When Nishi Kapadia, a 28-year old advertising executive bought a Louis Vuitton for a little under Rs 1 lakh, her family thought it to be a frivolous expenditure. A few months later she sold the bag online for Rs 70,000 recovering nearly 70 per cent of the cost. “I bought another bag for Rs 80,000,” says Kapadia cheerfully. She plans to hold on to this one for a few months and then sell it and buy another one. “Once everyone has seen it, I’ll change it. I don’t need to live with the same bag. It’s not my husband,” she chuckles. She already knows which is going to be her next bag — a Fendi.
Kapadia and several others like her are keeping websites such as Confidential Couture, Luxepolis, Luxury Station, etc., in business. Confidential Couture, for instance, sells 4-7 bags a day — a far cry from 2-3 a week when Anvita Mehra, launched the site in 2014 with a handful of bags from friends and family. Today she has an inventory of around 400 bags and receives 25-30 queries a day from fashionistas planning to sell their bags. “Earlier one didn’t know what to do with one’s luxury bags after a while. They were too expensive to be gifted but at the same time most women wanted to purchase a new one and the older one just took up closet space. Now they can sell them and recover some of the cost,” says Mehra.
Take 26-year old Gurbani Bhatia, a professional pianist who has sold five bags and a pair of shoes on Confidential Couture including a couple of Louis Vuitton clutches, a Gucci purse, a Chanel bag and a Fendi monogrammed cloth bag that she used to take to college. “I used the Fendi for over six years and then sold it for Rs 28,000. The option of being able to sell the bags makes one shop more,” smiles Bhatia. She reckons she paid Rs 50,000 to 55,000 for the Fendi. Getting half her money back is better than the bag lying in a corner in her closet.
While for most, a luxury handbag is nothing more than arm candy, a frivolous purchase best considered a fashion statement, fashionistas and those in the business know that it could well be an investment. “The right bag bought at the right price could make you a profit in the resale market,” says Mehra. Adds Kapila Gupta of Luxurystation, the only company selling both new and pre-owned accessories, “The retail price of most classic bags such as a Chanel or a Dior rise by nearly 15 per cent every year. So if you bought something for Rs 2 lakh five years back, it probably costs double of that today. You can sell it for almost Rs 2 lakh today or may be a little more as it will still be half the retail price.” Luxurystation sells around 40-45 pre-owned bags a month compared to around 60 new ones. “A lot of my clients have moved from buying new bags to pre-owned ones.”
So which bags should you invest in? Mehra believes a seasonal bag is for momentary pleasure while a classic is for keeps. “If it is a seasonal bag, get rid of it within a year. You can get up to 80 per cent of the price of the bag back. But if it is a classic, hold on to it. And when you sell a classic, use it to buy another classic.” On the other hand in India, there is a huge demand for monogrammed Louis Vuittons, Fendis and Guccis as those buying their first luxury product go for these instead of the understated bags. Prada bags also sell fast as Prada has not yet come to India so being able to own one is a novelty.
While the above bags are fast moving and you can clear out your cupboard and recover some of the cost, you are unlikely to make a profit even if the bag is brand new and not used.
If you wish to purchase a bag that is going to earn you a profit a few years down the line then you have to invest in a classic bag such as an Hermès Birkin (approximately Rs 8.5lakh) or a Chanel 2.55 (Rs 3 lakh) or a vintage Fendi Baguette (special edition and vintage Baguettes retail for several lakh). Due to the high demand for new, classic and limited edition bags, you can actually earn more than the retail price you paid for these brands.
What makes these bags special? It is the right mix of marketing, classic design and exclusivity. Take the Hermès Birkin, for instance, which has a waiting period of up to six years. Demand and desire for the bag, often seen on the arms of celebrities such as Victoria Beckham and Kim Kardashian and the difficulty in purchasing a new one from Hermès, are factors affecting the secondary market for the Birkin.
A recent study by a US-based consignment company, Baghunter, claimed that the Hermès Birkin bags increase in value by 14.2 per cent on average every year and are hence a better investment than stocks or gold. “The waiting list implemented by Hermès for a Birkin bag, sometimes as long as six years, has contributed to driving the resale value of Birkin bags upwards with bags regularly selling on the secondary market for more than their original price,” says Evelyn Fox, CEO, Baghunter. A Birkin that cost $4000 at the turn of the century costs $12,000 today. The website that specialises in selling both pre-owned and pristine Hermès Birkins, Kellys and Chanel bags had 1700 visits from India in the last month. “We buy from and sell to dozens of clients from India on a regular basis,” adds Fox. She suggests buying the Birkin in classic colours such as black, gold and etoupe if you are looking at holding on to it for the long term.
However, Mehra, disagrees regarding the colour. “Birkins are difficult to come across. If you get one buy it. Don’t get stuck on the colour,” she says. Mehra was gifted a Birkin by her parents on her 21st birthday. “It’s the kind of bag that I would like to hold on to and gift it to my daughter,” says the 26-year old. Gupta too owns a classic black Birkin but it is a red Prada shopper that she uses more for its practicality.
If you manage to lay your hands on a rare Birkin then you can even sell it at auction a few years down the line. Recently, a red crocodile skin Birkin, with white gold and diamond hardware set a world record for fetching the highest price — $ 203,150 — at an auction in the US. Greg Rohan, president of US-based Heritage Auctions, that sold the bag advises one to be patient, “When you sell your bag, you will be paying fees, at least 20 per cent. If you assume the value of your bag will increase by about 10 per cent annually, it will be at least three years before you’ll see a profit when you re-sell. It’s different at an auction. If two bidders have their hearts set on your bag, it can end up selling for far above what you paid even after a short period of time.” People in India can bid as well as put their bags up for auction at Heritage Auctions. However, exotic animal skins are banned in India, so the only Birkins you are likely to buy are in grain leather, togo or clemence.
The other bag that is worth investing in is a Chanel classic 2.55 (so called because it was launched in February 1955 by Coco Chanel) that has increased in price by a whopping 72 per cent between 2010 and 2015. So a Chanel 2.55 that you buy today could potentially increase in value by over 30 per cent in just three years — depending on how well you maintain and care for the bag.
Take care of your bag and it will end up being more than just arm candy.
smitatripathi@gmail.com; @smitabw
