Lauren Eager majored in economics 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 kind of Instagram-meets-eBay resale platform. Soon, he was selling as well as buying clothes.
This was the golden age of online reselling. In addition to Poshmark, companies such as ThredUp and Depop had emerged, giving a second life to old clothes. In 2016, Facebook debuted Marketplace. Even Goodwill got in on the act, launching a sleek website.
The platforms tapped into two consumer trends: buying things online and the unusual 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 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 PVH, the company that owns Calvin Klein and Tommy Hilfiger, at the time.
Then, the second-hand clothing business began to fray.
Using the Poshmark app, Ms. Egger and others said, began to feel like trying to find something in a cluttered closet. The app was filled with features he didn’t work or use and felt “spammy,” he said, sending too many push notifications.
Many platforms are found selling used items that are difficult to scale. Now, online resellers 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 products, has bought a competitor, Recurate. RealReal, a luxury consignor, has appointed a new chief executive as the company looks to improve profitability.
Poshmark is undergoing perhaps the 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 its 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 believe the resale fashion market still has room to grow in the United States, with revenue expected to grow 26% 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 that do business in the state and 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 be able to help brands fulfill this mandate.
For now, though, Naver’s focus for Poshmark is more basic: Make it the best place to sell and buy. The company has the “operational know-how” to do that, said Philip Lee, founder of media outlet The Pickool, which covers both South Korean and US tech companies.
“They’re trying to revamp Poshmark and then expand market share,” he said.
A marriage of search 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 its quest to expand, Poshmark faced a problem common to resellers: Capturing the thrill of a thrift store hunt while not frustrating shoppers with an endless scroll. The company knew it needed better search, as well as interactive elements that gave people more reasons to fork over $19 for a J. Crew sweater.
For its part, Naver was looking for ways to expand beyond South Korea, where its commerce and search 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 for expansion. But, added Mr. Kim, “it’s a more challenging division and that’s why it’s harder for a lot of the bigger players to get into.”
There are two common business models for reselling: peer-to-peer and consignment. With shipping, a platform collects and redistributes physical goods. Poshmark uses the peer-to-peer model, which relies on dozens of people — many of them beginners — haggling over prices and then mailing 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 make buyers comfortable trusting sellers on their site.
Before the Naver purchase, it was difficult to drive the necessary technology changes, said Vanessa Wong, Poshmark’s vice president of product.
“I was always talking to my engineers and asking, ‘What if we do this or that?’ They say, “It’s hard. The effort is really high,” said Ms. Wong.
Naver’s purchase provided both the investment and expertise to achieve the changes. The company was founded in 1999 and is located everywhere in South Korea.
“We are not just a simple search technology or artificial intelligence service,” said Soo-yeon Choi, chief executive of Naver, which is headquartered near Seoul. The company, he said, “alleviates people’s frustrations, which is needed to help growth.”
Search built Naver “on the huge strength they have in Korea,” said Mr. Chandra, who stayed on as CEO after buying Naver. 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 tank top they’re looking for. A paid advertising feature for sellers called “Promoted Closet” pushes listings higher in customer streams.
Poshmark has also introduced live shows, some of which are themed, to engage the TikTok generation and increase engagement. A party was auctioning off clothes previously worn by South Korean celebrities, a connection made with the help of Naver.
However, the resale market is experiencing growing pains and has not quite found its footing since the height of the pandemic. It’s not clear whether the changes being made to 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 backsliding on unpopular decisions.
In October, Poshmark introduced a new fee structure, which increased costs for shoppers. Sellers, fearing that higher costs would drive consumers away, revolted. Within weeks, the company withdrew 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. Sometimes sellers mislabel their products to draw more eyes to their less popular products. (Hard-to-load Amazon leggings, for example, 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 in the dedicated Facebook groups associated with Poshmark, there’s a lot of chatter about the changes sellers and buyers would like to see.
“The only way it’s going to do well is there’s going to be constant change,” Ms. Mahl about modifications to Poshmark. “If you were just in one app that never changed—one, it would be boring, and two, there would be no opportunity to do better.”
On a recent morning, Ms. Egger, the seller who joined Poshmark in college, was pleasantly surprised to find that the app had some new features that she really liked. She took a picture of her Aerie gray tank top with Posh Lens. Within seconds, the app populated lists of similar products. It was much better than inventing the adjectives needed to describe it.
“I love it,” Ms. Eger exclaimed.
