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

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I’ve found the recent trend of online retailers opening up offline retail stores very intriguing, given that in the past few years, there has been a lot buzz around ecommerce and about how online stores were going to reduce and eventually obliterate the need for brick & mortar stores.

In a bid to not be left behind, big box retailers such as Macys, Walmart and Target had made a significant investment in increasing their ecommerce presence and capabilities. However, just recently, it was announced that Amazon, the world’s biggest ecommerce retailer had opened up an Amazon brick & mortar store. Some other players that started online have also expanded into offline stores such as Warby Parker, BirchBox, BaubleBar in recent years.

This to me shows that there is no one simple answer to the question of online vs. offline stores. The question should thus be: should a business be an online only store or be an offline only store or be in both retail channels. And if the plan is to be an omni-channel retailer, should the business start online and then expand to offline or start offline and then expand to online? And are there specific product categories that each of these strategies works better for?

To answer this question, I analyzed the pros and cons of having an ecommerce only company. The major benefit of starting a business online first vs. offline is the low upfront cost associated with building an online store. Websites like shopify and squarespace make it easy and cheap to start selling items online. This gives one an opportunity to prove the concept and to prove the demand for the product before investing significantly in it. Online stores also provide a broader reach and more national or global exposure than offline stores given that anyone can access the website from anywhere in the world and potentially make purchases from it. Being able to carry a diverse and unlimited inventory of products is also a benefit of an online store as there are no physical space limitations. On the negative side, online stores tend to have high logistics costs and a high return %.

There are also a lot of benefits to shopping offline, which is why approximately ninety-two percent of all purchases in the U.S still happen offline. The benefits include being an avenue for people to touch, feel, and try the product before purchasing, having a personalized in-store experience such as great customer service which can lead to brand loyalty, legitimizing the business for those who don’t know or are not yet trusting of the company, building the brand look and feel through the physical design and experience in the store. A physical store in a great location also serves as a form of marketing, because it will attract new customers to the store. These benefits all translate to an increase in repeat customers, a lower rate of returns, and potentially more sales as its easier for someone to buy multiple items when they see them in person than online. The cons of this approach are the pro of online stores such the high startup and overhead costs, the limited reach of customers, limited physical space etc.

In addition to the aforementioned benefits of both models, other benefits to the hybrid model of retail includes providing an avenue for one to buy online and to return to the store, where they can in turn find something else that suits them, thus ensuring the sale is completed. From a logistical standpoint as well, being able to fulfill orders from the store closest to the consumer as well leads to reduce shipping costs and shortened delivery times, both of which are of value to the consumer.

Some product categories such as beauty products, home and office make more sense to start online because for beauty products, online allows one prove out the concept and demand for the products first, and home and office will result in high rental costs initially so starting online is a way of getting maximum value at a lower overhead cost. However, most other categories such as fashion, electronics, mobile, games, tablets, computer, collectibles can be profitable if started online, offline or if a hybrid model is employed. I think it comes down to the personal preferences of the entrepreneur, the amount of funding secured, how quickly they are looking to build a brand presence and to grow, how sure they are of the demand for their products, how important the in-person experience is for the brand and what it represents and finally what kind of store do they the capabilities to build and manage as the needs for the two types of stores are very different.

By: Oare Avbuluimen


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Will Racksandstands.com Disrupt the World of Ecommerce?

Way back in 2002, amidst the fallout of the dot-com bust, two college buddies turned serial entrepreneurs had a simple idea: utilize the internet to meet hyper-focused consumer demand for niche products. Amazon.com had a long ago established dominance in books and more recently moved into electronics, but what about everything else? Leveraging search engine optimization and a few ad words, these two founders connected suppliers to burgeoning ecommerce demand by creating an individual product oriented website. Thus was born racksandstands.com, an online store for the diehard sound enthusiast who could not hope to find similar variety for speaker system stands in her local brick-and-mortar retailer. About 270 stores tailored to oddly specific interests followed—allbarstools.com, everymirror.com, strollers.com, luggage.com to name a few. The umbrella business became CNS Stores LLC; a purposefully lame name intended to disguise the ecommerce nature of their business from would-be suppliers. CNS was hopefully not sexy enough to be another hapless ecommerce platform. Shah noted that back “…in 2002, manufacturers didn’t want to hear the word internet.”

