Rainmaker

The Luxury Series: Secure the Bag

The Luxury Series: Secure the Bag

You have $100K to invest.

Select either Mr. Big or Carrie to manage your money.

Mr. Big runs a hedge fund which aims to outperform the stock market. He invests in gold, stocks and corporate bonds

Carrie invests in Birkin bags and sometimes in stamps (yes, stamps)

Who do you pick?

Now if you chose Carrie – congrats, over the past 35 years she would have made you 2.5x the returns of Mr. Big. In fact, since more than 50% of hedge funds fail – Mr. Big would have liquidated your investment to fund his terrible coke habit.

Here’s how the different investments stack up over a 35 year period:

Hedge funds make just 6% on average

The US stock market makes 11% a year

What about the returns from a Birkin bag?

The value of a Birkin has gone 500% across the last 35 years translating to roughly 14% per year. In fact – Birkins outperform the stock market nearly every single year.

Last year handbags (followed by stamps) were the number one collectible investment outperforming wine, whiskey, watches and even art.

Now take a few seconds to look at the bag below, how much would you spend on it?

$1k?

$10k?

$50k?

This bag has sold for $500k (R8.5m).

It’s the “holy grail” of handbags, the white Himalaya Birkin bag. Made from Nile Crocodile hide which undergoes a special dye process turning it a special white that fades to a smoky grey. It also features 18-karat white gold and more than 200 diamonds. You’re probably reading this thinking, investment purposes aside, this is an absurd amount to spend on a handbag – what makes this so special?

The anatomy of a Hermès Birkin

Scarcity – You can’t buy it. No, seriously. You simply can’t walk into a Hermès and buy one. Chances are even sales associates haven’t sold one before. Hermès claims store directors can place seasonal orders twice a year and they may fulfill the order 12 months later. Waiting lists don’t exist at Hermès stores – so you can’t place an order either.

Welcome to the slightly dystopian universe where you have $12k (R200k) to spend on a handbag but nobody will sell it to you. Searching for insider hacks on how to buy a Birkin online is an absolute rollercoaster. Testimonials range from the far-fetched & jaw-dropping to downright tragic.

Here’s a few “tips” from those who have been fortunate enough to snag one:

“Build up a reputation by paying for many other things over a long period of time before asking about a Birkin.”

“Leverage your American Express Black Card and use your concierge to place the order”

“Look “deserving” of the bag”

“Just go to the store & ask” (this is my favourite)

Needless to say, it’s incredible to see the lengths someone is willing to go to secure the bag.

The kicker? In the very unlikely chance you’re offered a Birkin, you won’t be able to choose the colour or the size. You pay for what you’re given.

Workmanship – The culture of desirability is born from the production. All Birkins are handmade and it takes 48 hours to create a single bag – but that’s the culmination of years in the hustle.

Being a Birkin artisan resembles a 80s karate movie – those flicks where you spend years in a remote forest surviving off miso soup, getting your ass kicked by a remarkably agile 75yo sensei and learning how to catch insects with chopsticks before avenging your family’s honour. Birkin artisans are trained for 5 years before they are allowed to touch the hide used for the bags. In some instances artisans work for up to 10 years before they’re allowed to create a Birkin. An artisan needs to master the craft of consistency, traditional techniques and perfect precision. Birkins are double stitched with the same quality of leather used in the interior and exterior. Only the best 10% of the leather hide Hermès inspects will get used.

Symbolism – At the core of every great product is an origin story which is easily passed on, repeated & fuels the gravitas. Look no further than Batman – the wealthy orphan who witnessed his parent’s murder. He grows up to beat even minor offenders senselessly. The origin story is so powerful you overlook how he leverages unresolved past trauma as an excuse to justify vigilantism and a fetish for leather. Some origin stories don’t even need to stack up – case in point, Victoria’s Secret.

Roy Raymond (founder of Victoria’s Secret) wanted to establish a store where men could buy lingerie. He felt like an “unwelcome intruder” trying to buy lingerie for his wife. Roy spent 8 years studying the lingerie market before launching Victoria’s Secret. The store was named in reference to Queen Victoria and the associated refinement of the Victorian era, while the “secret” was hidden underneath the clothes. Not a happy ending though – the business went under, Roy ended up divorced and committed suicide.

The Birkin origin story is a bit more cheerful.

English actress Jane Birkin found herself on a flight from Paris to London seated next to the chief executive of Hermès, Jean-Louis Dumas (I usually end up seated next to the person who insists on taking up the arm-rest).

Jane kept all her stuff in a wicker basket, tried to stuff it in the overheard department and everything fell all over the place. She complained to Dumas. Dumas introduced himself as the head of Hermès (in a posh French accent, probably), and the pair spent the flight sketching possible handbag designs on the back of an airplane sick bag and the rest is history.

A year later, Dumas presented Jane with the Birkin bag, a spacious & sophisticated leather bag perfect for everyday use. One of the key distinguishing factors of Birkin has always been the emphasis on utility and function. In fact, many people actually use their Birkins (as opposed to just posing with them). It’s a strange concept in the luxury handbag world when bags are actually used. Birkin finds itself in the sweet spot of practical use, high end luxury and a rich history underpinning it.

