, but said he couldn't discuss any other deals.
Those involved in online Birkin sales are reluctant to divulge how transactions actually take place — probably because they don't want to get into trouble with Hermès, who undoubtedly don't want their product cheapened by an internet transaction. Also, the bags often sell for more online than they do in Hermès boutiques, even though they're pre-owned.
While the sites are charging what seems like an unbelievable amount for the bags, Craig says they're certainly also paying a lot to get a hold of them — in large part because they can use Birkin events to up their cachet, even if they don't make a profit. "It''s the prestige of saying, this place sells Hermès bags, so all their stuff must be great," she says.
But Gilt's Rao denies the notion that Gilt sells Birkins just for cachet. "It's not about saying we have to get Hermès on the calendar. It's about bringing covetable products to our customers," she says.
Craig says customers are willing to pay the high prices because "they don't want to wait."
"I know women who have paid $100,000 online for a crocodile bag. The market can take these prices. But I wouldn't pay them. I don't think that it's necessary to pay that premium," she says. "To me, that's the ultimate fashion victim."