Vol.01: Handbags - The new asset class?
Your bi-weekly newsletter covering the latest in fashion, tech and wellness
If you know me, you know that the topic for the first newsletter is everything but accidental. If you don’t know me yet, here’s a brief recap: I registered my first eBay account at 14, then membership with Purseblog at 15. Fast-forward to today, I am an Expert seller on Vestiaire Collective and I have owned pretty much every bag that has been considered “IT”.
My mum would typically freak out every time she sees me with a new handbag, and the conversation would go something like:
Mum: “Why did you buy another handbag, I thought you just got one?”
Me: “Yass… that one! I bought it purely as an investment”
Mum: “…but how could it be, it’s just an accessory?”
*OR IS IT* - stay tuned to find out below
Handbags were the #1 collectible investment in 2019, beating out art, stamps and rare whisky, among other categories, according to this article from CNBC. The most expensive handbag ever sold was a white Himalaya crocodile diamond Birkin, auctioned by Christie’s in 2017 for $379,261. For us more normal-income, feet-on-the-ground beings, let’s explore what makes handbags an investment and what to look for when making a purchasing decision.
Let’s look at the Investopedia definition of an “investment”.
I have added numbering to chronologically explore each part (#3 is a bonus feature!)
Asset = Handbag, with various features (brand, material, condition when bought, vintage)
Appreciation = Appreciation depends heavily on the type of handbag (brand, material, condition when sold, vintage, popularity, supply / demand etc.). According to wealth-researcher and real estate firm Knight Frank, Hermes Birkin = 13% annual increase in 2019.
Intent = Usually, an asset for investment is not consumed, but with handbags, you can use it *:)* without it losing much value (some exceptions apply)
Let’s deep-dive into the asset itself – which styles are best suited for investment?
As with any investment, timing is a critical element for understanding which asset (handbag) is going to be the most suitable. If you are looking to flip it quickly, look for styles that are trending (for this you can for example use the Lyst Index). Here you will typically find “trend” bags such as the Dior Saddle Bag. The bag, designed by John Galliano, debuted in 1999 in Dior’s S/S 2000 collection, and was quite popular at the time. Then it was literarily shoved in the inner part’s of people’s closets for nearly 18 years (I still recall you could get a very good condition sample for $200 in Vestiaire Collective 2 years ago) before reappearing as an “IT” bag when Dior decided to relaunch (current RRP €2,600). In these cases, the whole second-hand market pricing will adjust to the market price. Bags with somewhat similar stories include Prada Re-Edition 2005 Nylon bag, and according to myself, will include from next year, the Chanel East-West bag which is rumored for a relaunch.
If you’re looking to buy a timeless bag, there is no doubt that bags from Hermès and Chanel hold the best value. As I personally find Hermès bags quite a boring topic (you can read more about the bags in this guide), I will provide a more detailed guide for Chanel. The Chanel 2.55 bag (launched in February 1955), has consistently been Chanel’s most popular style with its quilted leather and shiny hardware. When launched, the bag retailed at $220 and today its yours for £3,000+ (depending on size and design). According to Yoogi’s Closet (one of my personal favourite resellers!), Chanel increased its prices this year by 8-12%. Other styles dubbed “timeless” are also in high demand in the second-hand market, and elements that typically add value to the bag are e.g. visible Chanel logo (+ CC turn-lock), black or beige colour, double-strap (so the bag can be worn cross-body or over-the-shoulder) as well as limited edition styles. Other good investment bags worth mentioning are the Louis Vuitton Speedy Monogramme in 25 or 30 size (read more about it here) and Fendi Baguette or Peekaboo.
Now that we know which styles are selling like hot baguettes, where do we source them?
Today there are many places to acquire handbags, and if you’re looking to maximize your return on investment, you rather be buying it:
(a) new on sale directly via brand’s own site;
(b) new on sale from third-party; or
(c) second-hand.
(a) Most brands offer seasonal discounts via their own websites (either in store or online), but you are less likely to find a good investment bag through this channel (unless it’s a collector limited edition piece) as the stock typically will be “trend”-oriented (think bright colours, patterns or distinct looks made for the specific season and year). If you purchase a bag via a brand’s own outlet store (such as Bicester Village), you are more likely to find less “trend”-oriented stock, and actually find timeless pieces or even new collection items (but be aware that some brands occasionally produce separate quality stock for outlets). Sample sales are also a great way of potentially getting a timeless staple at a fraction of the price, and there are multiple vendors offering single- or multi-brand sample sales (Showcase, Arlettie +). Check out Chicmi for an extensive list.
(b) There are also several discount retailers offering good-value for money pieces, although the stock tends to be limited and several seasons older than via option (a). Good places to seek out could be members-only platforms (e.g. BrandAlley, Otrium, BestSecret) or discount multi-retailers (e.g. TheOutnet, Yoox, TK Maxx). Additionally, search engines (e.g. Lyst, ShopStyle) provide useful aggregation tools to compare prices, track items and receive alerts when your desired items go on sale.
(c ) Second-hand could offer both amazing opportunities and disappointing stock as the availability of items can be lower and more random. Authenticity and the item’s condition could also be a problem, but you can do some of the biggest bargains through this channel if you’re lucky. Marketplaces (e.g. Vestiaire Collective, Luxury Promise, Cudoni, Designer Exchange, HEWI) offer a large selection of second-hand items and also pre-authenticates each item before sending it to buyers. However, due to high commissions and well-informed pricing analytics, you will often find certain products more expensive here than if you visit smaller second-hand retailers. Auctions are also great places to source discounted stock (e.g. Bukowski’s, Chiswick Auctions).
Another dimension to consider for realizing gain on value, is where to list your bag. Several large secondhand platforms exist, but they are all famous for charging hefty commissions. Please see below for current commissions for select UK players:
VC: £0 – 130: £13 flat; £130-6,500: 15%-20% progressive; >£6,500: £1,300 flat
Cudoni: 30%+ “You can earn up to 70% of the sales price for your items. The more you sell, the cheaper it becomes to sell.”
Luxury Promise: £0-2,999: 35%; £3,000-4,999: 28%; >£5,000: 18%
Why is the commission so high (ffs)?
To quickly understand the need for high commissions, it is essential to understand what these marketplaces must accommodate when accepting bags (and other products) to their sites. In short, they are covering: authentication (typically done manually in-house), shipping (sometimes both to their own warehouse and then to the buyer), insurance (on shipment), warehousing (inventory), marketing / selling (photography, physical store presence, social media) and powering tech / support (website, customer service).
What’s next in the handbag market?
Trends:
More second-hand retailers emerging
New formats for offering / consuming handbags:
Rental platforms: byRotation, Rotaro
Bag clubs: Cocoon
Likely to occur:
Commission decreasing over time due to increased competition
Logistics disruption: innovative, cost-efficient solutions for authentication, shipping, insurance and warehousing
Over-supply stemming from historic buying frenzy and current unprecedented clearance wave causing prices for certain styles to fall
Startups to watch:
Entrupy, technology-driven authentication solution for luxury accessories
Luxury Promise, AI-based authentication marketplace for luxury handbags
Sellier Knightsbridge, Consignment luxury store with a pivoted business model (selling predominantly via Instagram, 95% online), forecasting £5m NTM sales
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