Lauren Eager got into thrift in high school. It was a way to find cheap, interesting clothes without contributing to the waste of fast fashion.
In 2015, her freshman year of college, she downloaded the app for Poshmark, a sort of Instagram-meets-eBay reselling platform. Soon, she was buying and selling clothes.
This was the golden age of online reselling. In addition to Poshmark, companies such as ThredUp and Depop were born, giving a second life to old clothes. In 2016, Facebook debuted Marketplace. Even Goodwill got in on the action, creating a fantastic website.
The platforms tapped into two consumer trends: buying things online and the old-fashioned pleasure of grabbing a gently used item for a fraction of the original cost. During the Covid-19 pandemic, as people cleaned out their closets, enthusiasm for reselling intensified. It was so strong that Poshmark decided to go public. On the day of its initial public offering 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 second-hand clothing business began to crumble.
Using the Poshmark app, Ms. Eager and others said, they began to feel the urge to find something in a cluttered closet. The app was cluttered with features that didn’t work or that she didn’t use and felt like “spamming,” she said, sending too many push notifications.
Many platforms were found selling used items difficult to scale. Now, online retailers are trying to recalibrate. Last year, ThredUp decided to exit Europe and focus on sales in the United States. Trove, a company that helps brands like Canada Goose and Steve Madden resell their merchandise, bought a competitor, Recurate. RealReal, a luxury consignor, named a new chief executive as the company sought to improve profitability.
Poshmark is undergoing perhaps its biggest reinvention yet. In 2023, Naver, South Korea’s largest search engine as well as an online marketplace, bought the company in a deal valued at $1.6 billion, less than half of the IPO price.
Something of a cross between 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 can also help breathe new life into the resale market. Analysts think the fashion resale market still has room to grow in the United States, with revenue expected to grow 26 percent to $36.3 billion by 2028, according to retail consulting firm Coresight Research. .
New legislation in California may help. The law, passed last year, requires brands and retailers that operate in the state and generate at least $1 million to establish a “producer responsibility organization” to collect and then reuse, repair or recycle the products of her. Resale platforms like ThredUp and Poshmark may be able to help brands fulfill that mandate.
For 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 so, said Philip Lee, a founder of media outlet The Pickool, which covers South Korean and US tech companies.
“They’re trying to revamp Poshmark and then expand market share,” he said.
A marriage of research and commerce
Poshmark, which is based in Redwood City, California, was founded in 2011 by Manish Chandra, an entrepreneur and former tech executive, and three others. In trying to expand, Poshmark faced a common problem for resellers: Capturing the treasure-hunt thrill of second-hand shopping without disappointing shoppers with an endless scroll. The company knew it needed better search, as well as interactive elements that gave people more reasons to go beyond paying $19 for a J. Crew sweater.
For its part, Naver was looking for ways to push beyond South Korea, where its commercial and research businesses were already mature. The growing online resale market in the United States presented an opportunity and also gave the company access to the world’s largest consumer market.
“Commerce is a big growth engine 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, with room to expand. But, Mr. Kim added, “it’s a more challenging segment, and that’s why it’s harder for many bigger players to enter.”
There are two common business models for reselling: peer-to-peer and consignment. With delivery, a platform collects and redistributes physical goods. Poshmark uses the peer-to-peer model, which relies on many people – many of them beginners – haggling over prices and then shipping items to each other. This decentralization can be a headache for brands that want to maintain a certain level of control over their products. And platforms like Poshmark need to make shoppers happy by trusting sellers on their site.
Before the Naver acquisition, it was difficult to push the necessary technology changes, said Vanessa Wong, vice president of product at Poshmark.
“I would always talk to my engineers and ask, ‘What if we do this or that?’ They say, ‘This is hard. The effort is really high,'” Ms. Wong said.
The acquisition of Naver provided the investment and expertise to pull off the changes. Founded in 1999, the company is everywhere in South Korea.
“We are not just a simple search technology or AI service,” said Soo-yeon Choi, chief executive of Naver, which is headquartered near Seoul. The company, she said, “alleviates people’s frustrations, which is what’s needed to help growth.”
The search built Naver “into the massive power that they are in Korea,” said Mr. Chandra, who stayed on as chief executive after the Naver acquisition. It was a top priority when the company bought Poshmark.
Several new elements have been introduced for users and sellers. With a tool called Posh Lens, users can snap 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 top they’re looking for. A paid advertising feature for sellers called “Promoted Closet” pushes listings higher in customer feeds.
Poshmark also introduced live shows, some of which are themed, to attract the TikTok generation and increase engagement. A party auctioned off clothing previously worn by South Korean celebrities, a link that was made with the help of Naver.
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 whether the changes underway at Poshmark will be enough. In May, Mr. Kim, Naver’s chief financial officer, said on an earnings call that Poshmark’s profitability was improving, but by November, the company was warning that growth had slowed due to weakness in the peer-to-peer resale market in North America. .
Missteps and reinvention
The company has already done some backtracking on unpopular decisions.
In October, Poshmark introduced a new fee structure, which increased costs for shoppers. Retailers, fearing higher costs would shock consumers, revolted. Within weeks, the company dropped the new fee structure.
And there are still user headaches: tags and keywords that help users find what they’re looking for can be miscategorized. Sellers sometimes mislabel their products to get more eyes on their lesser known products. (For example, Amazon leggings that are difficult to unload may be listed as Free People clothing.)
The company is beta testing changes with its frequent sellers — people like Alex Mahl, who sells thousands of dollars worth of clothing on the site each year. And within the dedicated Facebook groups associated with Poshmark, there’s plenty of chatter about the changes sellers and buyers would still like to see.
“The only way to do well is that there will be constant change,” Ms. Mahl said of the changes at Poshmark. “If you were just in an app that never changed—one, it would be boring, and two, the opportunity to do better wouldn’t be there.”
One recent morning, Ms. Eager, the seller who joined Poshmark in college, was pleasantly surprised to find that the app had some new features that she liked. She snapped a photo of her gray Aerie top with Posh Lenses. Within seconds, the app filled the lists of similar products. It was much better than imagining the adjectives needed to describe it.
“I love you,” cried Mrs. Eager.
