[HN Gopher] The Secret Economics of the Birkin Bag
___________________________________________________________________
The Secret Economics of the Birkin Bag
Author : gsatic
Score : 55 points
Date : 2023-07-23 06:20 UTC (1 days ago)
(HTM) web link (businessday.ng)
(TXT) w3m dump (businessday.ng)
| GoofballJones wrote:
| I've heard of them, but never investigated anything about them. I
| just now looked them up and new ones are selling for like
| $20,000.
|
| I don't think I'm their target consumer.
| kyleblarson wrote:
| I'll stick with my Crocs, 10 year old hiking backpacks and Timex
| iron man watch that I got when I was about 12.
| tivert wrote:
| https://www.nytimes.com/2023/05/04/magazine/celine-chanel-gu...
| (Inside the Delirious Rise of 'Superfake' Handbags)
|
| > This led me to a Reddit community of replica enthusiasts, who
| traded details about "trusted sellers" capable of delivering a
| Chanel 2.55 or Loewe Puzzle or Hermes Birkin that promised to be
| indistinguishable from the original, and priced at a mere 5
| percent or so of the M.S.R.P.
|
| > ...
|
| > What was once a sly novelty has bloomed into a gigantic market.
| In 2016, a Virginia woman was sentenced for buying $400,000 worth
| of designer purses from department stores, returning high-quality
| knockoffs and reselling the real bags for profit; the stores went
| years without catching on.
| mighmi wrote:
| > This led me to a Reddit community of replica enthusiasts, who
| traded details about "trusted sellers" capable of delivering a
| Chanel 2.55 or Loewe Puzzle or Hermes Birkin that promised to
| be indistinguishable from the original, and priced at a mere 5
| percent or so of the M.S.R.P.
|
| There are amazing counterfeit watched to be had. For better or
| worse, suits don't work like this. Instead, you find a Tailor
| in Vietnam or Colombia, who will make you something great for
| $2-300. But the best materials/fabrics aren't accessible
| without paying thousands. That said, these days, I rarely have
| the opportunity to wear suits.
| Zircom wrote:
| Do you have to travel to those countries to get fitted or you
| just send them the measurements and have it shipped to you?
| whynotmaybe wrote:
| My tailor from Thailand flew in to Brussels and I met him
| at an hotel where he took my measurements.
|
| A few weeks later, the suits were shipped directly to my
| home.
|
| He also had several customers in Germany and did the same
| for them.
| marssaxman wrote:
| If you live near Seattle, you can have a company called
| Ruby Threads manage the process - they make twice-yearly
| trips to Vietnam, returning with made-to-measure custom
| suits:
|
| https://www.rubysuits.com/
| borroka wrote:
| I am not the above poster, but I have a semi-reliable
| tailor in Southeast Asia. They took my measurements a few
| years ago when I visited their country, and I send them
| size updates when needed. They have excellent fabrics in a
| variety of colors and weights.
|
| I have seen that there are pros and cons (with this
| particular tailor, others shops can be more professional,
| but they are also more expensive, sometimes much more).
|
| Pros: hard-to-beat price ($35 for a classic or sporty
| cotton shirt, $60 for wool/cashmere/denim/cotton pants,
| $150 for a wool or cotton sport coat, $200-250 for a suit)
| for something that is somewhere between bespoke and made-
| to-measure, opportunity for low-cost explorations (let's
| say I have a few unique garments), playing with details and
| fabrics.
|
| Cons: communication is often challenging (most speak broken
| English, which demands a good deal of patience and
| intuition), they are not very detail-oriented (some of the
| uniqueness of the garments were not sought by me, e.g.,
| e.g., bizarre button placement or pocket shape, etc.),
| quality of garments can vary unpredictably, and they are
| always asking for more business, which can be tiring.
|
| The other option is to buy on eBay, as I have been doing
| for some time. Although most pieces are priced correctly,
| some are much cheaper than they should be. I have bought
| fantastic, semi-current suits (say, suits that are 10 years
| old, but with classic features, meaning they are relatively
| "timeless") that have been used sporadically (the color of
| the ink on the label is a tell, some have been used once or
| twice) for $150 when new they would have cost 10 or 15
| times that.
