This model is not unique to Hermes. Watch and car brands work the same way. Early on in these markets, you can get one of the desirable items without spending too much on undesirable items.
Some examples:
Rolex - stainless steel models are desirable and appreciate, gold models go for below msrp
Porche - Bucking the trend a bit, Porche gives you the option of paying an additional dealer markup rather than making you buy a Macan to get a GT3 RS.
Over time, this arbitrage goes to equilibrium and resellers can’t make money. It is relatively easy to get into this market so naturally it gets flooded. Profit goes to 0. Resellers also carry a risk that the item loses market value while they hold it. The only real winner here is the brand.
Some examples:
Rolex - stainless steel models are desirable and appreciate, gold models go for below msrp
Porche - Bucking the trend a bit, Porche gives you the option of paying an additional dealer markup rather than making you buy a Macan to get a GT3 RS.
Over time, this arbitrage goes to equilibrium and resellers can’t make money. It is relatively easy to get into this market so naturally it gets flooded. Profit goes to 0. Resellers also carry a risk that the item loses market value while they hold it. The only real winner here is the brand.