Poshmark Buyout Reflects Hidden Value Within Battered Resale Industry
After months of declines that have seen investors fleeing and crushed valuations, the sudden outside interest of South Korea’s largest eCommerce group in acquiring Poshmark for $1.2 billion has done more to energize the resale platform sector than anything in recent memory.
In short, Naver’s willingness to buy is an indication that some see value and growth opportunities in the resale space where others — namely investors — have been running scared just as economic forces are working in favor of platforms that allow consumers to both make money from selling stuff, while also saving money by buying used items.
In a conference call outlining the Naver-Poshmark deal, executives said global consumer-to-consumer (C2C) social commerce is at the heart of their decision, with Poshmark CEO Manish Chandra saying the fashion resale platform was founded to help consumers “turn their closet into a shop and buy and sell, connecting and empowering everyday people to take the journey to entrepreneurship,” adding that “what got us really excited about this partnership is the depth of Naver’s technology … particularly around live selling, search and machine learning/AI.”
Choi Soo-Yeon, CEO of Naver said, “More than 80% of the Poshmark user base are millennials and Gen Zs in North America, and they are by far the number one secondhand C2C fashion and global platform,” adding that “if you look at their business model, it is by unrivaled in the fact that it is a model that brings together very strongly commerce, community and social features. We believe that to be a key strength.”
See also: South Korea’s Naver to Buy Poshmark in Bid to Boost eCommerce
In a Monday (Oct. 3) column, PYMNTS’ Karen Webster provides historical context around innovations powering ongoing growth of platforms, noting that deals like the Poshmark-Naver union and organic innovation for efficiency and scale are key drivers, now as before.
Citing a litany of such developments in ecommerce and the connected economy since 2014, Webster used Uber’s example from ridesharing to logistics platform, saying “business model innovations are powerful, sticky and as important as the technology that powers them — and they make it possible for competitors to traditional players to enter at scale and disrupt.”
Read: What 2014 Teaches Us About the Future of Payments and the Digital Economy
It’s a trend that been building as resale seeks its level and other players utilize the concept as part of a wider growth strategy. In 2020, Walmart partnered with resale marketplace thredUP.
That announcement noted, “We know that customers, especially millennials, are interested in shopping resale clothing. In fact, according to thredUP’s 2020 Annual Resale Report, 70% of consumers have bought or are now willing to buy secondhand. This partnership is our latest move to establish Walmart.com as a destination for fashion and offer customers the pre-owned items they might be looking for.”
Other such deals have seen tie-ups between Saks Off 5th and Rent the Runway.
See also: Saks Off 5th, Rent the Runway Team on Pre-Owned Fashion Offering
The ‘Pre-Loved’ Sector Experiments
The stage was set for this kind of tie-up in the hot but crowded fashion resale sector with Etsy’s July 2021 acquisition of peer-to-peer social commerce site Depop for $1.6 billion.
Noting similar dynamics to Naver’s Poshmark buy, Etsy CEO Josh Silverman said at the time, “We believe Depop to be the resale home for Gen Z consumers with a unique offering and highly-engaged user base.” Shifts in demographic buying power are crucial in both cases.
On Tuesday (Oct. 4), the trend took a new turn with charity Goodwill launching GoodwillFinds, described in a press release as a “secondhand marketplace to fund community-based programs across the U.S.”
Per that announcement, as of Oct. 3, “shoppers on GoodwillFinds.com can browse an initial curated selection of hundreds of thousands of unique items, showcasing a wide variety of secondhand women's, men’s and kid’s clothing, books, specialty and collector’s items, home decor and more. Net proceeds from purchases will flow directly back to the region the item was sourced from, deepening the rich social service programs the organization provides to local neighborhoods across the country.”
See also: Luxury Brands Take Second Look at Secondhand Sales
Steve Preston, CEO of Goodwill Industries International, said GoodwillFinds furthers the charity’s mission “through a modern online shopping experience – backed by a century-old philosophy – to harness resale with purpose. This is an exciting inflection point for the organization, as GoodwillFinds expands the thrifting alternatives to existing supporters and brand new visitors.”
The fashion resale and reCommerce space has been struggling for profitability, with marquee players like The RealReal focusing on cost cutting and higher-margin merchandise to build profitability instead of transaction volume, as PYMNTS reported in August.
See also: The RealReal CFO Looks to Trim Costs, Sell Higher-Margin Goods
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