The scarcity myth of Hermès Birkin bags weakens: second-hand premiums decline and supply surges

The myth of Hermès' iconic Birkin bag is facing unprecedented challenges. A surge in secondhand supply and a significant narrowing of resale premiums are shaking the core logic that has long supported Hermès' valuation.

According to Reuters, six dealers stated that as the number of Birkin bags circulating in the market has increased, secondhand prices have continued to decline over the past year, and demand from some sellers has also visibly weakened.

Earlier this month, UBS analysts downgraded Hermès shares to a "sell" rating, estimating that the number of available Birkin and Kelly bags globally has reached six to seven times pre-pandemic levels, warning that this will erode the brand’s much-vaunted “scarcity” business model.

Hermès’ share price has fallen nearly 40% so far this year, making it one of the worst performers among listed luxury brands. The company is expected to report quarterly sales data this Thursday, and Visible Alpha forecasts show that quarterly revenue growth will be around 5.2%, marking the lowest level in six years.

The resale value of Birkin bags is quickly retreating from its pandemic-era peak. According to auction data tracked by brokerage Bernstein, in Q3 this year, the average resale price for a Birkin 25 was about 1.7 times the retail price, a significant drop from the roughly 2.6 times peak in 2022.

According to secondhand resellers interviewed by Reuters, an unused black Birkin 25—one of the most sought-after models—has dropped about £4,000 (around $5,336) in price since 2022, now selling for around £24,000. Some sellers are even quoting as low as £20,000. Meanwhile, Hermès’ official retail price in the UK stands at £9,390.

Cai Baochun, who resells Birkin bags in London, said he started selling Birkins through Vestiaire Collective and social media platforms in 2020 and once earned hefty profits—reselling for more than twice the retail price.

Now, as the secondhand price for unopened Birkins has fallen more than $6,000 from its 2022 peak, he has stopped stockpiling. "I don’t want to lose money," he said.

The reason Birkin bags were able to maintain such high premiums for so long lies in strictly controlled supply and high purchase eligibility thresholds. According to resellers, clients often need to spend $10,000 to $20,000 on Hermès scarves, apparel, or footwear before being offered the chance to buy a Birkin or Kelly bag.

However, these barriers are weakening. In recent years, Hermès has opened an average of one new workshop per year, continually expanding handmade leather goods capacity. Meanwhile, the rise of secondhand platforms like Vestiaire Collective and The RealReal, as well as the proliferation of online shops and social media channels, has greatly lowered the entry bar for Birkin bag resales.

Sarah Davis, founder of California-based luxury resale platform Fashionphile, said the number of Birkins listed on their site has increased 32-fold in 15 years, with up to 212 Birkins currently available online.

She once described this model as “win-win”—the secondary market premium not only motivates consumers to keep buying at Hermès, but also fuels boom in the resale market.

This shift is prompting a re-evaluation of Hermès’ core business logic within the market. UBS’s downgrade report pointed out that the continued growth in secondhand supply of Birkin and Kelly bags could fundamentally undermine the brand's scarcity-driven model. “We think the nature of this business is changing,” UBS analysts wrote.

Antoinette Hunter, founder of luxury handbag reseller Lilac Blue, said that getting a Birkin is no longer a challenge, but turning a profit is becoming harder and harder. She pointed out that if Hermès keeps raising retail prices while secondhand prices continue to fall, the gap between the two will narrow further, “perhaps making Birkins not so attractive anymore.”

Two equity analysts and two industry consultants told Reuters that demand for Hermès apparel, scarves, and fragrances is cooling—categories that have traditionally been the path for customers to qualify for a Birkin purchase. This indicates that the overall appeal of the brand ecosystem may be weakening.

As for whether Hermès should slow production to protect brand value, CEO Axel Dumas said in July this year that output mainly depends on the number of trained artisans and availability of high-quality leather. He admitted that opinions on production levels are deeply divided.

Financial data shows that Hermès’ leather goods division still contributes 44% of the group’s annual revenue, and leather sales are still expected to grow about 10% this quarter. However, the overall slowing growth and a sharp drop in share price have prompted the market to reassess the long-term value logic of this luxury giant.

Some resellers remain cautiously optimistic—Fashionphile’s Davis noted that Norwegian football star Erling Haaland’s recent status as a collector has drawn wide attention, boosting Birkin prices on the platform slightly. But whether this positive turn can reverse the overall trend remains to be seen.