Wanted, people to make $22,000 handbags(ft.com)
ft.com
Wanted, people to make $22,000 handbags
https://www.ft.com/content/fc6da6cd-9395-4ead-8ef5-03cdb18425a9
15 comments
I bought a luxury handbag (thankfully not a Hermés Birkin). This comment completely misunderstands the market.
Nobody knows the name of the artisan who creates their Hermes Birkin bag. The value in the bag is the exclusivity, the exotic leathers, the gold/platinum/palladium metals, the sales boutiques, and the marketing/PR.
While artisans contribute to the quality of the end product, a new hire can easily cost the company a significant fraction of the cost per unit while they are learning. And I’d guess that not every person who starts an apprenticeship will make a customer-ready unit, so some contribute to only costs and no revenues.
Nothing a new apprentice touches will ever be seen by a customer. Those companies burn tons of units per year that don’t meet their QA standards for their brand value.
Nobody knows the name of the artisan who creates their Hermes Birkin bag. The value in the bag is the exclusivity, the exotic leathers, the gold/platinum/palladium metals, the sales boutiques, and the marketing/PR.
While artisans contribute to the quality of the end product, a new hire can easily cost the company a significant fraction of the cost per unit while they are learning. And I’d guess that not every person who starts an apprenticeship will make a customer-ready unit, so some contribute to only costs and no revenues.
Nothing a new apprentice touches will ever be seen by a customer. Those companies burn tons of units per year that don’t meet their QA standards for their brand value.
Cool, but no bags without someone to craft them. My issue here is more the fact that the FT let them get away with a hand-wavy “oh we pay more than minimum wage” that sure sounds like it conceals a salary issue.
I tend to think they make a decent chunk of profit on a 22k Euro bag, even after they pay for the gold trim.
I tend to think they make a decent chunk of profit on a 22k Euro bag, even after they pay for the gold trim.
What private business shows you all of their internal numbers? We know that it's an unknown (from our perspective). We also know that the counterfactual is mostly untestable (clone the company but raise artisan wages and see which version of the company survives).
Just assume that this might be a PR piece that benefits the company and move on.
Just assume that this might be a PR piece that benefits the company and move on.
I’d argue they are not more generating the value than a printing press is generating the value of money.
IMHO luxury brands are generating their products value by means of marketing.
The value add isn't all from the artisans - a good amount of that comes from their marketing and branding workers.
As my comment mentions, I'm aware of those costs; that the €1,500 isn't all from the "artisan". The article still leaves the question of how close these folks are to the minimum wage. Is "well above" €20 an hour? €30? €50? €100?
Not sure I trust the salaries mentioned, it quotes Glassdoor when stating bank tellers have a salary of 14k which seems absurdly low, the first search on Glassdoor says 39k https://www.glassdoor.fr/Salaires/paris-bank-teller-salaire-...
This article is piece of shit, seriously! That is not journalism but a paid advertisement in my opinion, going into great length to not be explicit but pretend workers are decently paid!
So a bank employee should have around at least 18/25k € at beginning once taxes are deducted.
But the important point is that the 22000$ bag will be manufactured mostly by a few days of work of 1 or 2 employees for the minimum salary, where LVMH boss will take so much margin that he is now the richest man on earth.
I don't understand how we can tolerate that. But at least there is no mystery why they have hard time to find skilled workers that want to enslave themselves for a misery salary .
As a reference, here is a more objective article of a few days ago about the real work conditions of the employees:
https://www-mediapart-fr.translate.goog/journal/economie-et-...
Working in cold, no discussion allowed,...
By comparison a bank teller earns between €14,000 and €24,000 on average, according to employment website Glassdoor.
So a bank employee should have around at least 18/25k € at beginning once taxes are deducted.
But the important point is that the 22000$ bag will be manufactured mostly by a few days of work of 1 or 2 employees for the minimum salary, where LVMH boss will take so much margin that he is now the richest man on earth.
I don't understand how we can tolerate that. But at least there is no mystery why they have hard time to find skilled workers that want to enslave themselves for a misery salary .
As a reference, here is a more objective article of a few days ago about the real work conditions of the employees:
https://www-mediapart-fr.translate.goog/journal/economie-et-...
Working in cold, no discussion allowed,...
Tangential to the topic: articles like this one often talk about “waiting lists” for luxury items like Hermes bags and Rolex watches. To be clear, there is no waiting list, or at least not the type that is counted down with wall clock time.
Your ability to buy the item is solely a function of spend on buying the less popular items. If you’re a big spender, sometimes the “rare” item magically appears the same day for purchase.
Your ability to buy the item is solely a function of spend on buying the less popular items. If you’re a big spender, sometimes the “rare” item magically appears the same day for purchase.
> To be clear, there is no waiting list, or at least not the type that is counted down with wall clock time.
What waiting list counts down time?
I’ve been on waiting lists for non-luxury goods (soccer season tickets) and it’s a function of limited supply, the number of people “ahead” of you, and how many holders of the good decide to keep it.
You can’t look at a clock and say, “My tickets will be ready in 11 minutes.” You can get an estimate based on previous year turnover (which is why the Cubs list is estimated to be like 35 years long) however.
What waiting list counts down time?
I’ve been on waiting lists for non-luxury goods (soccer season tickets) and it’s a function of limited supply, the number of people “ahead” of you, and how many holders of the good decide to keep it.
You can’t look at a clock and say, “My tickets will be ready in 11 minutes.” You can get an estimate based on previous year turnover (which is why the Cubs list is estimated to be like 35 years long) however.
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Talking about this topic without providing some actual salaries, factory locations and working conditions is just worthless.
OK, but how much above, given the €1,500/hour value they're generating? (I don't doubt there are costs of goods and marketing and retail and whatnot, but French minimum wage is a bit over €11/hour.)