Lauren Eager got into thrifting in high school. It was a way to find interesting, inexpensive clothing without contributing to the waste of fast fashion.
In 2015, during her freshman year of college, she downloaded the app for Poshmark, a sort of Instagram-meets-eBay resale platform. Soon she was selling and buying clothes.
It was the golden age of online resale. In addition to Poshmark, companies like ThredUp and Depop had sprung up, giving old clothes a second life. In 2016, Facebook launched Marketplace. Even Goodwill I got in on the action by creating a sleek website.
The platforms have tapped into two consumer trends: purchasing products online and the timeless pleasure of picking up a gently used item for a fraction of the original cost. During the Covid-19 pandemic, as people cleaned out their closets, enthusiasm for resale intensified. It was so strong that Poshmark decided to make it public. On the day of its IPO in January 2021, the company’s market value peaked at $7.4 billion, roughly the same value as that of PVH, the company that owned Calvin Klein at the time. and Tommy Hilfiger.
Then the trade in old clothes began to unravel.
Using the Poshmark app, Ms. Eager and others said, they began to get the urge to try to find something in a messy closet. The app was cluttered with features that didn’t work or that she didn’t use, and it seemed “spammy,” she said, sending too many push notifications.
Many platforms have found it difficult to sell second-hand items at scale. Now, online retailers are trying to recalibrate. Last year, ThredUp decided to leave Europe and focus on selling in the United States. Trove, a company that helps brands like Canada Goose and Steve Madden resell their products, has purchased a competitor, Recurate. RealReal, a shipper of luxury goods, has named a new chief executive as the company attempts to improve its profitability.
Poshmark is undergoing perhaps the greatest reinvention. In 2023, Naver, South Korea’s largest online search engine and marketplace, bought the company in a deal valued at $1.6 billion, less than half its original price. IPO.
Naver, which looks like a mix of Google and Amazon, is betting it can rebuild Poshmark, which has 130 million active users, with the same technology that helped Naver dominate its own country.
It could also help breathe new life into the resale market. Analysts believe the fashion resale market still has room to grow in the United States, with revenue expected to rise 26% to $36.3 billion by 2028, according to the fashion consultancy. retail Coresight Research.
New legislation in California might help. The law, passed last year, requires brands and retailers that operate in the state and generate at least $1 million to create a “producer responsibility organization” to collect and then reuse, repair or recycle their products. Resale platforms like ThredUp and Poshmark may be able to help brands fulfill this mandate.
For now, though, Naver’s goal for Poshmark is more fundamental: to make it a better place to sell and shop. The company has the “operational know-how” to make this happen, said Philip Lee, founder of media outlet The Pickool, which covers both South Korean and U.S. tech companies.
“They’re trying to renovate Poshmark and then expand their market share,” he said.
A marriage of research and commerce
Poshmark, based in Redwood City, California, was founded in 2011 by Manish Chandra, an entrepreneur and former technology executive, and three others. In trying to grow, Poshmark faced a problem common to resellers: capturing the excitement of the treasure hunt of thrift shopping without frustrating shoppers with an endless scroll. The company knew it needed better search, as well as interactive elements that gave people more reason to go beyond paying $19 for a J. Crew sweater.
For its part, Naver was looking for ways to expand beyond South Korea, where its trading and research operations were already mature. The growing online resale market in the United States represented an opportunity and also gave the company access to the world’s largest consumer market.
“Commerce is an important growth driver for us,” said Namsun Kim, Chief Financial Officer of Naver. And the peer-to-peer sector, in which users sell to each other, was still in its infancy and had room to grow. But, Mr. Kim added, “this is a more difficult segment, and that’s why it’s more difficult for a lot of big players to get into it.”
There are two common business models for reselling: peer-to-peer and consignment. With consignment, a platform collects and redistributes physical goods. Poshmark uses the peer-to-peer model, which relies on dozens of people — many of whom are first-timers — haggling over prices and then sending items to each other. This decentralization can be a headache for brands, who like to maintain a certain level of control over their products. And platforms like Poshmark need to allow buyers to trust the sellers on their site.
Before Naver’s purchase, it was difficult to implement the necessary technology changes, said Vanessa Wong, vice president of product at Poshmark.
“I would always talk to my engineers and ask them, ‘What if we did this or that?’ They say, “It’s difficult. The effort is really high,” Ms Wong said.
Buying Naver provided both the investment and expertise needed to make the changes. Founded in 1999, the company is present throughout South Korea.
“We are not just a search technology or an AI service,” said Soo-yeon Choi, general manager of Naver, which is headquartered near Seoul. The business, she said, “relieves people’s frustrations, which is necessary to foster growth.”
Search built Naver into “the massive powerhouse that they are in Korea,” said Mr. Chandra, who remained chief executive after Naver’s purchase. This was the top priority when the company purchased Poshmark.
Several new elements for users and sellers have been introduced. With a tool called Posh Lens, users can 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’re looking for. A paid ad feature for sellers called “Promoted Closet” helps display listings higher in customer feeds.
Poshmark also introduced live showssome of which are thematic, to attract the TikTok generation and increase engagement. One party auctioned off clothing previously worn by South Korean celebrities, a connection that was established with Naver’s help.
However, the resale market is experiencing increasing difficulties and has not really found its footing since the height of the pandemic. It’s unclear whether the changes underway at Poshmark will be enough. In May, Mr. Kim, Naver’s chief financial officer, said on an earnings conference call that Poshmark’s profitability was improving, but by November the company warned that growth had slowed due to weak peer-to-peer resale market in North America.
Missteps and reinvention
The company has reversed course on unpopular decisions before.
In October, Poshmark introduced a new pricing structure, which increased costs for shoppers. Sellers, fearing that higher costs would drive away consumers, revolted. Within weeks, the company abandoned the new pricing structure.
And users still face problems: tags and keywords that help users find what they’re looking for can be misranked. Sellers sometimes label their products incorrectly to draw more attention to their less popular products. (Hard-to-unload Amazon leggings, for example, may be listed as Free People clothing.)
The company is currently testing the changes with its frequent sellers — people like Alex Mahl, who sells thousands of dollars of clothing on the site each year. And within the Facebook groups dedicated to Poshmark, there is a lot of discussion about the changes that sellers and buyers would still like to see.
“The only way this is going to work well is if there are constant changes,” Ms. Mahl said of Poshmark’s changes. “If you just used an app that never changed, firstly, it would be boring, and secondly, the opportunity to do better wouldn’t be there.”
One recent morning, Ms. Eager, the salesperson who joined Poshmark in college, was pleasantly surprised to find that the app had some new features that she really liked. She took a photo of her gray Aerie tank top with Posh Lens. Within seconds, the app populated listings of similar products. It was so much better than conjuring up the adjectives needed to describe it.
“I love it,” Ms. Eager exclaimed.