Why Hermes, Porsche, Ferrari, and Rolex hold their products hostage

This episode explores the tactics ultra-luxury brands like Hermes, Porsche, Ferrari, and Rolex use to maintain exclusivity and demand through artificial scarcity and stringent purchase requirements.

1. Ultra-luxury brands manage their product availability to create artificial scarcity.
2. Consumers often have to navigate complex and costly paths to purchase high-demand products.
3. These purchasing requirements can include spending large sums on less desirable items.
4. The resale values of these items are significantly higher than retail, adding to their allure.
5. Legal challenges such as antitrust lawsuits are beginning to emerge against these practices.

1. Introduction to Ultra-Luxury Shopping

Jennifer Kleinhens introduces the concept of artificial scarcity in luxury brands. Key focus on how Hermes manages its highly coveted Birkin bags. Jennifer Kleinhens: "But don't run down to your local Hermes shop just yet because it's not easy to get your hands on one."

2. The Psychology of Exclusivity

Discussion on the psychological effects of exclusivity and status in consumer behavior, particularly in luxury markets. Jennifer Kleinhens: "This wild way of selling is built on the most basic but most powerful drivers in human behavior—scarcity, exclusivity, and status."

3. Case Studies: Porsche and Ferrari

Insights into the specific strategies used by Porsche and Ferrari to control the distribution of their luxury cars. Mark McCann: "They're selling a dream, which is not going to happen."

4. The Rolex Experience

Explores the unique selling strategy of Rolex and how authorized dealers manage customer expectations and access to high-demand watches. Jennifer Kleinhens: "Most people can't walk off the street into a Rolex store, plop down $10,000 and walk out with a watch."

5. Legal and Ethical Implications

Analysis of the potential legal and ethical issues arising from these sales practices, including a mention of a recent lawsuit against Hermes. Jennifer Kleinhens: "It seems that Hermes is now being hit with an antitrust class action lawsuit."

1. Research extensively before investing in luxury goods to understand potential purchasing hurdles.
2. Cultivate relationships with sales associates, as personal connections often influence purchasing opportunities.
3. Consider the ethical implications of supporting brands with restrictive and opaque sales tactics.
4. Explore the secondary market for luxury goods, but be aware of inflated prices due to perceived scarcity.
5. Stay informed about consumer rights and potential legal actions if engaging with ultra-luxury brands.

Do you have a luxury or designer brand that you lust after? It could be Tom Ford, Balenciaga, Chanel, Lamborghini, or Patek Philippe.

Maybe you dream about the day you can walk into one of their stores, throw your credit card down on the counter and walk out with a car, suit, bag, or watch that makes you feel (sometimes literally) like a million bucks.

What if I told you that the process of jumping through hoops and having to spend sometimes millions of dollars for the promise of potentially being able to spend millions more on what you ACTUALLY want - often to be denied at the very last minute - is common across many ultra high luxury brands?

Join me today as we take a look at how brands like Hermes, Porsche, Ferrari, and Rolex essentially hold their products hostage and use scarcity on steroids to drive customers to spend insane amounts of money for the privilege of spending millions more?

People

Jennifer Kleinhens, Mark McCann

Companies

Hermes, Porsche, Ferrari, Rolex

Content Warnings:

None

Jennifer Kleinhens

This week on choice hacking. Six months ago, I put in my Hermes wishlist. The purchase history included two oran sandals that I bought last year and a Kelly belt which I purchased this year. Total amount spent was around 1800 pounds. I was then offered this beautiful Birkin 25 chai gold hardware in togo leather.

I was told to be open minded about my colors because black and gold. Are very hard to get. That's a TikTok created by user oh my rock, a lifestyle creator talking about how she got her very first Hermes Birkin bag. Now, if you're not familiar with the underground world of Hermes bags, here is a short primer.

