A new study is making the rounds online, claiming that an Hermès Birkin bag is a better investment than stocks and gold. But it doesn’t really make sense.
The claims come from online luxury bag reseller Baghunter, which incidentally, invites readers to view its collection of “rare” Birkin bags at the top of its study. Baghunter compares returns on the S&P 500, gold and Birkins since 1980, when the bag was first produced, ultimately concluding that ahead of a potential global recession in 2016, the bags are “the safest and least volatile investment market.”
Theoretically, it makes sense that a $10,000 Birkin is likely to retain its value and potentially appreciate in the future given the bags’ tight distribution and history of popularity, kind of like a famous painting or special antique. But it’s not really comparable to a popular commodity or the stock market.
1. The market for Birkins is absurdly small compared to stocks and gold
The websites that claim it’s super easy to resell a Birkin at or above its original purchase price didn’t even exist a few years ago, and may not exist a few years from now. And while the S&P 500 and gold have good and bad years, the size of each market is in the trillions and you can buy or sell instantaneously.
Thanks to the size of the stock market, if Apple shares are priced at $100 each, that’s the price you’ll be able to buy or sell them at. There’s no such guarantee when it comes to rare handbags, and the returns cited by Baghunter don’t take into account how easy it was to find a buyer, or the hassle of haggling over prices with a buyer or reseller.
2. Investing in Birkins means you have to buy and sell in units of at least $10,000 which makes zero sense for a regular person
You can’t buy or sell half a handbag.
3. There’s no guarantee that the brand value will hold
Birkins got a lot more popular at the turn of the century — will the prestige remain? As Bloomberg News said in a story last year, Hermès “relies on the bag’s perceived exclusivity and prestige. If the world knew how many bags were churned out every year, the luster would likely dim.”
Or as my friend put it: “These are instruments that don’t produce cash (unlike the stock of a company) and have no inherent use (as opposed to a car or house), so they only have worth because people want them.” People are fickle!
4. You’re going to have to spend a lot of time protecting that Birkin
Let’s say you obtain a Birkin and want to sell it for a profit in 2020, assuming the brand is still hot and you can find a buyer. If you plan on getting top dollar, it will be best if you barely/never use the bag, avoid thieves and disasters like your house burning down, and maintain its condition the best you can, preferably in climate-controlled storage. Commodity and stock markets don’t work this way. You can’t ruin gold by spilling Starbucks on it.
5. It’s more expensive to sell a Birkin than a stock or commodity
Want to sell your Birkin on consignment through Baghunter.com? The company says it “takes just 30% as a base fee” on consignment sales. That would mean $3,000 in fees on a $10,000 bag.
Selling $10,000 worth of shares through E-Trade, on the other hand, would come with a $10 flat fee — or 0.1%.
Because of the size and specialization of the market, the commissions at auction houses and secondhand websites will dwarf what you have to pay to trade stocks or commodities. And beyond that, these markets are not regulated and monitored the way public exchanges are, meaning you’re exposing yourself to all sorts of risks.
Overall, it’s just not an apples-to-apples comparison.
Rati Levesque, chief merchant at secondhand luxury website The RealReal tells BuzzFeed News that while the secondary market price of Birkins tends to increase every year overall, they don’t always sell for more than their purchase price.
“It depends on the condition and how rare and coveted the bag is in color and material,” she said in an email.
“We’ve never compared it to investing in stocks,” she said. “It’s a different type of investment — we view it as the same as purchasing a piece of art. It epitomizes luxury and it’s a beautiful, heritage piece that most women want for that reason.”
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