Poshmark: Feeding Your Shopping Obsession

What is Poshmark?

Poshmark is a platform that allows users to buy and sell clothing and accessories from each other’s “closets”. Although items are shoppable on desktop, a user can only sell goods through the mobile app. Users can post items to sell “in less than 60 seconds”, and Poshmark makes 20% commission on all items sold. Although Poshmark provides the shipping label for sellers, the buyer is responsible for paying the standard shipping price of $4.99.

With over 700K users, Poshmark has raised $47.2 million in outside funding and has over 10 million items for sale at any point in time. Items for sale are displayed in an instagram like feed that can easily be liked, commented, or shared.

Magic Sauce: The Community

Users love interacting with each other and will even shop for a “posh friend” they have met through the app. This makes users more likely to share not only their own items, but other user’s items with their followers. Users are constantly looking for more followers and other user to follow you. This cycle continues then continues over and over. Once a user has reached a certain threshold they can become a suggested user and will appear on the many users timelines as someone they should follow.

A Like acts as a watch feature for items a user may want to buy. All liked items are stored in the app and users are notified when the price of a liked item has dropped.

Bundling allows sellers to provide a discount to buyers who buy multiple items from their closet. It incentivizes more sales at a faster rate. One common bundle is buy 3 items and receive 15% off total purchase.

Shopping Parties are blocks of time where items of a certain theme are available for purchase. Users enter the party to shop or share their items for sale. The limited time encourages users to act

Community Meetups is Poshmark’s way of taking the online offline by bringing together poshers in the same physical community to share tips and talk about their experience. This continues the user buyin to the Poshmark brand.

Platform Risks

Although all transactions should occur on the app, there are many users who leave comments on items and request that they be sold through Mercari or direct with Paypal. Mercari is a hugely successful mobile shopping app in Japan that launched in the US in July. They do not charge any fees or take a portion of the sales and the seller is responsible for shipping. Because Mercari does not take any fees, sellers could potentially get 20% more for their items.

Any time your business is a platform, there is a risk that users can bypass the platform. Some users simply list clothes on Poshmark to reach a broad base of potential customers and then conduct all of their transactions through Paypal, cutting Poshmark out completely. When buyers do this, they leave behind all of their protection. However, the Poshmark community feels trustworthy due to all the communication and interaction that happens between users.

There is also the buying and selling of counterfeit goods. Poshmark offers a $35 authentication service for goods over $500. The buyer purchases an item through the app and the seller ships the item to Poshmark. Once the item has been verified as authentic, it is then sent to the buyer. Given this high threshold, there are complaints of many counterfeit goods being sold.

The Future

There is so much competition in this space that it is too early to tell who will be the market leader. However, Poshmark has built a strong community and can continue to build services and features to add to the stickiness of their platform, which will position it for success in the future.


By: Anndrea Moore


  1. Alice Agyiri

    Interesting concept, Anndrea! A couple of thoughts on the platform risks you raise:

    – I'm wondering how Mercari is able to offer the same service with no fees? Is this a temporary subsidization, where they plan to eventually charge when they reach critical scale? Or are they making a spread on shipping charges between the wholesale rates they get from shippers and what they charge their platform users who opt to use Mercari's shipping service?

    – One way to address the counterfeit issue is to have sellers reviewed by buyers, similar to Amazon. I think this is more scalable than the authentication service currently offered.

    – In order to discourage users from bypassing the platform, Poshmark could reconsider its pricing structure. One option is to charge a one-time access fee for a certain period, that offers unlimited listings instead of taking a % cut of each transaction. However, the appropriate timing of the introduction of this access fee would need to be assessed, so as not to lose users to free platforms. A less risky option is tiered pricing, where the % cut taken decreases with more expensive items/higher sales. A third option is to earn a spread on shipping charges as described above.

    – With regards to stickiness, the access fee could raise the multihoming costs and encourage more transactions on a single platform.

  2. Carmen Collyns

    Anndrea, awesome post! There are a few things that stand out to me here that make me particularly excited for Poshmark:

    1. Mobile first for sellers. This is brilliant, because the founder had the right insight that the sellers were the first ones that needed to be mobilized for the platform to work; and in order to enable that, the item selection –> photo –> app transition is much easier than item –> photo –> email –> web app. I think Poshmark could take this insight one step further and integrate it with its pricing strategy, to Alice's point above, and charge only the buyers with an access fee potentially.
    2. Partnership with USPS. Poshmark was clearly angling to work with a lower-cost alternative to Fedex and UPS, while USPS still needs to prove itself in the world of ecommerce shipping of high-value products. The flat rate deal is not only a good deal for the consumer, but it also aligns incentives well with USPS as it develops new products to differentiate its service (eg: automatic flat-rate label delivery, not mentioned above).
    3. Low customer acquisition costs. Enabled by strong network effects, and the incentives to interacting with the app community, Poshmark can probably afford to focus on organic marketing efforts, rather than paid ones, which is often a killer for fashion startups.

    One opportunity Poshmark might consider is selling some of its insights to fashion brands. In particular, their data on resale prices are valuable, as well as mapping what items are most likely to end up being sold second-hand. Brands could themselves become buyers of the most trusted sellers when they stock out of inventory.