Jennifer Kleinhens

Hermes is a french luxury brand that makes some of the most expensive and exclusive handbags on earth. Their two most sought after models are called the Birkin and the Kelly and brand new, they cost between ten and $12,000. Now that might sound like a lot, but on the secondary market, the resale market, these bags can be sold for up to $100,000 with some going for as much as half a million. In fact, theyre a great investment piece. With the value of a Birkin rising 500% in the past 35 years, thats a better investment than literal gold.

And unlike gold, a Birkins value has never gone down. But don't run down to your local air maze shop just yet because it's not easy to get your hands on one. You have to jump through a series of wild, ever changing and expensive hoops to get added to a list. That doesn't even guarantee that you'll ever get the privilege of spending $12,000 on this bag. And by the way, the price of a new Birkin increased 7.7% in the last year alone.

So by the time you can buy one, it's going to cost way more. Customers have reported that they have to shop at a single store, sometimes with a single sales associate, and buy thousands of dollars worth of a variety of lesser products like belts, key rings, other bags, scarves, furniture, you name it, sometimes totaling tens of thousands of dollars. And guess what? If the air maze you're shopping at doesn't register your sales to your customer account or you shop in Paris and not Dubai, it doesn't count toward getting you on the Birkin list. And all that money you spent was for nothing.

Now, hey, you might be saying, Jen, its a luxury bag. Of course its hard to get. Fashion is expensive, and rich people like expensive, exclusive things. But what if I told you that the process of jumping through hoops and having to spend sometimes millions of dollars for the promise of potentially being able to spend millions more on what you actually want, often to be denied at the very last minute, is common across many ultra high luxury brands. Today we're taking a look at how brands like Hermaze, Porsche, Ferrari and Rolex essentially hold their products hostage and use scarcity on steroids to get customers to try their luck at the world's most expensive roulette wheel.

I'm Jennifer Kleinhens, and you're listening to choice hacking, a podcast about applying behavioral science and psychology to business marketing experience, design and more. Join me today as we uncover the wild world of ultra luxury shopping and how these big brands dangle the promise of a chance that you might be permitted to possibly buy one of their products in the future in front of desperate customers to rinse them. I'd argue unethically for thousands and sometimes millions of dollars, with no guarantee that they'll ever get to buy the product that they're really after. But before we get started, I want to talk about choice hacking the agency.

Did you know that choice hacking isn't just a podcast. We also offer online courses, team training, coaching and consulting to brands of all sizes. But because we're a small team and I want to keep giving our clients the personal attention they deserve, we only take on ten consulting clients a year. That's right, just ten. So if you want to grow your business by figuring out what makes your buyers tick, get in touch.

Today, we've worked with brands of all sizes all over the world, like at and T, McDonald's, T Mobile, Adidas and Starbucks. And we can help you too. Just visit choicehacking.com together to learn more. Thats choicehacking.com together. Now onto the show.

Now this wild way of selling is built on three of the most basic but most powerful drivers in human scarcity, exclusivity and status. Well, talk more about those later. But first, I want to introduce you to a man named Mark McCann. If you are lucky enough to have the money to buy a luxury special edition supercar like Porsche, Ferrari or Lamborghini, it's not as easy as walking into a dealership and buying the car of your dreams. He's an auto youtuber located in the midlands of the UK, and he's also a retired world champion stock car driver.

Although my TikTok FYp introduced me to the insane world of air maze collectors, my YouTube algorithm put one of Mark's videos in my feed. It was called I exposed supercar dealerships. Now, I love a bit of luxury YouTube. Whether it's Ryan Serhant giving me a tour of a tasteful $100 billion mega mansion in LA. Or someone like Harry Metcalf reviewing his time spent driving a $3 million Bugatti, who, when the engine light went off, sent a helicopter with a mechanic to service the car instantly.

Either way, I'm a bit of a YouTube luxury voyeur, but one thing I love more than seeing luxury stuff is seeing the darker, more gritty side of luxury consumption. What insurance costs on that Bugatti, or how much the power bill is in a 15,000 square foot mansion. So when I saw Mark's video about exposing supercar dealerships. Pour me some tea. I was hooked.