A hundred thousand on the bag (A hunnid)

That’s a whole lotta cash (Cash)

I bought a bag, it made ’em mad (Bag)

I bought the bag just to brag

Whoo, whoo, whoo, whoo

Migos (Birkin)

The allure of the Birkin is in no way confined to women. What better flex symbol than a bag than a bag which bleeds exclusivity? Drake (the rapper, not a male duck) has been collecting Birkins for years and insists it’s for his “future wife”. Of course there’s absolutely nothing wrong with him collecting it for himself considering their utility and investment value. The statement piece in Drake’s collection? None other than a Himalaya Birkin.  

I don’t have $100k lying around, what about other bags? 

The universe of super premium designer bags extends across Louis Vuitton, Chanel, Balenciaga, Gucci, Dior and Prada. Different bags within these brands retain value differently. 

Source: The Luxury Handbag Market

Why doesn’t every brand aim to be “ultra luxury”? That’s easy – being in different segments of the market is good for business. Certain brands deliberately position themselves as everyday luxury. The next time someone turns up their nose at your Michael Kors bag, remind them Michael Kors owns Versace (they bought Versace for $2.1bn in 2018).

Prices indexes reflecting the latest in handbag prices aren’t frequently updated so it can be tricky to figure out what each bag is worth. A great solution is to traverse second-hand sales websites to triangulate value. Here are some strong platforms worth checking out:

  1. Luxity (South African)

A very impressive local outfit with a massive range of luxury bags which would ordinarily only be available to South Africans who need to hop on a plane to Dubai, Paris or London to shop. The stand-out feature on Luxity is their commitment to authenticity. They offer a lifetime return policy – if you prove that any item purchased from Luxity is a counterfeit or fake for a 100% refund (including delivery costs)

2. The Changing Room (South African)

Vast selection of high-end branded items with a really seamless interface – clearly plenty of thought has been given to user experience. Most items are in great condition. Range extends across products – I spotted a Dolce & Gabanna sleeveless ruched and pleated emerald green silk dress for less than $250 (R2,550).

3. Rebag (Global)

Rebag offer an “Infinity Exchange” which is basically the option to return your purchase within 12 months in return for up to 80% of the purchase price. If you like to swap out bags regularly, it’s a pretty useful way to upgrade your bag without having to purchase them at full price.

4. Fashionphile (Global)

One of the world’s leading  second-hand stores online for luxury handbags. The site offers pre-owned handbags from across most luxury brands, including Balenciaga, Céline, Fendi, and Christian Dior. They also offer a buy-back programme.

Searching for a steal

It’s really useful to compare the condition of each bag to make a comparable and qualified judgement. A bag in “fair” condition has heavy wear on one part of the bag; it presents moderate wear in the interior and on the exterior including handles, corners and wax edges. A bag which is “pristine” is in excellent condition and is often part of a popular or exclusive collection.

Naturally, you expect to pay a premium for bags that are kept in better condition. An additional data point is comparing the used bag price vs. the new bag price. In some cases the difference can be up to 80% depending on condition.

For the purposes of this BankerX piece – I went shopping for a  Hermès Kelly Ghillies Handbag Rubis Tadelakt with Gold Hardware. Also because I felt this particular bag would really go well against my complexion.

The quoted Rebag price is $12,765. If you had to buy it on auction on Christies, you would pay just under $14,000. Most sites have a “gently used” version upward of $14,000.

If you dig really deep you can find one for under $11,500 on eBay. But should you opt for an eBay purchase?

It’s estimated 90% of all Louis Vuitton handbags sold on eBay are fake.

One of the biggest threats to the luxury handbag business are fakes. Hermès sued several websites for selling fake products and won $100 million in damages. Of course, it’s physically impossible for them to shut-down every fake handbag sales site. 

The next section may lose you a ton of friends & we’re not responsible for the fall-outs you may have when you loudly spot a fake at the next girl’s brunch… but here’s a few pointers on how to spot a fake.

Spotting a Fake

Logo: High-end brands have unobstructed logos. You will never find an authentic Louis Vuitton with a cut-off L or half a V. The logo will never be cut off by a zip, overlapping seam or buckle.

Workmanship. The stitching should be perfectly even. No loose threads or back-and-forth stitching at the end of a seam – that’s a sign of sloppy construction.

Lining. It’s very easy to tell from the colour, feel and overall look whether it’s a bang up job inside.

Pockets. Fake bags often have dummy pockets. Oh, here’s a zip… oh wait, it does nothing.

Place of manufacture: Some counterfeiters routinely mark Louis Vuitton knockoffs “Made in France.” Louis Vuitton products are also made in Italy, Switzerland, Germany and Spain. Every country has its unique code. Since 1983, Louis Vuitton has used a six-character date code stamp for its handbags

Misspellings. If you end up with Timmy Middlefinger instead of Tommy Hilfiger or Louis Fitton, yeah – that’s a fake

Eye-wateringly expensive handbags emblazoned with monograms of French designer companies are great & the allure of replicating the hottest celebrity fit can be tempting – but ultimately it comes down to the best outlet for self-expression. Oftentimes it isn’t found on the catwalks of Milan or the store retailing $100k bags… but buried deep in the recesses of a thrift store or in the DIY pair of torn up jeans reborn as a pair of shorts.

“Fashion fades, only style remains the same” – Coco Chanel

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Johan
Johan
2 months ago

Always learning something new

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