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.

Sources
https://poshmark.com/what_is_poshmark
http://fashionista.com/2015/04/poshmark-funding-round
http://techcrunch.com/2015/04/21/fashion-marketplace-poshmark-raises-25-million-more-heads-to-apple-watch
http://blog.poshmark.com/community-meet-ups/”

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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Oxford Dictionaries announced this month that their “Word of the year” for 2015 does not contain any letters in it. The “word” their editors chose to reflect what people identify most with is a pictograph, or more commonly known as an emoji:

Smile

Emojis have been around for quite some time; however it wasn’t until recent years that this practice grew exponentially into a culture phenomenon. For instance, if you opened any communication apps or text messages of a group of millennials, you will find yourself staring at an assortment of different emoji exchanges. This phenomenon might be the most popular in millennials but certainly exists in other age groups as well. Generally, in the U.S., the younger the user, the more frequent emoji he or she uses.

This phenomenon is also not restricted only to the English speaking population. In fact, some argue that it all started from a messaging app from Japan.  Currently, it has also taken all the Asian countries by storm. For example, the popular Chinese messaging app WeChat is observing emoji exchanges surpassing textual exchanges for a significant portion of their users. Interestingly, in China, Emoji use is not as closely linked to age. Due to the difficulty of typing Chinese language for older population on their phones, emoji communication actually tend to be even more popular with the older audience. (My parents only send me voice messages and emojis on WeChat).

Internet exists as a means to achieve more efficient communication and information sharing. Therefore is it not surprising to see that due to the power of internet, our most efficient means of communication – words and language is being challenged and evolved. Indeed, Emojis do have an advantage over words in several aspects: They add authenticity and an emotional layer; they are shorter, more convenient and sharable; they are also ubiquitous, easily recognized and transcend most language and cultural barriers.

It is no surprise then to see messaging apps taking advantage of this popularity to monetize emojis. After all, this is not so difficult. Many messaging apps, such as Line and WeChat, now have a freemium model that charges users for specialized emojis.

However, the money doesn’t just stop there. By nature, emojis have very strong network effects. The value of an emoji depends on the number of people installed and the frequency used. And through its nature of sharing, the network effect is even stronger as users want to be linked to other users and share the emojis which helps to turn them viral. Monetization does not have to follow the service function directly, and this is where it gets interesting – monetization can come through indirect benefits in creative ways.

In retail and e-commerce, brands have taken notice of this trend and have evolved their communications strategies to attempt to insert themselves into the daily conversations of both existing and potential consumers. In the past year, more than a dozen of brands have incorporated emojis into their marketing efforts to relate to their audience in a “more fun and no pressure way”.  This makes sense. Emojis are a powerful form of promotion because they enable and empower self-expression, and allows brands to enter customers’ lives while being organic and non-disruptive.

For example: Taco Bell created their taco emoji. Mentos created emojis faces on Mentos candies. Ikea created “emotictions” including  furniture, pets, and Swedish meatballs. Old Navy created a website that analyze your top used emoji, then gives you vacation suggestions. You can order pizza by tweeting a pizza emoji through Domino’s. WWF lets you donate to their cause based on how many of their emojis you use. Foot locker created a “Shoemoji” for every shoe style they have… The list goes on…

With the emergence of this new wave of communication methods such as Vine and Snapchat, we see the way of communicating rapidly changing and evolving. We have moved from voice, to text, to pictures and still emojis, and more recently, to animated emojis and videos. In this wave of rapid change lie significant business opportunities, especially for companies that benefit from brand awareness and network effects. Companies who can truly enter consumer’s everyday communication while being organic, authentic, and non-disruptive in making money will find themselves a very powerful competitive advantage.

By: Mark Feng


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Paper Checks in the Digital Century

Paper Checks in the Digital Century

A Brief History:

Checks are believed to be one of the oldest forms of non-currency payment in human history. Ancient Romans used checks in the first century B.C, and there is evidence of usage in the Persian empire of financial instruments referred to as a ‘Chak’. In the US, checks reached their peak usage in the 1970’s, when an estimated 85% of all non-cash retail payments where completed using checks1. While decreasing in popularity with the expansion of plastic cards and ACH’s, checks still remain a commonplace item in the modern financial world.

A Move Towards Digitalization

The ability to deposit a check via a phone, dubbed ‘Remote Deposit’ or ‘Mobile Deposit’, was created as a part of the “Check-21” regulation in 2004 that allowed for banks to send electronic versions of a check. While the regulation was aimed at allowing banks to more cheaply process checks, this regulation also allowed customers to send the same ‘digital’ images of checks to banks (2004). Combined with improvements in mobile phone technology, the first such application was launched by USAA in 2009.

The Competitive Dynamics

Remote deposits emerged as a way for smaller banks or banks without national branch networks to compete. Banks such as USAA, Ally, and then ING-Direct (now Capital One 360) needed a way to better engage with customers. Before this, customers had to either send a check in the mail, or send an ACH through their main bank to get their money to the online bank. Since those two methods are time-consuming, remote deposits offered a more convenient option for customers that also cut out their reliance on major banks.

It also became a new way for the major banks to have more digital servicing for their customers and lower their costs associated with their national banking networks. Banks can reduce the need for staff to process low value check deposits, and can focus their time on performing more value-add services. Average teller transactions dropped from 25% from 2008 to 2013 – and are expected to decline even further in the near future.