My expectations were medium. I honestly thought it might be clickbait, but what I saw blew my marketing psychology mind. I think there's people going in with the dream of buying their ultimate car, the 992 GT three rs. And I think these dealers are giving the dangling carrot. They're saying if you buy ten cars, which will potentially lose hundreds of thousands of pounds, I might get you a car.

Mark McCann

And they know that there isn't enough cars to go round. They're selling a dream, which is not going to happen. That's Mark talking about one of his dream cars, the Porsche GT three rs.

Jennifer Kleinhens

I'm not much of a motorhead, so from what I gathered, it was a new, very fast car, of which Porsche only made a few, and that the dealerships would be releasing very soon. Which, of course, made it very desirable in the world of collecting expensive porsches. But there's one thing you need to know about these cars for people who buy them at list price. So, from the dealer, brand new at what the dealer charges, a GT three rs goes for between 185,003, $300,000. And so it sounds reasonable for a luxury car.

But to buy one of these cars at list price from the dealer is almost impossible. And you have to jump through some incredible and ever changing hoops. But once you get your hands on one, the dealer makes you agree not to sell it, at least for a little while. Usually the agreement with the brand is about a year. That's pretty common with luxury cars.

Tesla did it for the Cybertruck, for or did it for their GT. Basically, when you buy an expensive, exclusive car from the dealer, these brands want to make sure that you don't drive it for a day and then sell it to the highest bidder. It's a way for them to get the cars to people who are approved to represent the brand. So if you don't get on the brand's exclusive, approved buyer's list. You have to go to the secondary market.

But once these cars leave the dealership, they're not like a Toyota Corolla. They don't lose money when they roll off the lot. They gain 100,000, 200,000 or more in the resale market immediately. Okay, you say, so what do I have to do to get on this list? Like, how hard could it be?

Just get there first or pay off the sales guy? Well, it's not that simple. Porsche requires you to have spent a certain amount of money on their cars in the prior year to be considered for the, in this case, GT three rs list. And the more you spend, the better your chances. When Hermes does this, customers spend thousands.

But when Porsche does this, the numbers and the stakes are much, much higher. It's into the millions from a single dealership and usually a single salesperson in one year. If your sales guy or gal tells you to spend 400,000 pounds, about half a million dollars, on three brand new Porsche Taykins in the next 30 days, to get on that list, which is what they told Mark McCann, you better do it. But as we all know, salespeople have sales quotas, and some of them allegedly take advantage of desperate, eager customers. And what happens if your sales guy or gal leaves the job 24 hours after you laid down half a million bucks?

You have to start all over from zero with a new salesperson and a new spending goal to get the car that you really want. And many customers have reported, often with their identities concealed to protect their relationship with Porsche and other luxury car manufacturers who do the same thing, like Ferrari, that once they're told they've made the list and that they have a car, often the rug is pulled at the very last minute. And they have spent literally millions of dollars for the chance to get their dream car, and it was all for nothing. Now, it would be wrong of me to point the finger only at Porsche, because they're far from the only luxury car brand to allegedly operate in this way. Ferrari is notorious for having insane and unpredictable buying requirements.

In fact, NoTA car collector and former Tonight show host Jay Leno is famous for saying he would never buy a Ferrari because the requirements are so ridiculous and the dealer experience is so poor. Here's how he described it in adult terms. Its like rich guys that go to a dominatrix, oh, she kicked the crap out of me. It was fantastic. Some guys like that, I dont.

So weve covered buying requirements and alleged rug pulling by brands like Porsche, Ferrari and Hermes. But what about Rolex, the luxury watch brand? The world of high demand Rolexes is ruled by what are called ads, authorized dealers. The Rolex stores that you see scattered around the world are basically just showrooms. Most people cant walk off the street into a Rolex store, plop down $10,000 and walk out with a watch instead.

Working with an authorized dealer is, according to the Rolex collector community, your best shot at getting a specific watch. And that means choosing which authorized dealer you want to work with is a huge decision for Rolex buyers. Waitlists in the world of Rolex are even more mysterious since, according to this authorized dealer, who has had his voice and face disguised in order to speak with TikToker Roman Scharff, they don't formally exist. There is no official list. You're not registering on the Rolex website.