|
| But I get much more satisfaction when I order clothes from
| my tailor. Those are pieces "designed by me", for me.
| ghaff wrote:
| When I used to sometimes get suits etc. made, I went into a
| tailor on trips to Asia. Presumably, assuming your
| measurements didn't change much, you could reorder things
| and get them pretty close though I never did that.
|
| Just sending your measurements will essentially give you
| something semi-custom. When a tailor takes your
| measurements, you usually go back and they do a little bit
| of nipping and tucking of a suit before you take it away.
| Other articles of clothing like coats require less
| precision.
| ForestCritter wrote:
| Being both a craftsman and having worked luxury handbag retail,
| I can tell you right now that I could spot the difference in
| construction quality and after a couple months of wear, the
| disatrous difference. I also highly doubt that the 800$ price
| tag reflects the overhead , advertising, packaging, retail
| store markup required to run the store and the salary +
| commission it takes a dedicated salesperson to go through the
| special order process it takes to sell one of these bags.
| er4hn wrote:
| The part about the margins always annoys me. They are comparing
| final cost to cost of goods + labor to manufacture, but there are
| other components than that. There is the cost of stores, of store
| staff to sell you the bag. The executives salaries who do not
| make the bags themselves.
|
| This comes up in tech as well. The cost to manufacture, say, a
| CPU, is very low compared to how it is sold. But you are paying
| for a lot of R&D that guided the CPU design. How are these things
| factored in? I'm sure that there is a word for this factoring in
| of R&D, mgmt, and other costs, but I don't know what the term is
| to start learning more. Does anyone else know?
| ke88y wrote:
| The word _amortize_ -- "gradually write off the initial cost
| of (an asset) over a period" -- denotes exactly this concept in
| the English language. As in, "the market price of a CPU
| includes amortization of the initial R&D effort over the
| lifetime sales of the CPU".
|
| The problem is that it means something more specific to
| accountants and lawyers in practice.
| psd1 wrote:
| > Almost everyone can identify the provenance of Gucci's double-G
| spangled Dionysus shoulder bag; only initiates can spot a Birkin.
|
| I bet some large majority can identify an Hermes bag as an
| expensive bag, logo or no.
|
| And perhaps more importantly, there are circles on which an
| obvious G, LV or C is infra dig. It is a sign of a deprived
| childhood.
|
| So yes, the bag is absolutely about conspicuous consumption.
| hospitalJail wrote:
| I hope one day people are free from the grip of Veblen goods.
| Its probably impossible due to genetic causes, like a demand
| for status.
|
| However we may be able to educate people that 'you cannot buy
| class'.
|
| Its interesting how many lower income people have iphones,
| Jordans, Teslas/Mustangs/Corvettes but as soon as you hit the
| upper-middle class, these disappear in favor of the more
| practical/functional items of similar prices. Not to say that
| some in the upper-middle class don't waste money on a
| Ferrari/Lambo, but I imagine its the same thing, 0.1ers don't
| buy those products.
| ypzhang2 wrote:
| I doubt there is truth to the common trope that "REAL rich
| people don't buy X/Y/Z". Its a No True Scotsman argument. In
| actuality, Kelly / Birkin are appreciated by a wide spectrum
| of people, even folks who are "0.1%ers". Just like "0.1%ers"
| buy luxury cars. Hell, Bill Gates (a "0.1%er" squarely)
| basically lobbied for a law just so he can import a Porsche
| 959. Jerry Seinfeld has a huge car collection. If you want to
| argue "old money", Prince Harry has a Jaguar E-type and a
| F-Type. Luxury goods are enjoyed by the leisure class,
| period, because they have disposable income and like nice
| things.
| [deleted]
| [deleted]
| gamblor956 wrote:
| Upper-middle class people can't afford Ferraris or
| Lamborghinis. If you can afford either of those cars, which
| _start_ in the six-figures, you are not middle class, you are
| very definitely upper class. You can 't even get on the list
| to _buy_ one of these cars without a bank account balance in
| the 7 figures.
|
| Also...every major wireless company offers iPhones free or
| heavily discounted. iPhones aren't the luxury goods anymore,
| they're the cheap alternative.
