Used luxury bags market hits $17.5 billion, online sales on the rise
The market for used luxury bags, watches and jewellery hit 16 billion euros ($17.5 billion) last year. (©caimacanul/shutterstock.com)
PARIS - Would you fork out $8,000 for an old handbag? For fashionistas who simply must get their hands on a rare model from an iconic brand, the answer is an emphatic yes.
Thanks in part to the economic downturn, some of the stigma of buying second-hand accessories has eased in recent years -- although many buyers still prefer to use euphemisms like "pre-owned".
The market for used luxury bags, watches and jewellery hit $17.5 billion last year, according to a study by the consultancy Bain and Altagamma, an Italian body representing luxury goods manufacturers.
And while 80 per cent of the sales are still in bricks-and-mortar shops, online sales are rocketing, their study found.
"If you add up the sales of all the big luxury groups for the past 20 years, you're talking about two to three trillion euros of merchandise sitting in people's closets," said Loic Bocher, co-founder of Collector Square, a website that touts itself as giving "another life" to luxury items.
The website, which launched just two years ago, did that for 5,000 luxury cast-offs last year.
A quilted blue Chanel, a Gucci made from python-skin, or a brown pony-hair Fendi Baguette: Collector Square has more than 1,600 bags on its site, including over a dozen Birkins, the legendary Hermes model that is by far its most sought-after.
"The Birkin is most difficult to get hold of and often sparks overbidding, but you need to be aware that it is not at all representative of the second-hand market," said Bocher.
The most highly prized second-hand Hermes models can command prices up to 20 percent higher than their brand-new equivalents, while other pre-owned brands sell at a discount of between 30 and 90 percent, according to a study by Exane-BNP Paribas published in March in colloboration with the website InstantLuxe.
For a Birkin, "the market goes crazy: a bag can be sold within a few hours and hit 10,000 or even 14,000 euros. It's the Rolls-Royce of handbags," said Yann Le Floc'h, the founder of InstantLuxe, which saw its business double between 2013 and 2014.
Carefully cultivating desire
Designed for actress and singer Jane Birkin in 1984, the bags are hand-made in France and come in a variety of sizes, colours and leathers. The bags are instantly recognisable by their flap fastener and padlock, with the classic 35-centimetre model in calfskin selling new for 7,400 euros.
It is not hard to see why Birkin fans are taking to the Internet: you can have one hanging off your arm in just a couple of days.
It could take months to find a new one in a Hermes store -- the brand carefully controls supply -- especially if you are set on a particular colour or leather.
"That's the key to luxury: carefully maintain a gap between supply and demand," said Bocher. "And the brands work so hard to cultivate desire."
For Le Floc'h, one explanation for the online second-hand rush is that people's views on luxury products have changed. Today, it is "the state of mind of using a luxury product" that is important, whereas "before it was owning and handing down".
Asian customers in particular are driving the Birkin buying spree, Le Floc'h added.
"It's the Chinese who have dictated the Birkin market," he said. "Two years ago the 35-centimetre model was the norm, but today it's the 30-centimetre model because there are more Asians on the market," and they prefer smaller bags.
Clamour for one particular Birkin led to it setting a record recently for the most expensive handbag ever sold at a Christie's auction.
The fuchsia-coloured crocodile-skin number, with a white gold clasp and padlock encrusted with diamonds, was snapped up by an Asian phone bidder for US$222,912 in an auction that saw "fast-paced bidding from start to finish", Christie's said in a statement.
Luca Solca, an analyst at Exane-BNP Paribas, said much of the European demand for second-hand luxury bags is suspected to be from 'daigou' -- Chinese middlemen who buy second-hand products in excellent condition in order to sell them in China as new.
In order to ensure the authenticity of the items sold on their websites, both Collector Square and InstantLuxe call upon experts, who also evaluate the condition of the bags.
But it remains unclear what impact the thriving online second-hand market will have on luxury brands that go to great lengths to control their sales.
"We give value to these products and prove that they're timeless," says Bocher in defence of websites like Collector Square.
"And for the brands, it's better to have a structured second-hand market with checks on authenticity."