Luxury Bag Scarcity

It’s unassuming at first glance. A somewhat rectangular purse made out of a single color of leather or skin. It stands straight up, never slouching — its posture hinting at its high class. It has two thin straps looped at the top and a modest clasp that comes together at the center.

Yet this simple-looking bag has retailed for upwards of $380,000, with a starting price tag of $12,000.

If you haven’t already guessed (or you’re not well acquainted with the world of ridiculously expensive fashion), I’m talking about a Birkin Bag. A bag that some have argued is a better investment than gold.

In an industry where styles change as often as the seasons, there’s an important and powerful lesson all ecommerce retailers can learn from how Hermès has marketed this bag. But first, a little backstory.

The Birkin Bag originated in the mid-80s after the chief executive of Hermès sat next to Jane Birkin on a flight and Jane’s bag fell, and all her contents spilled out, leaving her frustrated. An idea was sparked, and not long after the Birkin was born.

It’s not quite a Veblen good because it doesn’t instantly signal status or wealth — not in the way a Louis Vuitton purse or a Ferrari does. Only a small club of inductees truly know how to spot a Birkin. Yet, it attracts a much higher price tag than its fellow luxury brands.

So what exactly makes a Birkin Bag so freakin’ special that people will shell out enough money to purchase a home or car just to get their hands on it?

It’s Exclusive

Hermès doesn’t advertise the Birkin Bag. There are no print ads in glossy magazines, no TV spots, and definitely no radio plugs.

The Birkin Bag’s real success lies in the principle of exclusivity, scarcity and desire. Only the most elite have access to the Birkin Bag, and that’s on purpose. Once you get a Birkin, it’s almost as if you’ve joined an exclusive club. Because, as you’ll see in a second, even those that can afford one, won’t find buying a Birkin a cakewalk.

Hermès strategy is to make only a certain amount of bags a year (each Birkin can take a minimum of 18 hours and is made by a single craftsman who is trained upwards of five years). Most of those bags are pre-sold, and the remaining few are sold on a very selective basis.

If you go to the Hermès website right now and click on their purse selection, you won’t be able to see a single Birkin Bag for sale.

But what about walking into the store? Surely you can get one that way. Unlike its many designer counterparts, you cannot walk into a Hermès store and simply pick your favorite Birkin off the wall and purchase.

Sure, there’s the rare instance where they’re already housing a coveted Birkin in the back, but even then, you’re unlikely to know it unless the sales assistants have developed a relationship with you or you’re a special somebody.

That means even those with enough money to drop five or six figures on a purse won’t be able to instantly achieve satisfaction. So they’re left drooling at the thought.

Instead, Birkin hopefuls have to put their names on a waitlist and develop a purchasing history. And even once your name is on the waitlist, it may be months or years before a Birkin makes its way onto your arm. So what do hopefuls do? They satisfy their hunger for all things Hermès by getting other Hermès products until their day finally arrives.

A Little Lesson In Economics

It’s a well-known fact of economics that the supply and demand determine the price of a product. As demand increases, so does the price. As supply goes up, the price goes down. However, if the price rises too high, demand will drop, and supply will overflow. So, somewhere in the middle is a brand’s sweet spot, or market price.

This is not the case for the Birkin Bag. Through the power of scarcity and exclusivity, Hermès has created a sort of inelastic demand (as price goes up, demand stays strong). This is why the bag is touted as a valuable investment. In fact, Time reported that over the last 35 years the Birkin has done better than both the S&P 500 and the price of gold — with an annual return of about 14.2%.

If Hermès had flooded the market early on with Birkins, their success story might not have existed at all. Instead, they relied on the power of “want” to keep the bag alive and thriving for over 30 years.

Applying This Lesson To Your Business

While it’s unlikely to have the exact same success as Hermès (trust us, many have tried), you can use the principle of scarcity to your advantage — especially if you want your brand to scream “luxury.”

If you are running webinars, for example, make them exclusive. Only allow X amount of people to register before the signup closes. When you send out an email, let your list know about this restriction and highlight how this event will be for only a select handful. And make your replay available only for those that have gotten in.

Or, you could only send your webinar invites out to your best customers, letting them know that they are on an exclusive list (one percenters if you will). This will empower them to feel important and tie you into that.

If you sell ecommerce products, try taking a page from Hermès’ book. Price your products higher than you are now, and only make a limited amount of products available at one time, always staying just a bit below demand. And keep those that want your product on a waiting list, increasing the desire for your product.

You see, it’s a flaw of our human nature; we want what everybody else wants, and when we can’t have it right away, we want it even more.

If you sell memberships, you can do this too…it just requires a bit of patience. Have all potential members fill out an application to get access to your membership. Then, have them sit on a waiting list, with no “guarantee” that they’ll get in.

Periodically send out teasers to your site, building up their anticipation even more. Then once approved, they will become a part of an elite group — your group.

Grant them your exclusive information, along with special access to your other products. Make sure to provide rich content that can’t be found elsewhere (otherwise the product won’t live up to the hype).

Yes, you may take a short-term hit in sales — if you limit your sales you simply can’t make as many. However, like Birkin, this will extend the longevity of your product and help a steady demand pour in, rather than random trickles.


Have you seen another brand use the idea of scarcity and exclusivity to their advantage? Share it with us in the comments below!

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