London-based Cai Baochun used to make a hefty profit reselling Hermes' famed Birkin bags for more than double their $10,000 retail price. Now he has stopped stockpiling them as second-hand prices fall.
“I don’t want to lose money,” said Cai, who started selling the bags on online platforms such as Vestiaire Collective and on social media in 2020 and rode a pandemic-era luxury spending boom.
The resale value of unworn Birkins sold as second-hand online has dropped by more than $6,000 from its 2022 peak, he said.
The decline reflects a broader shift in the market for one of luxury's most exclusive products whose appeal and success have been driven by scarcity.
Increasing supply of Birkin bags in the second-hand market is depressing resale premiums, according to resellers, industry consultants and analysts interviewed by Reuters, raising questions about a strategy that helped propel Hermes to become one of the world's most profitable luxury companies.
Named after the late British-French actor Jane Birkin, the handbag has been central to Hermes' performance. Between 2015 and 2025, group annual sales tripled to €16 billion ($18 billion) while its market value surged. Last year, Hermes posted an operating margin of 41%, above that of rivals including Chanel, Kering-owned Gucci and LVMH's leather and fashion division, which includes Louis Vuitton and Dior.
RESALE MARKET UNDER PRESSURE
All of that was underpinned by an aura of exclusivity.
Six resellers who source bags directly from Hermes shoppers said access to a Birkin is generally linked to spending on Hermes scarves, clothes and shoes, although the exact policy differs between regions and stores. Two estimated customers typically spend $10,000 to $20,000 before being offered the Birkin or the Kelly, the brand's other popular bag.
Hermes, which says a Birkin takes 15 hours to craft, does not disclose its selling policies or how many bags it makes. It declined to comment for this story.
Of the nine Birkin resellers Reuters interviewed in the US, Europe and Asia, six said resale prices had fallen over the past year as more handbags became available, while five reported softer demand.
Antoinette Hunter, who founded luxury handbag reseller Lilac Blue in 2007, said when she got the first request for a Birkin, few people knew the bag. She eventually sourced one from a member of Japan’s royal family.
Acquiring Birkins is no longer a challenge, Hunter said, but it's harder to make money from resales. She said the price for an unworn black Birkin 25 bag, one of the most sought-after models, has fallen by around £4,000 ($5,336) since 2022, to around £24,000. Cai, who sells via Vestiaire Collective and Instagram, says his price for the bag is around £20,000.
Hermes sells the same model for £9,390 in Britain, a Hermes sales assistant in London said.
Although Hunter still sees plenty of demand for Hermès bags, particularly the most high-end ones, she said the decline in resale prices might dissuade some from buying directly from Hermes.
"If Hermes continues to raise the prices, and the prices on the resale market continue to drop, that margin gets squeezed, and perhaps it will become less appealing," she said.
Brokerage Bernstein, which tracks individual auction results, said in a September note the resale price on Birkin 25 bags averaged about 1.7 times the retail tag in the third quarter, down from about 2.6 times at their 2022 peak.
BUSINESS MODEL UNDER SCRUTINY
Hermes' leather goods division, which includes other handbag models, generates 44% of annual group revenue.
For more than a decade, limited supply and strong demand allowed Birkins to command hefty resale premiums, benefiting both Hermes and resellers as the prospects of making a profit via the secondary market encouraged Hermes clients to buy more from the brand.
"It was a win-win," said Sarah Davis, founder of California-based Fashionphile. The company said its Birkin listings have grown 32-fold in 15 years. The company's website currently lists 212 Birkins on sale.
Hermes has gradually expanded the production of its handcrafted items, opening one workshop per year on average. Meanwhile, the rise of resale platforms such as Vestiaire Collective and The RealReal, alongside vintage boutiques with online shops and social media channels, has made it easier than ever to resell.
The bags and other Hermes items remain highly sought after, resellers said, but the brand is showing some strain.
Hermes’ shares have lost nearly 40% of their market value this year, making the brand one of the worst performers among listed luxury companies.
Earlier this month, UBS analysts downgraded Hermes shares to "sell", saying that growing secondary-market supply of Birkins and Kellys could weaken the brand's scarcity-driven business model.
"We believe the nature of the business is changing," they said in a note, estimating that the number of the handbags listed for sale worldwide is now six to seven times higher than before the pandemic.
The company is expected to report quarterly sales growth of 5.2% on Thursday, which would mark its weakest quarterly growth in six years, according to Visible Alpha estimates.
While leather goods revenue is still expected to grow by 10%, demand for clothing, silk scarves and perfumes is cooling, a sign fewer customers are making the purchases traditionally required to buy a Birkin at a later stage, two equities analysts and two industry consultants said.
Asked in July whether Hermes should slow production to protect the brand, Hermes CEO Axel Dumas told reporters that some people feared making too many bags would hurt its exclusivity, while others questioned why it was not making more.
He added that output depended largely on the number of fully trained artisans and available high-quality leather.
Not all resellers see weakness. Davis said prices for the bag on the Fashionphile platform have remained firm and even risen slightly this year, pointing to renewed attention generated by Norwegian soccer star Erling Haaland's handbag collection.