| seabass-labrax wrote:
| From vodafone.co.uk: Samsung Galaxy A14 5G
| - PS15 per month + PS9 upfront
| PS563 in total (3yrs no inflation) Apple iPhone 11
| - PS32 per month + PS19 upfront
| PS1191 in total (3yrs no inflation)
|
| The iPhone 11 is being sold for PS480 on Amazon - I'm
| struggling to see where the heavy discount is.
| skibble wrote:
| Your comment about iPhone build quality is as anecdotal as
| they come. Here's my counterpoint anecdotal take: I've had
| pretty much every iPhone model since the iPhone 3G, and the
| tiny number of issues I've had have been straightforward (a
| free screen replacement as a result of a publicly
| acknowledged issue, for example). I also work in the repair
| sector (not for Apple), and have seen absolutely no
| evidence to support your claim that iPhones are dying left
| and right.
|
| When Apple do entire device replacements, this is simply
| because for weird issues it's a quicker and easier on-the-
| spot resolution for both the end user and the Genius Bar
| than spending days depriving the owners of pretty vital
| devices trying to reproduce odd issues. Articles abound
| detailing how exacting Apple are with suppliers, e.g:
|
| https://www.theverge.com/23743095/apple-watch-band-
| release-x...
| qzw wrote:
| I don't disagree with your overall point, but some of your
| examples are hardly Veblen anymore. Or perhaps we have very
| different definitions of upper-middle class. I live in what I
| consider an upper-middle class area, where median household
| income is about 3-5x the state's as a whole. Everybody has an
| iPhone and you can't throw a rock without hitting a
| Tesla/Mustang/Corvette. Jordans I won't comment on since I
| know nothing about sneakers, but I would argue the other
| brands are all no longer Veblen. My MIL used to buy only mid-
| range Samsung phones that would become slow or lose
| significant battery within a couple of years, necessitating a
| replacement. My wife finally talked her into getting an
| iPhone, and she's been using the same one for 4+ years and
| has no desire to replace it, because it's still working fine.
| And similarly for all the other people in my family and their
| iPhones. I personally still rock a Xs. So for us and millions
| of other people, iPhones are actually a better value than
| most alternatives. Similarly, the Mustang and Corvette are
| usually considered to be excellent values within their class.
| Sure they're toys, but they deliver a lot more performance
| per dollar than most fancier sporty cars. Tesla has been and
| arguably still is the best electric car brand. Add in the
| recent price reductions and the reintroduction of tax
| credits, some Tesla models now have final costs below the
| average new car price. Hardly a status indicator when you buy
| a car that costs less than many Hondas and Toyotas.
| ghaff wrote:
| I think we're getting away from the definition of Veblen
| goods in that it implies people wouldn't want a Tesla,
| Mustang, or iPhone as much if you cut the price in half.
| And that seems manifestly silly.
|
| On the other hand, I can absolutely imagine that a lot of
| the people who buy supercars would be less likely to buy a
| Lambo, given it's downsides, if it were something any upper
| middle-class household could afford if they wanted to.
| mucle6 wrote:
| If almost everyone has an iPhone/Telsa, but a few people
| don't, some people may begin to read it as a signal. In a
| sense, when veblen goods are popular in a community, they
| have become table stakes instead of status symbols.
|
| They're still veblen goods though even if they're table
| stakes. Because they became table stakes due to their
| price.
| adamsmith143 wrote:
| >Its interesting how many lower income people have iphones,
| Jordans, Teslas/Mustangs/Corvettes
|
| Yeah all those food stampers buying Corvettes and Teslas is
| so annoying. Lolwut
| mercutio2 wrote:
| You think iPhones are out of reach to poor Americans? Or that
| richer Americans don't predominantly use iPhones?
|
| I think I agree with your point about who's consuming
| positional goods, but... iPhones are a weird entry in your
| list of luxury goods.
| JohnFen wrote:
| There's some fascinating class-based spending behavior I was
| taught in school decades ago. I have no idea how valid it
| still is, but I presume nothing much has changed.