Without external capital, co-founders Niraj Shah and Steve Conine quietly grew CNS to over $500M annual sales by 2011. About that time the founders decided to take some investor capital—$200M Series A to be exact—rebrand CNS to Wayfair.com and apply their learnings to the home furnishings market. Four years of rapid growth and an IPO later, Wayfair.com is well-positioned to capture a large chunk of the $233B home goods market—only 7% of which currently transacts online. Recent revenue data demonstrates their rapid growth: year-over-year sales for the first six months of 2015 grew at 56% to over $900M. But unlike a website for bar stools, home decor is a crowded space. How sustainable is this growth and how has Wayfair remained differentiated?

With a network of over 7,000 suppliers and something like 7,000,000 products, the two-sided platform should be a logistics nightmare. According to an interview with Alex Finkelstein from Spark Capital, Wayfair solves this complicated puzzle by “teaching of small, mid, and large manufacturers to do drop-ship…”—fulfilling orders by shipping directly to the customer. Greg Bettinelli from UpFront Venture gives credit in his blog to the traits that made racksandstands.com  the original success back in 2002—old-fashioned online marketing capabilities in the form of paid search advertising and search engine optimization coupled with dedication to providing unmatched product depth. Bettinelli apparently counted 17,000 accent pillows and 5,000 barstools on the site.

Will Wayfair.com become for home décor what Barstools.com was for… barstools? In a recent interview Co-founder and CEO Niraj Shah seems to have his sights a little higher this time aiming to become the “Amazon for the home.”







http://gregbettinelli.com/my-wayfair-ipo-breakdown-when-an-s-1-doesnt-tell-you-everything/ http://www.xconomy.com/boston/2015/08/17/wayfair-learning-e-commerce-lessons-from-amazon-zulily/

By: Ben Seipel

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Amazon. eBay. Uber. These names are familiar among my fellow students at Harvard. However, when I mention Instacart or Peapod, only a few people have heard of it. I did a quick survey among my peers to see how many people have purchased items on Amazon, used Uber, or purchase groceries online in the past year. Here is the result:


All of my peers have used Amazon in the past year; in fact 90% have purchased something on Amazon in the past 30 days. Twenty out of thirty of my classmates have used Uber before. However, less than a quarter have ever tried purchasing groceries online. Why?

Reservations for Online Groceries

There are many reasons that my classmates are skeptical about online groceries. Here are some of the top reasons:

– Produce Selection. About half of my classmate who doesn’t purchase online grocery is because they want to pick their own produce. They want to touch, see, and smell the apple to ensure that it is fresh before putting it in their basket.

– Easy Access. Many claim that they live quite close to a grocery store. Some say it’s only at 10 minute drives. Some say it’s just down the street. One person even prefers biking to the grocery store and think that it is greener than having it delivered to his door.

– High Cost.  Many are afraid on the high delivery fees price tag. Some also claim that the grocery price online are more expensive than the price tag at the store. For example, Instacart charges you $3.99 for order over $35.00.

– Enjoy Going to Grocery Stores. Couple of people told me that they actually enjoy going to the grocery store. One said that it is very therapeutic to just walk up and doing the aisle. Another person said that going to grocery stores gives her inspiration for meals.

– Planning. A classmate said that his does not have a grocery list or have the desire to create one. He just likes to go to the store and just pick up things that look delicious to him. Also, he doesn’t want to order something and have to wait for a day or two for it to arrive.

Benefit of Online Groceries

While the majority of my peers are skeptical about online grocery shopping, some of my fellow students are very passionate about online grocery store and believe in the added value

– Time Savings. As you can imagine, graduate school is a lot of work. Our days are filled with classes, team meetings, lectures by famous people, and, of course, “social events”. Grocery shopping can be quite time consuming. You need to get there. Pick your items from the aisles. It can take even longer if you aren’t familiar with the store. Wait in line to pay. It is especially long on the weekend and during the peak time of the day. And, you still need to travel back.

– Convenience. You can grocery shop from your phone anywhere. You can pick your grocery items when you are on a subway to school, on a lunch break, or during a boring lecture. This gives you the flexibility to ensure that you don’t miss any items. You can review your cart at the end of the day before checking out.

– Product Search. Shelf space in grocery store can be very expensive, so you will only see the largest brands products in a more visible area. Online grocery allows you to see more options. It is also easier for you to search for item. For example, if you want to get a banana and peanut butter, you don’t have to walk over 12 aisles. Just type “banana”, click; then type “peanut butter”, click. Done.

– Price Comparison. For people who are price sensitive, online shopping allows you to check the groceries price at your fingertips. You can compare price within the same store or other stores as well.

