Lauren Eager started frugal in high school. It was a way to find cheap and interesting clothes without the waste of fast fashion.
In 2015, during her first year of college, she downloaded the Poshmark app, a kind of resale platform that is a cross between Instagram and eBay. Soon, she was not only buying clothes but also selling them.
This was the golden age of online reselling. In addition to Poshmark, companies like ThredUp and Depop have sprung up to give used clothing a second life. In 2016, Facebook debuted Marketplace. Goodwill also took action and launched a swanky website.
These platforms capitalized on two consumer trends: buying things online and the never-getting joy of getting second-hand items at a fraction of the original price. As people cleaned out their closets during the coronavirus pandemic, enthusiasm for resale increased. It was so powerful that Poshmark decided to go public. On the day of its initial public offering in January 2021, the company's market capitalization reached $7.4 billion, roughly the same as the market capitalization of PVH, which owns Calvin Klein and Tommy Hilfiger, at the time.
After that, the used clothing business began to fray.
Eager and others said using the Poshmark app felt like searching for something in a cluttered closet. She said the app was littered with features that didn't work or weren't used, and felt “spammy” with too many push notifications.
Many platforms found it difficult to expand sales of second-hand products. Online resellers are currently trying to recalibrate. Last year, ThredUp decided to exit Europe and focus on sales in the United States. Trove, a company that helps brands like Canada Goose and Steve Madden resell products, has acquired competitor Recurate. Luxury goods consignment retailer The RealReal has appointed a new chief executive officer as it looks to improve profitability.
Poshmark is undergoing perhaps the biggest reinvention. In 2023, Naver, South Korea's largest search engine and online marketplace, acquired the company in a deal valued at $1.6 billion, less than half its IPO price.
Naver, a combination of Google and Amazon, is betting it can rebuild Poshmark, which has 130 million active users, with the same technology that made Naver dominant in its home country.
It may also help breathe new life into the resale market. Analysts believe there is still room for growth in the U.S. resale fashion market, with revenue expected to rise 26% to $36.3 billion by 2028, according to retail consulting firm Coresight Research. are.
A new California law may help. The law, passed last year, requires brands and retailers doing business in the state with sales of at least $1 million to create “producer responsibility organizations” to take back, reuse, repair or recycle products. is required to be established. Reseller platforms like ThredUp and Poshmark may be in a position to help brands fulfill that mission.
But for now, Naver's focus on Poshmark is something more fundamental: making it a better place to sell and shop. Philip Lee, founder of The Pickool, a media outlet that covers technology companies in South Korea and the United States, said the company has the “operational know-how” to make that happen.
“They're trying to revamp Poshmark and then increase their market share,” he said.
Combining search and commerce
Poshmark, based in Redwood City, California, was founded in 2011 by entrepreneur and former technology executive Manish Chandra and three others. As Poshmark sought to expand its business, it faced a problem common to resellers. The idea is to capture the treasure-hunting excitement of second-hand shopping while not frustrating buyers with endless scrolling. The company knew it needed better search and an interactive element that gave people more reasons than just to pay $19 for a J. Crew sweater.
Meanwhile, Naver was looking for ways to expand beyond South Korea, where its commerce and search businesses were already mature. The growth of the US online resale market has provided opportunities and also given the company access to the world's largest consumer market.
“Commerce is a big growth driver for us,” said Namseung Kim, Naver's chief financial officer. Also, the peer-to-peer field, where users sell to each other, was still in its infancy and had room for expansion. But Kim added, “This is a more difficult segment and that's why it's difficult for many big players to enter.”
There are two common business models for reselling: peer-to-peer and consignment. In consignment sales, a platform collects and redistributes physical goods. Poshmark uses a peer-to-peer model, relying on large numbers of people, many of them newbies, to negotiate prices and mail items to each other. This decentralization can be a headache for brands that want some level of control over their products. And platforms like Poshmark need to make sure buyers feel comfortable trusting the sellers on the site.
Vanessa Wong, Poshmark's vice president of product, said that before the Naver acquisition, it was difficult to make necessary technological changes.
“I always talk to engineers and ask them, 'What would happen if we did this or did that?' And they'd say, 'That's hard.' The effort is really hard,” Wong said.
The acquisition of Naver gave us both the investment and expertise to make change happen. Founded in 1999, this company can be found all over South Korea.
“We are more than just a search technology or AI service,” said Soo-yeon Choi, CEO of Naver, headquartered near Seoul. The company “reduces people's frustrations, and that's what we need to do to help us grow,” she said.
Mr. Chandra, who stayed on as chief executive after the Naver acquisition, said search helped Naver “become the powerhouse it is in South Korea.” When the company acquired Poshmark, that was a top priority.
We have introduced several new elements for users and merchants. Users can take a photo of a product using a tool called Posh Lens, and using Naver's machine learning technology, the site displays a list of products that are the same or similar to the shoes or tank top they're searching for. will be displayed. A paid advertising feature for sellers called “Promoted Closet” puts your products higher in customer feeds.
Poshmark also introduced themed live shows to attract and engage the TikTok generation. One party auctioned off clothing previously worn by Korean celebrities, and this was done with the help of Naver.
Still, the resale market is experiencing growing pains and hasn't fully found its footing since the height of the pandemic. It's not clear whether the changes happening at Poshmark are enough. In May, Naver's finance chief Kim said on an earnings call that Poshmark's profitability was improving, but by November the company was seeing slowing growth due to weakness in North America's peer-to-peer resale market. he warned.
failure and reinvention
The company has already reversed the unpopular decision.
In October, Poshmark introduced a new pricing structure that increased costs for buyers. Sellers, concerned that consumers would rebel against the high costs, staged a revolt. Within weeks, the company scrapped the new pricing structure.
And it continues to be a pain point for users. Tags and keywords that help users find what they're looking for can be misclassified. Sellers sometimes mistakenly tag products to draw attention to less popular products. (For example, leggings on Amazon that are difficult to unload may be listed as Free People apparel.)
The company is beta testing the changes with regular sellers like Alex Mahr, who sells thousands of dollars of apparel on the site each year. And within dedicated Facebook groups related to Poshmark, there's a lot of talk about changes sellers and buyers still want.
“The only way it's going to work is if there's continuous change,” Mahr said of Poshmark's adjustments. “If you're just using an app that never changes, one, it's going to be boring. Two, there's no opportunity to do better.”
One recent morning, Eager, a seller who joined Poshmark while in college, was pleasantly surprised to discover that the app had some new features that she actually liked. She photographed the airy gray tank top with Posh Lens. Within seconds, the app displayed a list of similar products. It was much better than coming up with the adjectives needed to describe it.
“I love it,” exclaimed Mr. Eager.