Results: As of 2014, 11% of checks were deposited using Remote Deposit2

Should you add this feature to your banking habits?

Upsides: The whole operation takes around a minute to do. The user must take a picture of both sides of the check and type in the dollar amount.

  • Can save a trip to the bank or ATM
  • It’s free. Only 1 bank in the Pew report charged a fee 3,4

Downsides

 Banks have longer hold times on the money due to increased fraud risk

  • Most banks have a maximum value of check you can deposit via this method ($5K – $10K)
  • There are monthly limits on total checks deposited through Remote Deposit.
  • Doesn’t scale with multiple checks. If you have 10 checks, you have to take 20 pictures.

 So if you are customer who receives a couple of small checks every once-in-a-while (holiday, birthday), this is a great way to avoid the hassle of visiting a bank.

If you are customer with a large stream of checks, this service currently won’t help you much, unless you are nowhere near your current bank and don’t mind scanning check after check into your phone. Also, the slower funds availability time might not appeal to customers that need the money right away. As of now, you may need to continue to use your local bank or ATM to deposit checks.

What does the future likely hold?

What seems like a fantastic innovation a few years ago is now table steaks. Over 75% of financial institutions now offer this feature, and the point of differentiation has been erased. As banks become more comfortable with the fraud risk, we may see some incremental changes like removal of the current limits or a quicker experience taking photos. But don’t expect this feature to ever gain a dominant market position. This feature currently does not support small business users or customers with frequent check usage well – who will continue to use other means to deposit large quantities of checks. Maybe these customers will opt to use another system, say cash, ACH, or other electronic currency instead. In the meantime, using Remote Deposit for your one-off checks is a great time saver. Just remember one thing; after you’ve made the deposit, destroy the check.

Sources:

1)      http://blog.checkadvantage.com/the-colorful-history-of-checks/

2)      http://www.nytimes.com/2014/12/06/your-money/some-drawbacks-in-tapping-the-phone-to-deposit-a-check.html

3)      https://www.usbank.com/pdf/checking/EasyCheckingSnapshot.pdf

4)      http://www.pewtrusts.org/~/media/assets/2014/11/mobile-remote-deposit-capture-report–art-ready_6.pdf

5)      http://www.consumerreports.org/cro/magazine/2014/10/pros-and-cons-of-mobile-check-deposit/index.htm

6)      http://money.usnews.com/money/personal-finance/articles/2012/10/09/how-to-deposit-checks-with-your-smartphone

7)      http://www.remotedepositcapture.com/overview/rdc.bank.benefits.aspx

8)      http://www.aba.com/products/bankmarketing/documents/feature_1_cov_nov_14.pdf

9)      http://www.waff.com/story/26104190/digital-banking-creates-duplicate-deposit-risk

By: John Watts


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Context

With the risk of stating the obvious; the retail ecommerce landscape is rapidly changing. With the exponential uptake of smartphones and tablets, the retail industry is struggling to optimize the sales and shopping experience from the new m-commerce sales channel (mobile phones and tablets).

In January 2014, mobile apps overtook personal computer usage in the United States. Almost 55% of internet usage was through mobiles devices and tablets versus 45% through personal computers. Because of this growing consumer dependence on mobiles and tablets the m-commerce space cannot be ignored.

Exhibit A:

Pic1

Exhibit B:

Pic2

Problem

Currently there are two key issues that retailers face in this m-commerce space; firstly the time spent on a retailer’s website on a mobile device does not translate into purchases at the same rate. Although about a third of the online store visits are via mobile devices, the conversion rates are as low as 4.3%. Customers mainly use mobiles and tablets for out of store and in store research (e.g. to compare prices, find similar products). Secondly if and when the purchase is made, the dollar value spent is significantly lower through m-commerce., the dollar value spent is significantly lower through m-commerce.

Some critics of m-commerce argue that these devices can be viewed as aiding the ultimate purchasing decision; whether on consumer’s desktops or in stores. Hence the conversion rate is not that much of an issue.

However, when we do delve into understanding why customers make fewer purchases through m-commerce, the reasons that stand out are; the smaller screens make it harder to view items on sites that are not optimized for mobile devices; typing is difficult on a smaller device; and comparing prices to make the final purchasing decision is often viewed as much easier on desktops.

If this is true, then how do Amazon and e-bay manage to get higher traffic than other retailers and decent conversion rates through m-commerce? Part of the reason could be that both these retailers have had very high usage through the traditional e-commerce channels. This means that the customers are used to the interface and find it easy to follow and use on their mobile/tablets as well.

Exhibit C:

Pic3

Potential solutions

Two ways in which I think retailers could solve the issues identified:

1. Create a store specific mobile app: This mobile app would be optimized for usage on smaller screens, which will make it easier for consumers to look through potential shopping options. If the user’s card and shipping details are stored on this app, it could also potentially reduce the shopping cart abandonment rates

2. Use location based capabilities: In order to make customer interactions more relevant, stores can use location based capabilities to make their interactions with customers more relevant. For example; send the consumer a coupon when he/she in the isle or in the area. Retailers should consider Apple’s new product; the ibeacon to achieve this

Sources:

Comescore; CNN; Custora; Forbes; The mobile retail blog; Neilson.com


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