This Brand Reveals How Much What You Buy Actually Costs
How much are the things that you buy worth? The fashion industrys opacity means its hard to tell. But considering luxury brands run profit margins of as much as 30%, the one thing you can guarantee is that its a fraction of what you pay for them.
Fashion has always had an odd relationship with value. As the epitome of how capitalism values brand over function, a T-shirt can now cost more than a cooker if its got the right logo. A pair of shoes can be as much as a degree. And for your outlay on luggage, you could buy a family car.
Take the fabled Hermès Birkin, a handbag with a two-year waiting list and five figure price tag. Why so much? According to the Parisian brands erstwhile boss, Patrick Thomas, its because theres always one craftsman responsible for the whole process of the bag, from the start to the end. To create a single bag, it costs around 15 to 20 hours.
Considering they kick off at around £10,000 (and escalate quickly from there), that translates to around £666 per hour for the basic model. Can anything be worth that? Well, according to the founder of new brand Oliver Cabell, probably not.
Theres essentially three large conglomerates that control 75 per cent of a $220bn market, says Scott Gabrielson, who launched Oliver Cabell to shine a light on precisely how they make their products. The brand was born in an Asian accessories factory, where bags with Made In Italy labels were being stitched by women earning a few dollars a day.
They cost less than $100 to make and were selling at the shopping malls close by for $1,200, he recalls. It turns out that legal loopholes allow you to do 90 per cent of the origination in a certain country, then finish the handle or whatnot in another country and claim origination. So while the consumer thinks theyre paying for the calloused handiwork of a Milanese craftsman, hes probably only sewn the handles on. And that Made In Italy tag.
Gabrielson wanted to do things differently and reveal on how the fashion industry actually worked. He focused on bags, because they had a the highest markup in luxury fashion, he says. They sell for 12-20x the cost to make. Instead, hed cut out overheads so his consumers could buy Oliver Cabell products for as close to the production cost as possible.
Selling direct to the consumer isnt groundbreaking. The internet has dissolved those walls between maker and buyer, although for most luxury brands, the markups have proved less soluble; a Versace bag is still as much from versace.com as on the rack Harrods. Gabrielsons idea is more radical: publicise every cost, from materials to manufacture to markup, so customers can decide whether thats a price worth paying.
Its an approach thats already won over Italys best factories, which are normally off-limits to all but the biggest brands, doing the biggest volumes. They like the fact were being transparent about precisely where everything is made, says Gabrielson. Because it means that unlike other brands, we cant just move production to other, cheaper countries.
Good for the factories, and good for consumers. The size of the worlds biggest brands and their priorities, now that the demands of shareholders are at least as important as customers brings ancillary costs. So as well as the leather, the labour, the shipping, you also pay for your big name brands marketing spend, its Parisian head office, its runway shows. Youre spending significantly more on the label stamped on the bag than the bag itself.
With Oliver Cabell, however, the costs are clear. Take its holdall, the Kennedy Weekender, which is the first of two products to launch, alongside a minimalist backpack. From your $285 spend (although the brand is US-based, it ships globally) precisely $71.57 goes to materials (including leather tanned in the Italys Monte Urano district and cotton from a mill founded in Montappone in 1936), another $69.95 on labour, $7.29 on shipping and $8.92 on tax.
The brand adds an 80 per cent markup to cover its own costs (and make a profit), but thats still a fraction of the $1,695 luxury equivalent. And, you can guarantee youre buying something made where it claims its made, not in a Bangladeshi sweatshop. And that peace of mind is priceless.
Oliver Cabell Debut Collection