TheChek News Flow

It’s so hard to get your hands on an Hermès Birkin bag it should be illegal.

That’s according to two would-be Birkin buyers who filed a complaint against the French luxury brand in a Northern California district court on March 19.

The pair have accused Hermès of exploiting the “incredible market power” that comes from the “unique desirability, incredible demand and low supply” of its most prestigious bag to drive up prices and increase their own profits. The plaintiffs allege that access to Hermès’ perpetually sold-out Birkin bag is predicated on the purchase of other products, resulting in an “illegal tying arrangement” that violates US antitrust law.

Hermès’ enigmatic selling practices — where the most desirable items like Birkin and Kelly bags are offered intermittently and usually to clients who already have a purchase history at the brand — have been endlessly dissected in fashion circles, and more recently have become the subject of countless TikTok videos and Reddit threads about how to play “the Hermès game,” where creators offer tips on how to get their hands on prestigious Hermès items through carefully coordinated interactions with sales associates.

Tightly controlled distribution and scarcity helped make the Birkin one of fashion’s most consistently covetable products and an asset class all its own (prices can more than double at resale). Hermès’ ultra-exclusive positioning has allowed it to keep outperforming the market even as most other luxury brands see demand slowing from post-pandemic highs. Revenue rose 21 percent year-over-year in 2023, while net profit was up 28 percent. But now, it’s potentially landed the brand in legal trouble.

Last year, Hermès told BoF it “strictly prohibits any sale of certain products as a condition to the purchase of others.” Whether the case will go to trial remains to be seen. Still, the complaint could have implications across the industry. Other brands, including Rolex, Chanel and Celine have fielded similar accusations (if not legal complaints), particularly in China, where shoppers have decried rising barriers of entry to sought-after products.

BoF unpacks Hermès’ selling system and what the lawsuit means for the Birkin-maker and beyond.

Like most luxury houses, Hermès tightly controls its distribution — it sells its leather goods only through its own stores, where stock is never marked down. Birkin and Kelly handbags in particular aren’t sold online and sometimes aren’t even displayed in stores.

The brand’s retail experience varies from city to city; local Hermès staff are given a long leash to determine how its handbags — for which demand outstrips supply — are doled out. Some bags are allocated via waitlists, others offered at the sales associate’s discretion (many shoppers vie for attention by trying to seem extra stylish or wealthy). Others are reportedly sold on a first-come-first-serve basis (particularly at the brand’s original flagship store in Paris). Clients’ preferences are registered, but when customers are offered a particular Birkin, they don’t necessarily get to choose the style or colour.

The ambiguity of the process has sparked speculation around who gets a bag and why. TikToks, YouTube videos and Reddit threads on the “Hermès game” detail shoppers’ paths to nabbing so-called “quota bags” (even the most loyal Hermès customers are only allowed to indulge in these styles limited times a year). Creators offer advice on what to say, how to dress and when and where to go to better their chances of scoring. Customers share theories about how much to spend on lipsticks, sweaters, sandals and dog beds to secure an offer or a preferred style — with some estimates climbing into the tens of thousands. Other commentators share reproof for Hermès’ manufactured exclusion of shoppers from already exclusionary-priced products.

“You have to buy their shoes, their pillows … that little $900 horse to show your appreciation for the brand,” said one TikTok user. Another referred to the process as “pledging allegiance to the brand.”

Others tell stories of snagging sought-after bags without spending heavily on other items, suggesting that the alleged practices are not completely systematic — or that the most vocal shoppers are choosing to go overboard (perhaps because they are unwilling to wait months for a bag offer).

Hermès can only produce so many of the handbags each year, and it has to decide who gets them somehow.

“[Hermès] is driven by supply, not demand ...” said Erwan Rambourg, global head of consumer and retail research at HSBC. “It is not going to wave a magic wand and suddenly be able to produce a lot of products.”

Saving them for their biggest — or highest-spending — clients could simply be savvy business. Plus, it drives mystique.

The system could help to preserve balance between leather goods and other categories in Hermès’ business — which has long been a priority for the company, as it employs thousands of French artisans specialised in skills like weaving silks, painting enamel bracelets or even silk-screening its leopard-motif beach towels.

A more balanced sales mix and long waitlist for key products help the brand maintain consistency year-over-year, making it more appealing to investors.

Prioritising clients who spend heavily on other categories also could de-incentivise resellers looking to flip bags for a profit.

Those resellers pose a looming challenge for the brand: As more people can get the exact Birkin they want with the click of a button online, Hermès will have to find more ways to drive excitement for its products beyond how hard it is to get them.

Counsel for the plaintiffs (the legal teams at California-based Setareh Law Group and Haffner Law) claim Hermès is in violation of US antitrust regulations that prohibit abuse of market power through bundling goods or tying them to other purchases. Tying occurs when the sale of one product is made on the condition of purchase of another product. A seller also must have enough market power to restrain the free trade of a good. Microsoft, for example, was accused of the same type of antitrust violation for compelling users of its operating system to also use its browser in the 1990s.