How Poshmark Is Trying to Make Resale Work Again

Lauren Eager first got into thrifting during high school as a way to find affordable, unique clothing while avoiding the environmental toll of fast fashion.https://wordpress.com/

In 2015, during her freshman year of college, she downloaded Poshmark, a resale platform that blends Instagram and eBay. It wasn’t long before she was both buying and selling clothes on the app.

This was the heyday of online reselling. Alongside Poshmark, platforms like ThredUp and Depop emerged, offering secondhand items a new lease on life. In 2016, Facebook introduced Marketplace, and even Goodwill launched a slick website.

These platforms capitalized on two key trends: online shopping and the thrill of scoring gently used items at a fraction of the original price. When the pandemic hit, many people turned to decluttering their homes, which fueled a boom in reselling. The demand was so high that Poshmark went public in January 2021, reaching a market valuation of $7.4 billion on its first day of trading—about the same as PVH, the parent company of Calvin Klein and Tommy Hilfiger.

However, the resale business began to show signs of strain.

For users like Ms. Eager, browsing on Poshmark felt more like rummaging through a disorganized closet. The app became cluttered with features that were either broken or irrelevant, and it felt “spammy,” with too many notifications.

Many resale platforms struggled with scaling their businesses. As a result, online resellers are now rethinking their strategies. In 2023, ThredUp pulled out of Europe to focus solely on the U.S. market. Trove, which helps brands like Canada Goose and Steve Madden resell items, acquired competitor Recurate. The RealReal, a luxury consignment platform, brought in a new CEO in an effort to improve profitability.

Poshmark is undergoing perhaps the most significant transformation. In 2023, Naver, South Korea’s leading search engine and online marketplace, acquired the company for $1.6 billion—less than half its IPO price.

Naver, a tech giant comparable to Google and Amazon, believes it can revamp Poshmark, which has 130 million active users, by applying the same technology that made Naver successful in South Korea.

This acquisition could also provide a fresh boost to the resale market. Analysts predict that the U.S. resale fashion industry will continue to grow, with revenue expected to rise by 26% to $36.3 billion by 2028, according to retail consultancy Coresight Research.

A new California law may also support this growth. Passed last year, it requires brands generating over $1 million in revenue to establish “producer responsibility organizations” to collect, reuse, repair, or recycle their products. Resale platforms like ThredUp and Poshmark could play a crucial role in helping brands meet these requirements.

For now, however, Naver’s primary goal with Poshmark is to enhance its functionality. Philip Lee, founder of The Pickool, a media outlet covering tech in both South Korea and the U.S., noted that Naver has the “operating know-how” to make improvements.

“They’re trying to renovate Poshmark and then expand the market share,” Lee said.

The intersection of search and commerce

Poshmark, founded in 2011 in Redwood City, California, by Manish Chandra and three co-founders, faced a typical challenge for resellers: How to capture the excitement of treasure-hunting for secondhand items while avoiding the frustration of endless scrolling. The company knew it needed to enhance search features and add interactive elements to encourage people to return beyond the occasional purchase of a $19 J. Crew sweater.

Naver, on the other hand, was seeking ways to expand beyond its already mature commerce and search businesses in South Korea. The burgeoning resale market in the U.S. presented an opportunity to access the world’s largest consumer market.

“Commerce is a big growth engine for us,” said Namsun Kim, Naver’s CFO. The peer-to-peer resale sector, where users buy and sell directly, is still in its early stages, with plenty of room for expansion, although Kim acknowledged that it’s a challenging segment that many larger players find hard to break into.

There are two main business models for resale: peer-to-peer and consignment. Poshmark operates on a peer-to-peer model, where individual users negotiate prices and ship items themselves. This decentralization can be tricky for brands, which prefer to maintain more control over their products. Additionally, platforms like Poshmark must work to establish trust between buyers and sellers.

Before Naver’s acquisition, making necessary technological changes was difficult, according to Vanessa Wong, Poshmark’s VP of Product.

“I would always talk to my engineers and ask, ‘What if we do this or do that?’ They’d respond, ‘It’s hard. The effort’s really high,’” Wong explained.

Naver’s investment and technical expertise are now enabling these changes. Founded in 1999, Naver is a ubiquitous presence in South Korea.

“We are not just a simple search technology or AI service,” said Naver CEO Soo-yeon Choi. The company, she explained, “alleviates the frustrations of people, which is necessary to spur growth.”

Search was a key factor in Naver’s dominance in South Korea, Chandra said. It remains the top priority for Poshmark after the acquisition.

Several new features have been introduced for both users and sellers. One of them, called Posh Lens, allows users to snap a photo of an item and, using Naver’s machine learning, get listings of similar products. A paid ad option called “Promoted Closet” pushes listings higher in user feeds.

Poshmark also introduced live shows, some of which are themed, to attract the TikTok generation and boost engagement. One auction, for example, featured clothing worn by South Korean celebrities, facilitated by Naver.

Still, the resale market is grappling with growing pains and hasn’t fully recovered from the pandemic. It’s unclear if the changes at Poshmark will be enough. In May 2023, Kim mentioned that Poshmark’s profitability was improving, but by November, the company admitted that growth had slowed due to weakness in the North American peer-to-peer resale market.

Missteps and reinvention

The company has already reversed unpopular decisions. In October, Poshmark rolled out a new fee structure that raised costs for buyers. Sellers feared this would drive away customers, and after a backlash, the company quickly scrapped the changes.

User frustrations persist. Tags and keywords, which help users find products, are sometimes misused by sellers trying to get more visibility for less popular items. For example, hard-to-sell Amazon leggings might be incorrectly tagged as Free People apparel.

Poshmark is testing new changes with its most frequent sellers, such as Alex Mahl, who sells thousands of dollars in clothing on the site each year. Within Facebook groups dedicated to Poshmark, there’s much discussion about the changes that sellers and buyers still want to see.

“The only way for it to do well is constant change,” Mahl said of Poshmark’s updates. “If you were just on an app that never changed—one, it would be boring, and two, the opportunity to do better wouldn’t be there.”

One morning, Ms. Eager, who first joined Poshmark back in college, was pleased to find new features she actually enjoyed. She took a photo of her Aerie gray tank top using Posh Lens, and within seconds, the app displayed similar products. It was far easier than coming up with the right adjectives to describe the item.

“Love it,” Ms. Eager exclaimed.