Poshmark filed its prospectus Thursday for an initial public offering after finally turning a profit this year.
The move follows secondhand rival ThredUp’s October IPO filing, underscoring the sky’s-the-limit growth potential for the booming fashion resale market, fueled in large part by eco-conscious millennial and Gen Z consumers whose full spending power has yet to be seen.
Unlike ThredUp or luxury peer The RealReal, similarly Bay Area-based Poshmark courts individual buyers and sellers to its online fashion marketplace for secondhand goods, allowing them to transact directly with each other for a small fee. Since launching in 2011, the company says it has attracted more than 70 million users and sold more than 130 million items, pushing cumulative gross merchandise volume (GMV) to $4 billion. Active users last year spent an average of 27 minutes on its site, connecting with each other through 20.5 billion social interactions.
“Secondhand and resale also continue to grow as consumers, particularly younger generations, adopt efforts to reduce overall consumption and support a more sustainable economy,” Poshmark said, citing its Social Commerce Report, executed with Zogby Analytics, stating that 16 percent of the Gen Z consumer closet is secondhand, versus 10 percent for baby boomers.
“According to that report, 72% of our U.S. users often consider an item’s resale value before purchasing, and that when unable to return an item online, 93% of our U.S. users would sell it online,” it added. Plus, the “online U.S. resale market for apparel and footwear is estimated to have been $7 billion in 2019 and is expected to grow to an estimated $26 billion in 2023,” it said, pointing to research it commissioned with GlobalData earlier this year.
Although the coronavirus pandemic affected Poshmark’s GMV, which measures the total dollar value of merchandise sold online, the metric gained ground as buyers and sellers resumed transactions following the initial outbreak. This year, GMV growth for the quarter ended March 31 was 9 percent but rebounded to 42 percent for the second quarter June 30. While it has benefited from stay-at-home orders as consumers shifted their purchasing to online, Poshmark cautioned that the pandemic “has impacted, and will continue to impact, our business.”
For its IPO, Poshmark plans to sell $100 million worth of shares, the typical placeholder by companies figuring out filing fees. Shares will trade on the Nasdaq under the symbol “POSH.”
The company said it posted its first quarter of profitability for the period ended June 30, which saw net income of $8.1 million, or 45 cents a share. For the nine months, revenue rose 28.1 percent to $192.8 million from $150.5 million, while it posted a net profit of $20.9 million, against a net loss of $33.9 million in the year-ago period. For the year ended Dec. 31, 2019, the company widened its net loss to $48.69 million from the year ago net loss of $14.5 million.
Poshmark charges a fee of 20 percent of the final price for sales over $15, or a flat rate of $2.95 for sales under $15.
As of Sept. 30, the peer-to-peer platform featured “over 201 million secondhand and new items for sale across 9,431 brands,” with “31.7 million active users, 6.2 million active buyers and 4.5 million active sellers,” it said.
As it turns out, secondhand gifts are resonating with shoppers this holiday season. As consumers hunker down for the holidays—instead of traveling to spend time with loved ones—they’re also increasingly turning to the web for their gifting needs.
While consumers have undoubtedly tightened their purse strings, they’re still demonstrating an appetite for luxury. The price-sensitive solution, Poshmark believes, is buying haute couture wares on the secondary market. “Even in a year when we’re being cost conscious, resale luxury offers a more accessible way to delight without going over budget,” it said, and easy-to-style, size-free accessories have represented a particular area of growth when it comes to gifting.
While occasions to dress up are few and far between, the compact Gucci Marmont bag has become the present of the season, Poshmark said, with purchases up 83 percent from fall last year. Shoppers have also bought 40 percent more Chloe Paraty shoulder bags, as the trendy 2008 style remains highly coveted more than a decade later. Luxury jewelry has also been a bright spot for resale, coinciding with the trend toward waist-up “Zoom dressing,” and Chanel earring buys are up 49 percent year over year.
The Chloe Paraty shoulder bag has been a hit with holiday shoppers this season, Poshmark said.
Men are also getting in on the secondhand luxury game, Poshmark said. Headwear has skyrocketed, with bucket hat sales up 73 percent and beanie purchases showing an increase of 38 percent from the holiday shopping season last year. Louis Vuitton phone cases have also proven popular with male shoppers, who have bought 134 percent more of these luxe accessories since fall of 2019.
Predictably, comfortable staples are also garnering major interest from holiday shoppers. “With more time spent at home than ever before, cozy gifts for staying at home are sure to be used over and over again,” Poshmark said. Festive pajamas and holiday onesies for women, men and kids have surged, with adult versions up by about 70 percent year over year, and kids up 34 percent. Notably, men’s onesies in particular are seeing a 60-percent spike in interest from last year, it added.
The cozy PJ love may stem from the fact that Christmas sweaters—normally a must-have for the usual wave of “ugly sweater” parties that overtake the nation each December—have demonstrated much less relevance this year, with consumers holed up at home. Conversely, Santa suit purchases are on the rise, perhaps because parents might be taking the place of professional mall Santas amid widespread retail disruptions.
While socializing is proving tough this holiday season, shoppers are interested in spending socially distanced time enjoying the great outdoors—specifically on the slopes. Ski and snowboard staples like jackets, gloves and mittens were trending throughout November, Poshmark said, with male consumers in particular favoring brands like Burton and Arc’teryx.