Hermès slammed with lawsuit over unfair Birkin sale practice

French luxury brand Hermès has been accused of antitrust and unfair business practices according to a class action lawsuit filed in California.

The lawsuit alleges that Hermès engaged in the unlawful practice of tying the sale of its highly sought-after Birkin handbag to the purchase of other ancillary products. This means that the company has been allegedly coercing its customers into buying its other products to purchase a Birkin handbag.

Don't miss: Survey: Majority of APAC luxury consumers reduce support of brands ignoring sustainability

“Only once a consumer has a sufficient purchase history or purchase profile with defendants, will the consumer be offered the opportunity to purchase a Birkin handbag,” said the lawsuit, according to legal documents seen by MARKETING-INTERACTIVE.

The lawsuit also stated that Hermès had designed a sales associate compensation structure that encourages a big purchase history with the brand as a 3% commission is given to the sale of ancillary products such as shoes, scarves and belts while a 1.5% commission is given for non-Birkin handbags.

In contrast, no commission is given on the sale of Birkin handbags.

Additionally, the lawsuit added that Birkin handbags cannot be purchase through the company's website and while consumers can only purchase them by physically visiting a retail store, Birkin handbags are not publicly displayed for sale. Adding: 

Typically, only those consumers who are deemed worthy of purchasing a Birkin handbag will be shown a Birkin handbag (in a private room).

Consumers are also offered a specific Birkin handbag with no way to order a bag in the specific style, size, colour, leather and hardware that a consumer wants.

“The unique desirability, incredible demand and low supply of Birkin handbags gives defendants incredible market power […] With this scheme defendants were able to effectively increase the price of Birkin handbags and, thus, the profits that defendants earn from Birkin handbags,” said the lawsuit,

Hermès has previously denied this practice, but its CEO Axel Dumas once said that employees are encouraged to vet prospective buyers to find “real” clients, who do not plan to resell the bags online, according to Business of Fashion.

As consumers become disenchanted with playing what is known as the “Hermès game”, a majority of APAC luxury consumers would reduce their support of brands that neglect environmental sustainability, a survey found.

The comprehensive study titled “Navigating a Greener Future” was conducted in August 2023 by Hong Kong-based market research firm inspiring-i and commissioned by luxury and sustainable packaging specialist Delta Global.  

The study surveyed over 2,000 luxury consumers from Gen Z to Gen X (ages 18–55) across Hong Kong, Australia, Malaysia, Singapore and mainland China. It delved into the impact of sustainability on luxury consumers’ purchasing behaviours – particularly among Gen Z and Millennials, who will emerge as the biggest luxury consumers by 2030.

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