Poshmark’s first year as a public company ended on a lukewarm note. The clothing resale company’s sales in the final quarter of 2021 were up 22% and nearly half a billion dollars’ worth of merchandise was listed on the site, up 27% from the same period in 2020.
The number of buyers making purchases had also grown at a respectable clip. There were 7.6 million active buyers in 2021, up 17% from 6.5 million in 2020. But the Redwood City, California-based company reported a loss for the year of $44.4 million, a tough pill to swallow after it made a profit of $25.2 million in the previous year.
Investors, overall, have been unimpressed with the results. Since going public in January 2021, the stock price has sunk by nearly 84%, and now trades at around $12.25. Its market cap now stands a little shy of $1 billion.
Yet there are encouraging signs buried in several of the company’s key metrics. According to information gathered by our parent company, Thinknum Alternative Data, Poshmark is showing consistent growth in app-related activity, social media following, job openings, and product listings — all of which may point to a brighter future.
The number of Apple App Store ratings, a proxy for download activity, took off in early 2022, jumping 35% from 281,000 on Jan. 8 to 380,000 a month later.
The company’s job listings are at an all-time high, and up nearly 100% from the number a year ago. Although hiring activity plummeted during the spring of 2020, it has more than rebounded and has been on a steep upward climb.
The company’s Twitter following has also increased steadily over the past year. Its follower count, now at 140,900, has risen by about 15% since January 2021. The company’s Twitter following, however, stands well below that of some competitors. EBay has over 750,000 followers and Etsy has over 2.4 million followers.
The inventory of items has also been growing. Total listings now stand at 805 million, up about 10% from October 2021, according to data from Thinknum.
A shopping app that acts like a social media platform
The supposed key to Poshmark’s strategy is to combine clothing resale with social activity, which is intended to support sales growth. The company currently has 80 million registered users across the U.S., Canada, Australia and India. Poshmark takes a 20% cut of sales of $15 and up, and the company takes a flat commission of $2.95 for items sold at below $15.
A representative for Poshmark declined to comment to The Business of Business about the company’s marketing strategy, but encouraging social engagement appears to be a strong component. In 2020, Poshmark introduced Posh Stories, a way to connect buyers and sellers through video clips, like Instagram stories. Each 15-second "story" video appears at the top of your feed in the app and disappears after 48 hours.
Another one of its strategic PR pushes is working with celebrities, such as rapper Doja Cat. The artist has her own “closet” where she sells items on the app, and donates the proceeds of her sales to the charity Musicians on Call. Members of the K-pop band ATEEZ also sell personal items on Poshmark.
Helping to further cultivate a young user base, the company has also jumped on the “buy now, pay later trend,” allowing purchasers to pay for items in four installments over six weeks with Zip.
In October at the 2021 edition of its annual festival Poshfest, the brand introduced a dashboard, My Closet Insight, to help sellers manage and maximize their sales. Around the same time, the company launched in India, which added 2 million to its user base almost overnight.
India seemed like a reasonable next step for Poshmark, given that the company’s founder and CEO grew up in India and moved to the U.S. in 1989 when he was 19 years old (he is now based in Silicon Valley). The company is backed by leading investment firms including Mayfield, Shea Ventures and AngelList.
The social component does enhance the app’s appeal and helps drive sales, according to some observers. Staying active on the app is the key to sales, a California-based full-time Poshmark seller, Shannon Jean, told us. The seller, who uses the online nickname Rebounded, makes over $90,000 a year.
Top performing sellers treat the app like a social media channel, liking and commenting on other people's items, and resharing them (similar to a retweet function). She has also seen success for attending the in-app Posh Parties or attending the in-person Posh Party Live events.
Sunny Netgains, founder of a digital marketing agency for fashion brands called I Love Fashion Retail, told us the algorithm also drives success on Poshmark, as it personalizes recommendations for items for each user. As a result the company makes its “customers and brand feel like a text from a friend who deeply understands them,” said Netgains.
“We find that our community of millions of women love the twice-daily push notifications we send so much that they end up taking a screenshot and posting to their social media profiles on Instagram and Twitter saying things like, ‘Poshmark gets me,’” she says.
The brand still faces major challenges
Although there are strong points in Poshmark’s favor, the company nonetheless has challenges it needs to navigate. For instance, while reviews of the app are increasing, they’re not all glowing.
Some users say that the company’s $7.11 flat shipping fee for lightweight, affordable items isn’t justified, while others suggest there should be better subcategories for items (dresses can be subcategorized as midi, maxi, formal, cocktail dresses, etc.). Some users also complain about the company’s zero refund policy, but there are rave reviews from some sellers who earn significant income from the site.
Concerns abound about the possibility of counterfeit items, especially given the company’s limited customer service. It seems unlikely that all fake items can be flagged and banned from the app. While Poshmark recently acquired Suede One, a sneaker authentication platform, it’s unclear if it’s making an impact. There are also worries that the site is unable to police issues like whether items are made in countries that allow child labor.
Even though the company has an anti-counterfeit policy, there are countless Reddit threads criticizing the app for selling fakes. As one user puts it: "I asked for additional pictures of the [sunglasses] arm with the serial number so I could make sure they were legit. Her shop was mostly high-end sunglasses, purses, etc., and I think those are the worst because they are buying bulk replicas from overseas and selling them as real."
The company is also criticized on Reddit for selling used, secondhand makeup – including used lipstick – which some users say should be banned for sanitary reasons. And shoppers can only contact sellers by commenting on an item — there is no direct messaging allowed between buyers and sellers on the app, making it more difficult to work through problems.
Competition is another growing issue for Poshmark. Other popular clothing resale apps include thredUP, Etsy, Depop, The RealReal, Tradesy, and Vinted. Another competitor is eBay, which just released its second Recommerce Report, where it found that Gen Z makes up 80% of the resale market.
Another competitor is StockX, which uses a far more sophisticated technology than Poshmark, and has fewer annoying pop-ups. As StockX explains on its website, there’s “no taking photos, no writing catchy descriptions, and no dealing with rogue buyers or sellers.” (Almost half of StockX users are also Gen Z, or under the age of 25). Grailed is another competitor, a resale marketplace for menswear, selling everything from Ralph Lauren to Nike.