Cost/Benefit Analysis

For me, it makes a lot of sense to purchase grocery online. On average, it would take me about 1.5 to 2 hours for each grocery store run. Valuing my opportunity cost only at $10/hr, it cost about $15-20 per trip. In addition, since I don’t have a car, I will need to rent a Zip Car, which is about $12-$18 per trip depending on what car is available. With these conservative estimates it will cost me at minimum $27 for each grocery trip. This is very high for a ~$50 grocery bill. With this, it is cheaper for me to pay Instacart $3.99 to delivery my groceries.



While there are some legitimate concerns about online groceries, I have confident that the online grocer service providers will effectively address and mitigate those concerns. When I graduate from Harvard two years from now, I expect to see at least a 100% increase in the number of people who grocery shop online.

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Will online retailers replace traditional brick and mortar stores one day? With the convenience of online shopping, do customers really need to physically go to a store? What unique value can brick and mortar stores offer to consumers? In this post, I’m going to focus primarily on online shopping for apparel and groceries, discuss barriers of consumer adoption and also look at what online retailers are doing to address these challenges.

Personally, I am an avid online shopper and believe that e-commerce has revolutionized the retail industry. E-commerce has made shopping easy and simple; Shopping can now be done from anywhere and anytime, requiring significantly less effort and time from customers. With the breadth of product selection online, customers now have access to more products than ever compared to the options available at their local store. Online retailers can also offer more competitive prices due to relatively lower capital expenditures compared to traditional brick and mortar stores. Given that online shopping is generally more convenient, cheaper and provides a greater selection, should we say good-bye to brick and mortar stores? Even with this laundry list of benefits, customers seem to favor online shopping only for certain product categories, such as books or electronics, which require less physical interaction between the customer and product in the purchasing process. However, in other areas of retail such as in apparel and groceries, online retailers are facing more challenges in terms of consumer adoption and conversion.

Apparel Shopping

I have always been skeptical about purchasing clothes online because I am someone who likes to try clothes on to ensure the proper fit. As a consumer, I typically do not have confidence in the generic size guidelines that are posted online. For this reason, I do find value in visiting a brick and mortar store for apparel shopping. To indirectly address this concern around fit, many online retailers provide free returns policies. As a result, consumers like me would order multiple sizes of the same item, fully anticipating to ship back a portion of the order.

For others, the need for fashion advice from sales associates is another reason to visit a physical store. Many shoppers will go into a store, tell the salesperson the clothing item (e.g. a pair of black jeans) they are looking for, then have the sales associate bring them a number of options leveraging the salesperson’s expertise in recommending styles and brands that work best with the customer’s particular body shape and type. To mimic this service, some online retailers such as Macy’s have started implementing clothing recommendation systems which require that the user answers a number of questions (http://www1.macys.com/campaign/social?campaign_id=36&channel_id=1).

Fit technology companies such as Styku are making advances that could theoretically change the game for online apparel retailing and solve the two barriers discussed above. Styku’s technology would enable online shoppers to build an accurate, self-scanned avatar that is used to virtually try on clothes to address the sizing issue. From the consumer’s body measurements, online retailers can also create personalized clothing recommendations for fit and style. There is certainly a lot of potential here but fit technology is still in its early stages and largely unproven.


Can online retailers find a way to mimic the fun user experience of grocery shopping? Many consumers enjoy hand selecting their own produce and meat prior to making the purchase. People also tend to have personal preferences regarding grocery characteristics e.g. the exact color shade for meats, the firmness of fruits and the softness of baked goods. With online grocery shopping, consumers are inherently taking the risk of purchasing items that do not align with their mental preferences. With groceries, there is just no guarantee that the product will be the same as the display product image, in contrast to retail products such as books. There are also concerns regarding delivery, such as bruising of produce or melting of frozen foods in transit. Lastly, there is typically no pricing advantage when it comes to online groceries, as the grocery business is already low margin.

Given these disadvantages, is the online grocery business destined to fail? Not necessarily, there has been a trend toward retail giants investing in this area with the introduction of online grocery services such as Amazon Fresh. Amazon has been trying to refine the online grocery shopping experience with a user-friendly interface to emphasize the value of convenience and simplicity. For example, from suggested recipes on the site, the consumer’s shopping cart can be auto-populated with the recipe’s ingredients. Amazon Fresh also offers an “Expert Pick” section which provides customers with news about which produce are most in season, with real customer product reviews. Lastly, most online grocers provide a product freshness/quality money-back guarantee, which certainly helps with consumer adoption.

So where does this leave us – will online retailing take over the need for brick and mortar stores? The possibility is certainly on the horizon, though I do not think this paradigm shift will occur in the immediate future. There is an important social element to shopping and human/product interaction that online retailing has not been able to capture…at least not yet.


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