Bulk buyers vs exclusive brands

Bulk buyers, who have been reselling designer bags at more than double their original price, have taken to through resale platforms such as Vestiaire Collective and TheRealReal. In response, luxury brands, including Chanel and Hermès, have strengthened their pushback against the resale market in an effort to retain their exclusivity. 

According to Jefferies analysts, Chanel has been raising its prices by 71% since 2019 on some classic leather goods; “one consequence of Chanel’s price increases has been to boost the cost of its handbags on the secondary market”, said Seth Weisser, chief executive of New York-based luxury reseller What Goes Around Comes Around. 

In accordance, the luxury firm has started restricting the number of bags each consumer can buy every year through a quota system, especially in crucial markets: in South Korea, where luxury resale is booming, Chanel is limiting purchases to one Timeless Classic flap bag and one Coco Handle bag per year, effectively reducing sales volumes by almost a third. “We just had a big successful year, especially in Korea, and we don’t have enough products, especially for handbags”, explains Chanel’s president of fashion Pavlovsky. Moreover, the brand has begun to track customer buying patterns, identifying those who do not buy for personal use or those selling popular leather goods through e-commerce. 

Chanel is not the first brand to set limits on purchases: Hermès has been imposing quotas on popular bags, especially Birkin and Kelly bags; back in 2008, Louis Vuitton was famous for its battle against professional buyers reselling designer goods online in Asia and, in 2021, Gucci hiked the pricing of many leather items in China to prevent scarcity in local boutiques.

By setting purchase limits and analyzing consumers, luxury fashion firms are trying to protect their precious image of exclusivity and prevent the resale category from reselling their products online for a big markup. However, Chanel’s strategy to provide scarcity resulted in creating a giant buying frenzy: as the brand is likely to hold its value on the secondhand market, some people who used to buy for personal use are now even considering reselling online.

Are those brands who are avoiding embracing the resale category losing an opportunity?

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