|
| What I remember finding the most curious on first glance is
| that people in the lower-upper income group are the most
| likely to be bankrupt within five years of hitting that
| income band. Bu the explanation made sense to me: at that
| income level, you begin to compare your lifestyle to those
| who are much wealthier than you are, so you feel poor by
| comparison. Therefore you're more likely to start spending at
| rates that the income level can't actually sustain, in an
| attempt to live like the wealthier people you have begun to
| compare yourself to.
| paganel wrote:
| I think what you're describing is very similar to the
| Diderot effect [1], which has been discussed in here
| several times (I'm too lazy to search for those threads,
| but that's how myself have learned about it):
|
| > The Diderot Effect is a phenomenon that occurs when
| acquiring a new possession leads to a spiral of consumption
| that results in the acquisition of even more possessions.
| In other words, it means that buying something new can
| cause a chain reaction of buying more and more things
| because the new item makes one feel like one needs other
| things to go with it or to keep up with it. This can lead
| to overspending and accumulating more possessions than one
| actually needs or uses.
|
| [1] https://en.wikipedia.org/wiki/Diderot_effect
| Cockbrand wrote:
| In case you're not quoting from it anyway, I'd recommend the
| book "Class" by Paul Fussell. It's a bit outdated, and often
| not really serious, but it takes this kind of observation
| quite far.
| bamfly wrote:
| I've found it _remarkably_ useful, despite often being a
| bit tongue-in-cheek.
|
| The insight on mirrored surfaces was especially
| interesting. I remember seeing a staged photo of some Trump
| kid & spouse with their own kid playing in a living room
| with a spotless mirrored table and was like "oh, hey!" Lots
| of fun bits like that.
|
| ... Actually, the entire Trump _thing_ was fascinating with
| Fussell 's instruction guiding one's experience of it.
| "Prole" fit on expensive suits. Middle-as-fuck taste in
| home decor ("if you're rich it means everything's huge and
| covered in gold, right?"). Still haven't figured out how
| much of it's genuine and how much of it's an affectation
| for marketing/personal-branding reasons.
|
| He got his hope-for-the-future "Class X" all wrong--just an
| upper-middle youth fashion wave, mostly--but otherwise it's
| still a surprisingly-useful tool for analysis, considering
| how old and half-jokey it was.
| steveklabnik wrote:
| > Not to say that some in the upper-middle class don't waste
| money on a Ferrari
|
| It is not actually possible to directly buy the fancy
| Ferraris. No matter how much money you have. It's a whole
| thing. You don't call them, they call you.
| addcommitpush wrote:
| The very next sentences explain why this is about conspicuous
| consumption:
|
| > The authors of "Signalling status with luxury goods: the role
| of brand prominence", which appeared in the Journal of
| Marketing in 2010, do so by dividing the rich into two groups:
| "parvenus", who want to associate themselves with other rich
| people and distinguish themselves from have-nots, and
| "patricians", who want to signal to each other but not to the
| masses. They theorise that more expensive luxury goods, aimed
| at patricians, will have less obvious branding than cheaper
| ones. Sure enough, they found that Gucci and Louis Vuitton
| charge more for quieter handbags and Mercedes slaps bigger
| emblems on its cheaper cars. People who cannot afford luxury
| but want to look as if they can ("poseurs") go for big logos:
| counterfeiters usually copy louder goods.
| margalabargala wrote:
| > I bet some large majority can identify an Hermes bag as an
| expensive bag, logo or no.
|
| Not to the extent you'd think, I bet. The designs of the Hermes
| bags are designs that have been widely copied by far less
| expensive manufacturers.
|
| I went on the Hermes site and looked at some bags (they don't
| show prices on their website), then looked up the prices of the
| bags. They were all an order of magnitude more than I would
| expect for the item I was looking at.
|
| So, sure, most people could look at a bag and think "That bag
| cost hundreds of dollars". But I don't think that most people
| could look at the bag as think "that bag costs _thousands_ of
| dollars ". Spending several thousand dollars on a handbag is so
| far outside the realm of normal for people that it wouldn't
| occur to them that it would be _that_ expensive.
| jareklupinski wrote:
| > But as Solca observes, there are good commercial reasons why
| rationing by queue rather than price can make sense.
|
| > First, it gives Hermes a buffer: even if demand drops, sales
| will not.
