The resale industry is bound to get even more of a lift as apparel sales bounce back and shoppers go out on a regular basis again. And Poshmark stands to be one of the biggest beneficiaries of the return to normalcy, according to its founder and chief executive. Manish Chandra, who also serves as chairman of Poshmark, believes the company’s operating model as a peer-to-peer secondhand fashion platform gives it just the right product mix it needs as the apparel industry continues to recover from the Covid-19 pandemic.
During Cowen’s 2nd Annual New Retail Ecosystem CEO Summit, Chandra referred to Poshmark as the “biggest harbinger” of the world’s changing attitude toward new trends, given that every product it sells is sourced from its own community of buyers and sellers.
“The core sourcing engine for us is really making sure that the sellers know where the demand is and making sure that they are able to merchandise it while it’s still in style,” Chandra said.
While Poshmark hosts four virtual “Posh Parties” each day that enable fashion shoppers to meet up in the app to shop, share, and sell clothing and accessories, the marketplace curates the top brands and items from the parties into their own showrooms, giving shoppers easier access to popular and trending merchandise.
With underlying technologies including algorithms and machine learning capabilities that can respond quickly to change, the platform can promote items that the customer wants and deprioritize items shoppers might be less interested in throughout the entire experience.
The combination of social commerce and technology kickstarts Poshmark’s “meta-merchandising” strategy, which aims to guide sellers through the merchandising process so they have a better chance of connecting their products with a buyer.
“As the community and the world is changing, our inventory starts to change dynamically,” Chandra said during another investor event, the Morgan Stanley Life After Covid: 2021 Thematic Conference. “Because of the fact that our sellers source this inventory, they can dynamically upload inventory that is getting depleted and overcome it.”
The social commerce marketplace, which went public in January, recently added the Style Tags feature so buyers and sellers alike can customize their feeds by following tags related to styles they are interested in, once again feeding more data to the company’s merchandising engine.
“The dynamics of the marketplace where new kinds of inventory can shuffle up to the top, is what ends up driving that second-quarter growth as the reopening is happening,” Chandra said. “We’re excited about the reopening because of two things: one is the marketplace is incredibly responsive to reopening. Given that apparel is a very large portion of our total inventory mix, we see people going out, going to events, going to weddings or dates, as something that drives more demand and more supply on the platform.”
Chandra didn’t reveal info about second-quarter results to date, but the company expects revenue in the period in the range of $79 million to $81 million, ahead of the $66.9 million generated in the year-ago quarter. Given the performance during the first quarter, in which categories such as crop tops increased 101 percent and bikinis jumped 86 percent, it appears “going out” clothing will continue to play a major role into Poshmark’s Q2.
“When you think of our platform, it really relies on that circularity of fashion. You go out, you wear an outfit,” Chandra said. “You want to recirculate it, you buy a new outfit. That whole cycle has been somewhat blocked in the last year and a half, as we’ve all stayed indoors largely. [Reopening] really starts to accelerate that, so we see that as an accelerant for our business across the board, not just for demand, but also for supply as people sort of take the stress out of their life.”
Poshmark chief financial officer Anan Kashyap indicated during the Morgan Stanley event that while shopper frequency and average order size are important metrics for the company, the platform is focused mostly on global “buyer growth over the long term.”
Total active buyers at Poshmark increased 18 percent to 6.7 million in the first quarter, up from 5.7 million in the year-ago period. The company defines active buyers as unique users who have made one purchase on the Poshmark platform in the past 12 months.
Poshmark is aggressively pursuing new buyers with its first television campaign featuring Marie Kondo, as well as international expansion efforts such as launching in Australia earlier this year and pursuing “more new markets in the long term,” Kashyap said.
“From a funnel standpoint, this is really important to develop each of these markets, both in the buyer and the seller side,” he noted.
Poshmark is also making moves to meet young consumers where there are. Last month, it debuted a “bite-sized” version of its experience inside Snapchat, whose 42 million users born between 1997 and 2012 make it Gen Z’s most-used social destination, according to eMarketer. Poshmark says Snap reaches about 90 percent of the generation’s 13-to-24-year-olds, a demographic that fellow digital marketplace Etsy just paid $1.6 billion to court.
In essence, Poshmark Mini brings the peer-to-peer platform’s treasure-hunting experience to teens and 20somethings on Snapchat, where they can browse products and connect without tapping out of the social app.
“Community is at the heart of everything we do, and we’re focused on building the world’s largest and most accessible social shopping community where everyone is welcome and anyone can thrive,” Poshmark chief marketing officer Steven Tristan Young said in a statement. “We’re delighted to bring our simple, social and sustainable shopping experience to Snap, a brand that also prioritizes and fosters community. This partnership is a natural extension of our founding mission to put people at the heart of commerce and allows us to create more engaging, dynamic, and personalized shopping experiences everywhere consumers are.”
Poshmark pointed out that sellers stand to benefit from the advent of Mini, which affords greater exposure and visibility. Roughly three years ago, Poshmark was among the first to partner with Snap Kit so that its thousands of sellers could link their listings through the popular social app.
Stateside users on Snapchat have three ways of engaging with Poshmark Mini, the resale platform said. In addition to shopping virtual Posh Parties—the firm’s “signature, real-time” events—Snapshat consumers can also review the secondhand site’s full catalogue of roughly 200 million items across 9,000 brands. Beyond that, they can view top-trending brands across the breadth of the Poshmark community, it added.
In the U.S., Poshmark still operates a more structured ROI-based framework focused on lifetime value (LTV), customer acquisition costs (CAC) and payback—the length of time taken to earn back the money invested in acquiring customers.
The need for more customers is simple—get more supply of product into the Poshmark ecosystem.
“The key dynamic for us is to really focus on supply,” Kashyap said. “It’s hard to have a marketplace without real products and listings so that’s a core area of investment for us initially and upfront.”
Chandra pointed out that Poshmark’s recent expansions into categories such as pet fashion are designed to serve two purposes: enabling more products to be bought and sold on the platform, which boosts gross merchandise value (GMV) per buyer and income through high-order-value purchases, and driving new buyer activations and enable more buyers and sellers with an opportunity to engage with the platform.
“For example, if fundamentally you are very much a focused shopper, as a pet lover, it gives you a journey to Poshmark through our pets category, but then you discover that you care about fashion, home, etc.,” said Chandra. “We’re trying to also just cater to multiple aspects of your life so that as you’re looking at style across the full spectrum, it becomes a one-stop shop for you.”
Additional reporting by Jessica Binns.