Lauren Eager started saving in high school. It was a way to find cheap, interesting clothes without contributing to the waste of fast fashion.
In 2015, during her freshman year of college, she downloaded the app for Poshmark, a kind of Instagram-meets-EBay resale platform. Soon she was selling and buying clothes.
This was the golden age of online reselling. In addition to Poshmark, companies such as ThredUp and Depop had emerged, giving old clothing a second life. In 2016, Facebook debuted Marketplace. Even Goodwill took action and started a trendy website.
The platforms capitalized on two consumer trends: buying things online and the never-forgotten pleasure of getting your hands on a second-hand item for a fraction of the original price. During the Covid-19 pandemic, as people cleaned out their closets, enthusiasm for reselling increased. It was so strong that Poshmark decided to go public. On the day of its IPO in January 2021, the company's market value peaked at $7.4 billion, about the same as that of PVH, the company that owned Calvin Klein and Tommy Hilfiger at the time.
Then the old clothes trade began to fray.
Using the Poshmark app, Ms. Eager and others felt like they were searching for something in a cluttered closet. The app was full of features that didn't work or that she didn't use, and it felt “spammy,” she said, sending too many push notifications.
Many platforms found it difficult to sell used items. Now online resellers are trying to recalibrate. Last year, ThredUp decided to leave Europe and focus on sales in the United States. Trove, a company that helps brands like Canada Goose and Steve Madden resell their goods, bought a competitor, Recurate. The RealReal, a luxury consignor, named a new CEO as the company tried to improve profitability.
Poshmark is perhaps undergoing its greatest reinvention. In 2023, Naver, South Korea's largest search engine and online marketplace, bought the company in a deal valued at $1.6 billion, less than half the IPO price.
A mix of Google and Amazon, Naver is betting it can rebuild Poshmark, which has 130 million active users, with the same technology that made Naver dominant in its home country.
It could also help revive the resale market. Analysts believe the resale fashion market in the United States still has room to grow, with sales expected to rise 26 percent to $36.3 billion by 2028, according to retail consultancy Coresight Research.
New legislation in California could help. The law, passed last year, requires brands and retailers operating in the state that generate at least $1 million to establish a “producer responsibility organization” to collect and then reuse, repair or recycle their products. Resale platforms like ThredUp and Poshmark could help brands fulfill that mandate.
Right now, though, Naver's focus for Poshmark is more fundamental: make it a better place to sell and shop. The company has the “operational know-how” to do that, said Philip Lee, founder of media outlet The Pikool, which covers both South Korean and U.S. tech companies.
“They're trying to renovate Poshmark and then expand market share,” he said.
A marriage of search and trade
Poshmark, based in Redwood City, California, was founded in 2011 by Manish Chandra, an entrepreneur and former tech executive, and three others. In its attempt to expand, Poshmark faced a problem common among resellers: capturing the excitement of thrift store treasure hunting without frustrating buyers with an endless scroll. The company knew it needed better search capabilities, as well as interactive elements that gave people more reasons to go beyond paying $19 for a J. Crew sweater.
In turn, Naver looked for ways to expand beyond South Korea, where its trading and search operations were already mature. The growing online resale market in the United States provided opportunities and also gave the company access to the largest consumer market in the world.
“Trade is a big growth driver for us,” said Namsun Kim, Chief Financial Officer of Naver. And the peer-to-peer sector, where users sell to each other, was still in its infancy and had room to expand. But, Mr. Kim added, “it is a more challenging segment, and therefore it is more difficult for many larger players to enter.”
There are two common resale business models: peer-to-peer and consignment. With consignment, a platform collects and redistributes physical goods. Poshmark uses the peer-to-peer model, where dozens of people – many of them beginners – negotiate prices and then email items to each other. This decentralization can be a headache for brands, who would like to maintain some level of control over their products. And platforms like Poshmark need to ensure that buyers can trust the sellers on their site.
Before purchasing Naver, it was difficult to make the necessary technology changes, says Vanessa Wong, vice president of product at Poshmark.
“I used to talk to my engineers and say, 'What if we do this or that?' They say, 'That's hard. The effort is really high,” Ms Wong said.
The purchase of Naver provided both the investment and expertise to implement the changes. The company was founded in 1999 and has a presence throughout South Korea.
“We are not just a simple search technology or AI service,” said Soo-yeon Choi, the CEO of Naver, whose headquarters are located near Seoul. The company, she said, “relieves people's frustrations, which is necessary to drive growth.”
Search has given Naver “the enormous power they have in Korea,” said Mr. Chandra, who stayed on as CEO after Naver's takeover. It was the top priority when the company bought Poshmark.
Several new elements have been introduced for users and merchants. A tool called Posh Lens allows users to take a photo of an item and using Naver's machine learning technology, the site populates listings that are the same or similar to the shoe or tank top they are looking for. A paid advertising feature for sellers called “Promoted Closet” helps listings appear higher in customer feeds.
Poshmark also introduced live shows, some of which are themed, to attract the TikTok generation and increase engagement. One lot auctioned off clothes previously worn by South Korean celebrities, a connection made with Naver's help.
Still, the resale market is going through growing pains and hasn't quite found its footing since the height of the pandemic. It's not clear if the changes happening at Poshmark will be enough. In May, Naver's chief financial officer, Mr. Kim, said in an earnings call that Poshmark's profitability was improving, but in November the company warned that growth had slowed due to weakness in the peer-to-peer resale market in North America. America.
Missteps and reinvention
The company has already made some pushback on unpopular decisions.
In October, Poshmark introduced a new fee structure, increasing costs for buyers. Sellers revolted, fearing the higher costs would cause consumers to flee. Within weeks, the company scrapped the new fee structure.
And there are still headaches for users: tags and keywords that help users find what they're looking for can be miscategorized. Sellers sometimes mistag their products to draw more attention to their less popular products. (For example, hard-to-deliver Amazon leggings might be listed as Free People clothing.)
The company is beta-testing changes with its regular sellers — people like Alex Mahl, who sells thousands of dollars worth of clothing on the site every year. And within dedicated Facebook groups related to Poshmark, there's a lot of talk about the changes sellers and buyers would still like to see.
“The only way to get it right is that there will be constant changes,” Ms. Mahl said of the adjustments to Poshmark. “If you just used an app that never changed, it would be boring, and secondly, the opportunity to just do it better wouldn't be there.”
On a recent morning, Ms. Eager, the salesperson who started working at Poshmark in college, was pleasantly surprised to find that the app had some new features that she really liked. She snapped a photo of her gray Aerie tank top with Posh Lens. Within seconds, the app filled in lists of similar products. It was so much better than coming up with the adjectives needed to describe it.
“I love it,” Mrs. Eager exclaimed.
