How much does the average Hermes wallet cost

Handbag as an investment: return with the Birkin Bag from Hermès

This article was published on September 12, 2018 by Orange - the young portal of the Handelsblatt.

Victoria waited two years to be allowed to buy her handbag. For 12,000 euros. Before that, the dealer didn't want to sell her any. The 29-year-old had to register on a waiting list. In spring the time had finally come. The Düsseldorf resident was allowed to pick up her order: a gray leather bag, model Birkin Bag.

Hermès: Almost one billion euros in profit in the first half of 2018

The name causes gasps in women all over the world. The noble handbag stands like no other product for the luxury manufacturer Hermès - and for its gigantic success. In the first half of 2018, the French family business earned almost one billion euros before interest and taxes. If Hermès has a turnover of 1,000 euros, the company has an average profit of 345 euros.

One reason for Hermès' success: the luxury manufacturer deliberately keeps the range of its products small. Even more: the company itself determines who can buy a Hermès handbag. That puts customers in a real frenzy - and turns the articles into a lucrative investment.

Because Hermès makes its handbags so rare, a real stock exchange has arisen on auction sites such as Ebay and on special portals on the Internet. Customers who don't want to wait that long sometimes pay more for a handbag than the original price. Even year-old Birkin Bags can still be bought online for tens of thousands of euros. Victoria, too, who doesn't want to read her real name in an article, thinks about selling her new piece of jewelry again after buying it.

The success story of the Birkin Bag begins in 1983. British actress Jane Birkins tears her straw bag on a plane. Golden lipstick sleeves roll over the floor from their raffia basket. The person sitting next to you, a graceful balding man, rushes to help her. It's Jean-Louis Dumas, head of the family company Hermès.

Origin of the Birkin Bag by Hermès: The cult handbag was created with Jane

Together they pick Birkin's belongings off the floor. "Why do you always carry that unwieldy basket?" Asks Dumas. The actress replies that unfortunately there is no bag in which to stow all her things. Dumas thinks about it for a moment and then draws his first draft of a trapezoidal leather bag with two handles on a spit bag. The simple black tote bag will be with Jane Birkins for the next thirty years. And make Dumas rich.

Today the Birkin bag is one of the most important sales drivers for the French fashion brand Hermès. The starting price for the 22 centimeter high and 30 centimeter wide bag is 6,600 euros. Despite the high price, Hermès has no problems finding buyers. The waiting lists for the status symbol on four feet are long. Hermès boutiques only sell to customers who already know them, according to a book by columnist Michael Tonello. The message behind it: Not every customer is worthy of a Birkin Bag.

All of this makes the bags popular all over the world. They achieve top prices on websites like rebelle.com. A classic Birkin bag gains more than ten percent in value every year, according to a study by the online retailer Baghunter. In the past 35 years, Birkin Bags have even grown by an almost unbelievable 500 percent.

Some limited editions cost as much as a single family home. The auction houses are happy. Four years ago, a fuchsia-colored Birkin bag made of crocodile skin was auctioned at Christies in Hong Kong for 223,000 euros. The gold fittings are adorned with diamonds. The model is a rarity. Hermès should only produce two of these per year.

Birkin Bag by Hermès: Higher return than stocks in the S&P 500

People like Fanny Moizant benefit from the hype. The 43-year-old entrepreneur founded the leading European sales community Vestvaire Collection with friends in 2008. She specializes in selling second hand fashion. The handbag segment generates 35 percent of sales. Particularly in demand: luxury handbags. They sell in no time. A black Birkin bag was gone after 17 seconds.

Fanny Moizant is certain: “With a good knack for brand and style, you can earn a lot of money with handbags in a short period of time.” The color of the bag doesn't matter. This is shown by the example of an investment banker from Paris. “The pink model wasn't her color at all,” says Moizant. She bought the bag anyway. For her three year old daughter. Now the handbag is wrapped in tissue paper in the bank safe, waiting for the girl's 18th birthday. Not a bad investment.

Last year, the online retailer Baghunter compared the development of various forms of investment between 1980 and 2015: American stocks from the S&P 500 index, gold and the Birkin bag. The result: the noble handbag has been the most profitable investment over the past 35 years with an increase in value of 14.2 percent per year.

Stocks in the S&P 500 index gained an average of only 8.7 percent. Gold has even lost 1.5 percent, according to the online retailer. Even crises on the stock exchanges in the meantime could not harm the Birkin Bag. Baghunter writes that their value has never fallen in real terms. Second-hand platforms are also benefiting from the Birkin boom. Even with websites like sacdeluxe.fr, which offer bags for hire, there are waiting times.

Hermès Kelly bag: 24 hours to make one copy

And the Birkin bag is just one example. The Hermès Kelly bag is also a promising investment. The handbag has been on the market since 1935. The square model achieved great fame in 1956, when Princess Gracia Patricia of Monaco used it to cover her pregnancy. Today Hermès sells the bag for prices starting at 7,000 euros. A worker needs between 18 and 24 hours to manufacture them.

The used Kelly Bag is available for an average of 5,270 euros. However, certain color combinations are also sold at a new price or more expensive. This shows that by far not all bags are suitable as investment objects. Dan Wade from Just Collecting knows what is important. He says: “99.9% of all handbags are not investments. Only the most expensive and high-quality handbags offer potential. "

The condition of a handbag is also crucial. Buyers pay premium prices for handbags in perfect condition. "Signs that the bag has been worn very often can make reselling it impossible," says Wade.

So if you want to get a designer handbag as an investment, you should first ask yourself a few critical questions:

  • How long will I wear this bag?
  • Will the quality promise come true?
  • Does the brand have a unique characteristic?

At Hermès, the unmistakable H logo is crucial, similar to the intertwined C’s from Chanel. These designs brought the brands world fame.

Younger design houses can do that too. Chloe and Valentino are good examples. The unmistakable rivets from Valentino or Chloe’s Saddle Bags are trademarks that pay off. The number of pieces produced and whether the handbag is a limited edition are also important indicators.

A sudden stop in sales can add value to a bag overnight. But the most important component is the brand. Handbags from high-priced brands don't look alike. The materials used are also different. But they all have one thing in common: a legend.

This myth could now be reinforced at Hermès. Because Jane Birkin wants to end her sponsorship. After thirty years. Without notice. She is demanding her name back - and suing the company because crocodiles are being slaughtered for some of the Birkin Bag models.

If the actress actually wins the dispute and Hermès has to rename the bags in the future, customers who already have a Birkin bag should be particularly pleased. Their value will then go through the roof even more.

More: These 8 tips will help you sell classified ads successfully on eBay