|
| > Second, it creates surplus demand for the bags, which overflows
| into demand for other Hermes products. Much of the firm's
| business consists of selling consolation prizes: wallets, belts,
| beach towels and so on. As J.N. Kapferer of the Inseec Luxury
| Institute in Paris observes, the wait induces "impatient buyers
| to switch to other products of the brand, to calm their hunger
| until the much-awaited object of desire is achieved."
|
| > Third, although market-clearing prices might raise
| profitability in the short term, in the long run they would drive
| French women away, leaving nouveaux riches from the developing
| world as the bags' main buyers. If elegant Parisiennes lose
| interest, so, eventually, will women who aspire to be like them.
|
| 'economics' would make more sense if offered as a humanities
| course
| HDThoreaun wrote:
| Veblen goods are a topic that is covered in the first semester
| of any serious econ program. Buying them is perfectly rational
| and can be modeled mathematically.
| morelisp wrote:
| _At this point, an economist would tend to usher in the
| argument made by Thorstein Veblen... Yet in a couple of ways,
| Birkins do not look like classic Veblen goods._
| davidw wrote:
| So it's not econ 101. That's what makes it interesting and
| noteworthy?
| paulette449 wrote:
| Veblen Goods sounded a lot like Giffen goods which were
| covered in the economics module of my CS degree. I had to
| check, they're related [1]:
|
| "... both Veblen and Giffen goods have an upward-sloping
| demand curve. This means that demand for them increases when
| their price increases. Their main difference is in the type
| of good.
|
| Veblen goods are luxury items that connote status in society,
| such as cars, yachts, fine wines, celebrity-endorsed
| perfumes, and designer jewelry. Giffen goods are essential
| goods, such as rice, potatoes and wheat. Demand stays high
| when prices increase because there is no ready substitute for
| them."
|
| [1] - https://www.investopedia.com/terms/v/veblen-good.asp
| jetrink wrote:
| > Giffen goods are essential goods, such as rice, potatoes
| and wheat. Demand stays high when prices increase because
| there is no ready substitute for them.
|
| The way Giffen goods were explained to me is that not only
| is there no substitute for a Giffen good, it _is_ the
| substitute. Imagine you eat meat and potatoes and the price
| of potatoes increases. If you can no longer afford your
| regular diet and need to cut costs, well, meat is probably
| still more expensive than potatoes, so you buy less meat
| and even more potatoes.
| blowski wrote:
| That's not the best explanation of Giffen goods, since it
| only covers price inelasticity.
|
| The key point of Giffen goods is that, as they become more
| expensive, you have less to spend on alternatives and thus
| have to buy more of the Giffen good. For example, you
| normally spend 10% of your income on pasta but then the
| price doubles. With less disposable income, you can afford
| less meat, so buy more pasta instead. That said, there's
| very scant evidence such an effect exists in the real
| world.
| [deleted]
| smiley1437 wrote:
| Is healthcare a Giffen good? Because that would explain a
| lot about the prices in the US healthcare system
|
| edit: look like some people think so:
|
| https://seekingalpha.com/article/4103336-healthcare-
| ultimate...
|
| https://www.econlib.org/archives/2006/01/giffens_paradox_1.
| h...
|
| https://gulzar05.blogspot.com/2007/05/giffen-goods.html?m=1
| boc wrote:
| I'm begging HN to stop assuming they understand economics
| before dismissing the entire profession.
| deciplex wrote:
| I'm begging economists to stop assuming that the lessons of
| their profession apply to every aspect of human behavior.
| AussieWog93 wrote:
| I'm not sure that serious economists do?
| jkuria wrote:
| Notice how this is stolen content? Nigerian blog stealing The
| Economist content.
| wmf wrote:
| The Economist is a Veblen good; most people can only afford
| knockoffs.
| iamben wrote:
| A long time since I read it, but Michael Tonello's memoir
| "Bringing Home the Birkin" was a fun and easy read. Long and
| short, he figured out how to skip the waiting lists, buy the bags
| and flip them for profit.
|
| https://www.amazon.co.uk/Bringing-Home-Birkin-Pursuit-Covete...
___________________________________________________________________
(page generated 2023-07-24 23:01 UTC)