Poshmark is prepping for its public debut.
The peer-to-peer fashion resale site said it has confidentially submitted an S-1 registration form with the Securities and Exchange Commission (SEC) for an initial public offering (IPO) of its Class A common stock.
There had been rumblings for more than a year that the secondhand apparel marketplace wanted to launch an IPO at some point, but the company put off its go-public plans until 2020, Bloomberg reported a year ago.
Bay Area-based Poshmark first prepared the IPO in April of last year when it was reportedly valued at $1.25 billion after some existing investors sold shares in a secondary transaction, according to The Wall Street Journal. Poshmark initially hired Goldman Sachs and Morgan Stanley to manage the IPO, according to the report, but the company has not confirmed if they are still overseeing the process.
Initially postponing the IPO to focus on boosting sales and improving its execution, Poshmark likely also had Covid-19-related headwinds that delayed the filing to the end of this year.
Poshmark was founded in 2011 as a way for women to sell clothes they no longer wore in a more socially based shopping setting, with the company’s app enabling them to “like” and comment on other people’s listings, which helped make the experience more personal than shopping for secondhand products on a more traditional marketplace or in a thrift-store setting. The company has since expanded into men’s wear, kid’s and home décor.
There is recent precedent for a secondhand marketplace to go public in the online-driven shopping environment, with luxury marketplace The RealReal filing an IPO in June 2019 valuing the company at $1.7 billion.
ThredUp, which is more of a direct rival to Poshmark than The RealReal and its luxury-centric merchandise, is also pursuing an IPO, Bloomberg reported last month. ThredUp’s IPO, targeted for early 2021, could raise anywhere between $200 million to $300 million, one of the people familiar with the matter said.
The overall secondhand apparel market has gained plenty of traction in recent years, with total generated sales expected to reach $64 billion by 2024, according to the ThredUp 2020 Resale Report.
And while there have been worries about whether the market could slow down, especially as people may be afraid to try on already-worn clothes, the online side of things is still doing well, with e-commerce resale still expected to grow 27 percent in 2020, according to analytics firm GlobalData, which calculated and collected the data for the ThredUp report. That number is only going to get much larger, the report said, with online secondhand set to grow 69 percent by 2021, dominating in-store’s 2 percent growth for secondhand. During the same period, the broader apparel retail sector is projected to shrink 15 percent.
While 66 percent of shoppers expect to buy less at department stores and 52 percent say they will shop less at luxury apparel stores, only 18 percent said they would shop for less secondhand apparel, while 44 percent say they would shop more within the pre-owned category.
Prior to the Covid-19 pandemic, Poshmark released a survey of its own in February detailing modern consumers’ growing preferences to shop on social media platforms. Notably, more than half (58 percent) of shoppers were comfortable purchasing products through social media platforms, and 75 percent were fine with the idea of buying directly from individuals online. Almost all shoppers (94 percent) are happy to purchase from sellers out of state.
In particular, Gen Z shoppers are becoming bigger catalysts in these changes, with these shoppers making up 20 percent of Poshmark’s total user base, and they represented one-quarter of the marketplace’s new users in 2019. Upon releasing the report, Poshmark announced that it passed the 100-million-order milestone.
“Gen Z is the hyper-social generation that has emerged as a key driver influencing these social shopping trends,” a Poshmark spokesperson told Sourcing Journal in February. “Social shopping is driven by connection and has given way for ample discovery, engagement and purchases—all things that Gen Z prioritizes and why they’ve become the ultimate advocates for this new way to shop.”
Poshmark’s ability to craft a community that enables both buyers and sellers to switch roles at the drop of a hat is an appealing one that can further drive go-forward plans, especially in an apparel landscape where more shoppers want to trust their peers. According to the company’s data, 48 percent of its sellers are also buyers who made purchases within the past year, and surveyed Poshmark users claim that an average of 38 percent of their closets were made up of secondhand goods.
The number of shares to be offered and the price range for the proposed offering have not yet been determined. The IPO is expected to commence after the SEC completes its review process, subject to market and other conditions.