The list is a way to, I guess, hold you off to not completely tell you you are not getting this watch. However, I do have people that are on our list. That list is built by people that have done business with us. And that list is in my head I'm thinking, hey, I just got this. I remember Bob.

Bob really wanted one. Bob spent some money with me. He's not trying to flip this. He's not looking for all the hottest models. This is just the watch that he's wanted for last, you know, four years.

Let me give Bob a call and sell him this watch. The Rolex subreddit is a goldmine of moaning, complaining, scheming and dreaming about how to get on an ad's mental waitlist as user dingo ate me baby. Apologies to my australian listeners posted first rule of the wait list is there is no waitlist. It's a we got a 28 millimeter date chest that would be great for your wife, but no submariner has come in yet waitlist. In other words, just like Hermes and Porsche, you had better get in that salesperson's good graces because at the end of the day, they decide arbitrarily if you'll ever get a chance at your real goal.

Jennifer Kleinhens

A highly collectible and rare watch. Often a spot on a waitlist for a sought after model is down to if your ad even likes you, and if you have what's called a spend profile, a history of buying a certain number of watches or spending a certain arbitrary amount of money money with your ad of choice. And don't even think about buying a bunch of recommended watches to up your spend profile and then flipping them. Because if you ever get that sought after phone call from your ad telling you to come in right now because your dream watch is suddenly available? You better be wearing one of the watches they recommended, or it's seen as an insult and a huge faux pas that could cost you a shot at your dream watch.

Look, you might be saying this is stupid, rich people doing stupid things with their money. Porsche, Ferrari, Hermes, Rolex. They can take advantage of these people and nobody really gets hurt. And to a certain extent, I agree. From a brand's perspective, if it's legal and they see it as a way to protect the exclusivity of their brand, then it's fine.

Nobody's forcing people to spend ridiculous amounts of money on these cars, watches and bags. But from a behavioral science and psychology perspective, it throws up more than a few red flags. First and most important, is how some of these salespeople are reportedly manipulating customers who desperately want this bag watcher car to hit their sales numbers and then, whoops, I told you were on the list. But it turns out, not so much. These items might be something that people have 100 of in their closet, or maybe they've worked their entire lives to save for just one.

And look, I wouldn't buy it, but I'm not going to tell anyone else or judge them on what they can or can't desire or dream about. My issue is with what appears to be deception and manipulation based on these powerful drivers of scarcity, exclusivity, and status. It's worth noting that all of the brands I've talked about today have denied the existence of these buying requirements in approved buyer lists. But their customers tell a very different story. They're on YouTube and TikTok and Reddit passing along urban legends and myths about what it takes to win the right to spend.

And for some customers, it fuels their desire to beat the system and get one of these products. But for others, it's a very expensive exercise in trust with no guarantees. One quick update I had to jump in and make to this podcast before I released it because this happened just as I was about to release this episode. It seems that Hermes is now being hit with an antitrust class action lawsuit because of the way that they sell their Birkins and Kellys. According to the filing.

In the state of California, Hermes is violating antitrust law by tying the sale of one item to the purchase of another, according to a Reuters report. And while we'll have to wait and see what happens when airmaze gets their day in court, one thing is certain. If I were Ferrari, Porsche, or Rolex, I'd be very nervous. Thank you for listening to the choice hacking podcast. If you enjoyed this episode, please rate and review it.

It takes me 20 plus hours to create every episode, and it really helps the podcast find new listeners when it has more ratings and reviews. And if you're stumped about what to say in a review, just tell me where you're from. And don't forget, you can learn more about using behavioral science and psychology to figure out what makes your buyers tick. When you subscribe to the free choice hacking Ideas newsletter, you'll join more than 8000 brilliant entrepreneurs and marketing folks from companies like Google, Coke, Disney, McDonald's, and Starbucks who get my newsletter. To sign up, just visit choicehackingideas.com.

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