The £30 Problem: How Dupes Are Rewriting the Rules of Luxury

 

Would you still feel cool in your designer outfit if everyone around you was wearing the dupe? While you are scrolling through TikTok, you may have noticed that influencers are racing to find less expensive, look-alike knockoff products from name brands. This is what Gen Z calls the “dupe culture”. They do not feel knockoffs are uncool. Instead, the viral spread of the “dupe culture” among Gen Z even makes them prefer knockoffs more than other generations, but it is not just an economic decision.

Signalling and Differential Costs

Try to think about why you would like top brand products even though they are expensive. A Hermès Birkin can cost £10,000, with an 18-month waitlist to get one. This phenomenon is known as Veblen goods, named after American economist Thorstein Veblen. Veblen argued that in a "leisure class," consuming expensive, non-essential goods is a way of displaying social power.  This seems reasonable, but how does a Hermès Birkin display social power?

Here, we have to introduce an economic concept of signalling, which refers to when one party acts to credibly convey private information to another party to overcome asymmetric information (Spence, 1973). In our example, the leisure class are the signallers who take the Hermès Birkin as a signal to show their social power to others who are the receivers.

Can a cheap and average bag be a suitable signal? The answer is no, as an important condition of a signal is that it only works if it has differential costs. In our example, the Hermès Birkin is a small amount of spending for a leisure class person, but expensive to an average person, so the high cost screens out the latter, as they cannot genuinely afford it. However, what if someone found a cheap and similar-looking “Hermès Birkin”?

When Everyone Can Signal, Nobody Can

So, what happens when a £30 AliExpress bag becomes indistinguishable from a £10,000 Birkin? The signal loses its informational value.

Global trade in counterfeit goods and imitation products has reached $467 billion (OECD, 2025), and on TikTok alone, the hashtag #dupe has amassed over 7 billion views. Dupe culture is not a niche trend, it is a mass market phenomenon.

In economic terms, this represents a shift from a separating equilibrium to a pooling equilibrium. In a healthy luxury market, consumers sort themselves based on their ability to bear the cost of the signal: those who can genuinely afford luxury goods (high-type senders) purchase them, while those who cannot (low-type senders) are screened out by price. However, when dupes collapse this cost differential, low-type senders can mimic high-type signals at minimal cost. The result is a pooling equilibrium: nobody can tell who is who anymore. The Birkin stops being proof of wealth and becomes just another bag.

Fighting Back: How Luxury Brands Are Raising the Bar

Luxury brands are not sitting still. Faced with a pooling equilibrium, they are actively redesigning signals to restore their credibility.

First, firms intensify exclusivity. By restricting supply through waitlists and controlled distribution, brands like Hermès ensure that access (not just price) becomes the barrier. Even if a product is copied, it cannot be legitimately obtained.

Second, brands invest in non-replicable experiences. Companies such as Louis Vuitton and Chanel embed value in in-store rituals, craftsmanship, and heritage narratives. The signal shifts from the physical object to the intangible experience surrounding it.

The third, and perhaps most interesting, is digital authentication. Luxury houses are increasingly adopting Digital Product Passports, embedded microchips and blockchain-backed certificates of authenticity that verify a product's origin instantly (FashionBI, 2025). LVMH, Prada and Cartier have already piloted this through the Aura Blockchain Consortium. The signal moves somewhere a £30 knockoff cannot follow.

In effect, luxury brands are engaged in an ongoing effort to re-establish a separating equilibrium in a world where visual imitation is no longer costly.

The psychology behind the price tag

Even if brands are successful in rebuilding their signals, the way buyers and owners perceive their products still plays a crucial role. But dupe culture does not just disrupt markets, it gets inside people's heads. To understand why, we need to look beyond standard economic theory and into behavioural economics.

One key concept is the endowment effect, which describes our tendency to value items we own more highly than their market price would suggest. A £3,000 bag is more than just a bag, once it is yours, the emotional pride and social status it carries become part of its value.

However, it is at this stage where dupe culture starts to undermine the psychological value of ownership too.

Imagine paying £10,000 and waiting 18 months for an Hermès Birkin, only to see near identical versions roaming the streets. That sense of pride and ‘showing off’ that comes with owning the authentic bag is eroded, as others can no longer distinguish the real from a convincing dupe. Both the bag and its owner lose a kind of celebrity status and instead you start to blend into the crowd filled with £30 lookalikes.

This reaction is best understood through loss aversion, the idea that losses feel more significant than gains (Kahneman and Tversky, 1979). In this case, buyers who paid thousands aren't just worried about the financial loss, but also the symbolic loss of exclusivity. What was once a costly way to access the perks of owning an authentic bag is now easily mirrored through dupes, which are able to send the same signals whilst saving thousands of pounds. Due to loss aversion, that loss of exclusivity feels far more costly than the satisfaction of owning an Hermès Birkin ever did.

In other words, dupes don't destroy the market for bags like the Hermès Birkin as there will always be demand for authenticity and exclusivity. Instead, they strip away the magic of owning one. Luxury brands and dupe culture are locked in an arms race, and whether the signal survives will determine whether that £10,000 bag is ever worth the price.

References:

FashionBI (2025). How Luxury Brands Are Embracing the Digital Product Passports. Available at: https://www.fashionbi.com/insights/how-luxury-brands-are-embracing-the-digital-product-passports

Kahneman, D., & Tversky, A. (1979). Prospect Theory: An Analysis of Decision under Risk. Econometrica, 47(2), 263–291. https://doi.org/10.2307/1914185

Ken Research (2025). Global Fast Fashion Market. Available at: https://www.kenresearch.com/global-fast-fashion-market

Mosendz, P. and Rubin, C. (2023). Gen Z Is the Dupe Generation. Business Insider. Available at: https://www.businessinsider.com/gen-z-is-the-dupe-generation-2023-12

OECD (2025). Global trade in fake goods reached USD 467 billion, posing risks to consumer safety and compromising intellectual property. Available at: https://www.oecd.org/en/about/news/press-releases/2025/05/global-trade-in-fake-goods-reached-USD-467-billion-posing-risks-to-consumer-safety-and-compromising-intellectual-property.html

Spence, M. (1973). Job Market Signaling. The Quarterly Journal of Economics, 87(3), 355–374. https://doi.org/10.2307/1882010

Trust Place (2025). Dupes on TikTok: How Brands Are Losing Control of Their Image. Available at: https://www.trust-place.com/post/dupes-on-tiktok-how-brands-are-losing-control-of-their-image