Poshmark might not be everyone’s ideal fit in retail, but suddenly it seems like one of the cheapest.
Social shopping marketplace Poshmark, Inc. is down more than 75% from where it closed on its trading debut in January—hardly a fashionable entrance.
But if you arelooking for a stealin online retail over the next few months, now might be a good time to shop.
In its initial public offering filing, Poshmark was billed as a way to marrysustainable commercewith social media—two very hot trends amid the pandemic.
Unfortunately, it was late to the party: Founded in 2011, Poshmark came after e-commerce competitors likeeBay,Etsy,thredUPand Tradesy.Unfortunately, it was late to the party: Founded in 2011, Poshmark came after e-commerce competitors likeeBay,Etsy,thredUPand Tradesy.
While it launched in India earlier this month, Poshmark is available now in just four countries, including the U.S. Compare that with Etsy, which said that, as of June 30, it connected active sellers and buyers in nearly every country in the world, and it is easy to understand why Poshmark wasn’t nearly as well equipped to ride the Covid-19 wave.
Consumers might not have rushed to buy pandemic staples like face masks and yoga pants last year from Poshmark’s peer-to-peer marketplace, which features a lot of “gently” used merchandise.
Poshmark's quarterly revenueSource: the company, FactSet (forecasts)Analysts' forecast ->2019'20'21'22020406080100$120million
Poshmark revenue grew 27% annually to $262 million in 2020, results that paled in comparison with Etsy’s 111% growth over the same period, even off a 2019 base that wasnearly four times the sizeof Poshmark’s.
But with offices reopening and stimulus checks ending, building a secondhand closet is looking a lot more attractive. This fall, Poshmark’s asset-light model suddenly has a lot going for it.
Supply-chain issues, including pandemic-relatedfactory shutdownsin Vietnam, are likely to lead to shipping and supply delays for many top retail brands into the end of the year. Vietnam contributes almost a third of U.S. footwear manufacturing and a fifth of U.S. apparel manufacturing by dollar value, according to the American Apparel & Footwear Association. More than half ofNike’sfootwear manufacturing occurs in Vietnam, whileGapandLululemoneach rely on the country for roughly a third of their manufacturing.
If you can’t physically get your yoga pants directly from your favorite brand’s website later this year, Poshmark’s inventory, new or old, might suddenly start to look a lot more compelling. For now, Poshmark doesn’t offer cross-border shipping, so users can only buy and sell within the country in which they are located.
Longer term, international expansion is a key focus for Poshmark. It recently hired a general manager of its international operations who spent more than 16 years at eBay running that company’s Latin America business. As it expands geographically, Poshmark is working to bolster consumer awareness across age groups. In July, it partnered with Snapchat parentSnapInc.to give the social-media company’s Generation Z-heavy user base the ability to shop Poshmark’s merchandise, search listings and even attend virtual shopping events, all through Snapchat. As of the end of 2019, Poshmark said just 27% of its users were Gen Z, while over half were millennials.
Category expansion is also something Poshmark has been pushing lately. It recently added art-and-design and pets, both of which should reap long-term value from the one-time purchases, like a new home or a new puppy, that so many consumers made over the past 18 months.
Finally, Poshmark is leaning into social commerce. While the company said active users spent an average 27 minutes a day on its platform in 2019, new initiatives should bolster that number. Much the way Instagram might send you a notification that a friend just commented on your latest photo, Poshmark will tell you if someone likes or comments on one of your listings. Gamifying commerce, Poshmark can now alert you when someone else bids on something you liked, and it can send you similar listings when something you liked sells.
Assuming Covid-19 wanes, analysts see 2022 as a bit of an inflection point for Poshmark, baking in more payoff for some of its recent growth initiatives. Wall Street expects Poshmark revenue to grow by a quarterly average of 25% on-year next year, including nearly 28% growth in the fourth quarter of 2022—up from the 20% it is forecasting for the current quarter.
Given its dramatic selloff, Poshmark has been reduced to less than 7% of the market value of Etsy, but Wall Street forecasts it will do more than 14% of the revenue of its e-commerce peer this year.
There is nothing like a sale to turn an apathetic head.
