Online Platform Rallies Behind Birkin Bags

An Hermès exotic skin Birkin bag on view at Rally Road's museum in SoHo. KATRINE MOITE/Courtesy Photo

Online platform Rally Road securitizes and splits into shares high-value assets IPO-style. Categories includes luxury collectibles, wines and whiskeys, rare cars, vintage Rolex watches and sports memorabilia — expensive toys for boys. In an appeal to women Rally is teaming with Prive Porter, which will source rare and valuable new Hermès Birkin handbags that will be offered for investment on the platform.

The first bag, a Hermès 35-cm Bordeaux Porosus crocodile Birkin, will be available for investment on Friday. Rally Road plans to issue 2,000 shares priced at $26.25 per share, valuing the bag at $52,500. Rally vice president of operations Fitz Tepper said, “Of all the exotic skins Hermès will produce, the Porosus crocodile is arguably the most costly and rare. It frequently commands a price many multiples above retail value.”

The Hermès Bordeaux Birkin handbag. Courtesy Photo

“The collectable handbag category has been appreciating in value like cars or watches, and growing like crazy, said Jeffrey Berk, founder of Prive Porter. “But, it was always an indulgence for the super-affluent. This Birkin-as-investment [idea] is something we stayed on the sidelines of until we saw how Rally was democratizing these alternative investments.”

Privé Porter, whose tag line is, “The Key to Authentic Luxury,” sells online new — often rare — Hermès Birkin and Kelly handbags. The company in 2017 opened a showroom in a stately five-story town house on Manhattan’s Sutton Place, which at the time was listed on Truvia for $7.9 million. Handbags were priced between $15,000 and $300,000.

Tepper said Rally Road’s mission is to democratize luxury for consumers who can’t afford the five- or- six-figure price tags associated with life’s finer things. He claims Birkin bags, as an asset, outperformed the S&P 500 and gold on an annualized basis, between 1980 and 2015.

“Rally’s mission is to let anyone invest in one-of-a-kind items with the potential for both emotional and financial returns,” Tepper said. “Offering our members access to invest directly in Birkins, an asset class that has defined the intersection of fashion and investing, is the next step in this mission,” said Robert Petrozzo, cofounder and chief product officer of Rally.

Rally Road will offer about 20 handbags this year, among 150 assets across all product categories, Tepper said. “Rare vintage jewelry is an opportunity,” and we’re been hearing a lot about couture fashion. We go where our community wants us to go. We’ll try to stay away from things such as Supreme. We don’t see that as having lasting value, such as Rolex watches from 1975. We want to make sure what’s going on the platform is time-tested and not a fad.”

Rally Road aspires to be more than a site that operates as a facsimile of the stock market. “Our long-term vision is more of an investment platform,” Tepper said. “There’s no rush to sell the whole thing. If you have a Himalayan Birkin that’s unused and in pristine condition, [selling] could be one of the exit strategies.”

The site operates a showroom/museum on Lafayette Street in Manhattan’s SoHo. “We hold everything at our location in SoHo, and have a big facility in Delaware,” Tepper said. “Behind each ‘deal’ is the actual bag, Rolex or car, and each thing is owned by a mini public company. Who knows what’s going to happen to some of these industries. At end of day, if Rally ever went out of business, these things are their own companies. You’re a shareholder in it forever, until you sell it.”

Tepper said sites such as StockX, a platform that initially launched as a stock market for sneakers, and is set up like the world’s stock markets with standardization for real-time pricing, has helped pave the way for Rally. However, he underscored the difference that Rally Road doesn’t sell products, while StockX allows consumers to bid on them using an algorithm similar to the stock market. “People are now starting to see value in things,” Tepper said. “They see a pair of sneakers and buy them and they may go up in value. We share some investors with StockX.”

Subscription services could be in the offing in the future. “Longterm, we may offer a subscription service,” Tepper said. “Because we have exclusive deals with suppliers, there’s an opportunity to increase our margins. We now make 2 percent on each deal.”

Even with the razor-thin margins and the fact that Rally Road doesn’t charge fees for trades, it still plans to be profitable by yearend. Tepper and Berk see an opportunity to grow the Birkin business.

Online Platform Rallies Behind Birkin Bags — The exhibit at Rally Road’s SoHo museum underscores the rarity of products. KATRINE MOITE

“Unlike The RealReal and other luxury resellers, Prive Porter sources about 50 percent of our supply from Hermès best customers whom, when offered a Birkin or Kelly they may not be crazy about, are afraid to say ‘no’ to their sales associate, lest they won’t be called again.” Prive did $20 million in 2019. “The secondary market is insane for the bags. Everybody’s heard stories about consumers hoarding them. A lot of them have $300,000 worth in their closets.”