Designer bags are not always a good investment

"What?!  This isn't what I've heard!" I hear you say.  There has been much press this year about how buying a Chanel classic flap or an Hermes Birkin is a great financial investment.  Baghunter published a much referenced study which found that Birkin bags have increased in value by 500% in the last 35 years.  This spawned a number of articles from prominent fashion publications and popular blogs claiming that we can all profit from buying Hermes, Chanel and Louis Vuitton bags.  This initially sounds great and certainly works in some cases but wait!  There are a number of things to consider if you are genuinely planning to make a return on your investment and not just trying to find an excuse to buy a new handbag (which we certainly don't blame you for!).  So breathe, put down the credit card, make a cup of tea and read this first.

Problem #1:  Condition and Usage

Do you love the bag you just bought and are you therefore going to want to use it all the time?  New bags are like new cars.  Once they have been taken out of the store, they immediately lose value.  It is unlikely that you will be able to sell a second-hand bag for the price it currently retails for in the store.  Also, condition is key to how a second-hand bag is valued.  The best way to make sure a handbag holds its value is to not use it and to keep it in mint condition.  If you are going to use it at all, you might feel pressured to be extra careful with it and it might not end up feeling like your bag despite the fact that you paid for it outright and deserve to enjoy it.  That doesn't sound like much fun.

Problem #2:  Patience

How long are you willing to wait for your investment to mature?  You will have to wait at least a few years to have a hope of getting a return.  Although less interesting, wine or property might be a better investment than a handbag...  Even with the brands who are the most prolific when it comes to increasing their prices, it might take a good few years for you to make a profit on a used bag (or one in mint condition) once you've taken off the sale commissions, which brings us to our next point.

Problem #3:  Sale Commissions

You will need to sell your bag through a third party platform, whether it is eBay, Vestiaire Collective, a professional reseller or an auction house.  These platforms all take a very healthy commission on your sale so you will take a hit on your return.  eBay likely charge the least but there are also PayPal fees to consider and whether anyone will believe your product is authentic (having the receipt helps!).  Vestiaire Collective are willing to guarantee authenticity as they examine the product in-house before sending it to the buyer but they take a huge commission which will eat into your return.

Problem #4:  Limited Editions

Purchasing limited editions is another common suggestion.  While investing in limited edition styles might really pay off in some instances, it is a riskier proposition in that you need to find a buyer or avid collector who is interested in that particular style.  The style will also need to be desired years later so this option represents a bit of a gamble.

Problem #5:  Betting on New Styles and Scarcity

The Chanel Le Boy bag has achieved cult status since its launch and has risen in value but other styles which initially showed promise have fizzled out, such as the Chanel Coco Cabas Tote.  The Mansur Gavriel Bucket Bag was very hard to come by in 2015 and those who managed to get hold of one and sold them on straight away or a couple of months later managed to make a bit of a profit.  However, Mansur Gavriel have recently increased their production levels so they are no longer as scarce as they were.

Final Word

Don't get us wrong: if you are ever in a financial pinch and need to sell your things to release some cash, selling designer handbags and other designer goods can be a great way of doing this.  Making a substantial return on what you paid for a handbag might be possible in some instances and with a bit of luck, but our point is that this is certainly not a sure bet so proceed with caution!

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