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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Your Solution to Monetizing Your Closet

Your Solution to Monetizing Your Closet

What is it?

VillageLuxe is described as the Airbnb of high-end fashion, where consumers can both lend and rent designer goods from other users. The business focuses on a niche market of fashion-conscious women in NYC and is based on improving the inefficiencies of women’s closets. Fashion-focused women spend considerable amounts of money on clothing, shoes and accessories, however, between uses these ‘investments’ end up sitting in closets underutilized. While many women resort to consignment or donation in order to get rid of clothes they no longer wear, what about the clothes they want to keep, but don’t wear as often? VillageLuxe’s solution: renting.

Renting your clothes allows you to continue to recognize value from already purchased clothing that would otherwise go unused in between wears. This idea of monetizing underutilized assets has been seen with other business models such RelayRides with cars and Airbnb with homes.




Network of Fashionistas

VillageLuxe users engage in a two-sided network with lenders and borrowers, and most users participate on both sides. As a result, each new user actually adds value to both sides of the network, giving VillageLuxe a unique ability to balance between supply and demand. VillageLuxe goes a step further to encourage this behavior explicitly, subsidizing $10 of a user’s first rental if she also lists an item.

Additionally, users themselves are motivated to spread the word in order to maximize the value of the service. The more fashion-oriented women who sign up, the more rental options users have, creating a positive network effect.

Despite these expansion efforts, the business has been slow to scale, however, this appears to be intentional. VillageLuxe offers a luxury service and is able to maintain exclusivity through an invite-only signup process. While this exclusivity stifles user growth, the expensive nature of the products and the need for maintaining quality validate the company’s decision to use vertical segmentation in order to keep high quality users, thus preserving the value of the platform for everyone.




Quality is Key

Quality control is something that should be top of mind for VillageLuxe given the issues that similar companies, like Airbnb, have had to date. Asking women to share expensive designer clothes with strangers means asking them to change their behavior. Women need to become comfortable with this new concept, making it critical for VillageLuxe to build users’ trust through a quality experience. VillageLuxe has implemented mandatory reviews and social connections to assist with exactly that.

Uber used mandatory reviews in order to improve the accountability of its user base. VillageLuxe has followed suit, but unlike Uber, VillageLuxe customers’ multi-transaction relationships makes doing so even more critical. VillageLuxe acts as a community for like-minded women to share their fashion investments. The cycle of lending and borrowing means that this week you might borrow a dress from Sarah and next week Sarah might borrow a purse from you. You feel more of a responsibility to return Sarah’s dress in good condition if you know she will be borrowing your items later. And, if you love Sarah’s fashion taste and want to borrow her clothes in the future, it’s in your best interest to be a responsible borrower.







VillageLuxe’s Future

It will be exciting to follow VillageLuxe’s journey and to see whether the business model is scalable and can maintain the same level of quality and trust as it expands. Surely VillageLuxe will be presented with similar questions that Airbnb faced about how much control the company actually has to manage the users’ experience and whether they can prevent people from abusing the service.

It will also be interesting to see what impact VillageLuxe has on future consumer buying patterns. Will shoppers begin to consider future rental income when making purchases, turning clothing into potential investments? This could open up luxury goods to a new demographic that previously couldn’t afford them.

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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:


Exhibit B:



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:


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


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

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As Christmas gets closer, retailers are getting ready for their best sales season of the year by building up their stocks, hiring extra personnel and working extra-hours. For example, Wal-Mart’s sales during this season normally account for around 40% of their overall yearly sales [1]. Nevertheless, retailers are also getting ready for a great market share war, a war that has become fiercer year after year.

Brick-and-mortar retailers such as Target, Wal-Mart and Best Buy are implementing on a trial basis new strategies, along with old ones, in order to attract customers back to stores. For example, they will try to match in-store prices (Target, Best Buy) to those offered by strong online competitors. Additionally, they will increase the offer of different kinds of coupons: in-store and location-based mobile discounts (deals that customers can only get while in the store by for example scanning an in-store code), after being tired of customers using stores as showrooms for online retailers and using their cell phones to compare prices [2].

Furthermore, some are experimenting with new strategies for their store websites such as one-day-shipping or same-day-shipping for a fixed fee (Wal-Mart) and free shipping if the store is out of stock (Best Buy) [3]. All of these strategies seem to be targeted to compete with the almightiest of all competitors: Amazon.

For online stores, the key strategy is getting the product faster to its customers to try to produce a similar gratification feeling as getting the product at a store. This strategy is not new to Amazon, but recently it has started to be implemented by another online giant: EBay. EBay is teaming up with FedEx in order to have merchants print the labels from home and use the service at a discount [4].

Given the fact that brick-and-mortar retailers are trying to provide its customers with the benefits of online shopping in their stores and online retailers vice versa, one can’t help but wonder who will customers ultimately chose? There is one key aspect to each side that the other cannot replicate: seeing up-close and trying the products, and the comfort of not leaving home and making a purchase in a couple of minutes.

Another distinguishing factor is that on one side, there are competitors like Wal-Mart and Best Buy that play both in-store and online, and on the other, there are competitors such as Amazon and EBay who only play online. In the scenario where online retail prevails, will stores like Wal-Mart and Best Buy have to redefine their companies’ strategies? Will they have to allocate more resources to their online portals?

What if customers, given that all companies offer the same price, prefer the in-store shopping experience? What other strategies could online retailers implement to offer its customers a value-added experience?

Shipping strategies present a great business opportunity and challenge for carriers such as FedEx and UPS, but its ultimate success will be defined by “if” and “how much” customers are willing to pay for same-day and one-day shipping services [5].

I believe that the strategies being implemented are going to allow in-store retailers to capture some of Amazon’s and Ebay’s market share. Nevertheless, I don’t see how they can be economically sustainable if implemented over prolonged periods of time. Online retailers can afford the low prices they offer by not having to incur in the high costs of running a store, in addition to sales tax strategies.

Additionally, customers’ willingness to pay for short-time shipping may be very low, making this strategy not very effective. Amazon has achieved to have customers’ pay for its Amazon Prime subscription that offers shipping benefits by offering other valuable products with the subscription. For example, some of Amazon Prime’s benefits are: free two-day shipping and USD 3.99/item one-day shipping or same-day shipping in some cities, free lending of Kindle books and free instant streaming of selected videos [6]. Customers may not see flat-fees per purchase as valuable as Amazon Prime’s deal.

I believe that brick-and-mortar retailers’ price and shipping strategies can be very effective in order to win customers but they will hurt their margins, thus they might only be economically sustainable if implemented seasonally or during limited periods of time. Online retailers still have the bigger price advantage. Nevertheless, it seems that it is going to be a very happy Christmas for both customers and carriers.

 Sources and references

[1] http://noesisstar.com/target-to-match-online-prices-in-the-holiday-season-835

[2] http://www.latimes.com/business/money/la-fi-mo-amazon-target-price-match-20121017,0,5546399.story

[3] http://bottomline.nbcnews.com/_news/2012/10/19/14538755-amazon-retailers-do-combat-shoppers-caught-in-the-middle

[4] http://www.businessweek.com/news/2012-10-23/ebay-joins-with-fedex-on-shipping-to-compete-with-amazon

[5] http://www.businessweek.com/news/2012-10-18/same-day-shopping-lures-fedex-as-premium-business-wanes

[6] http://www.amazon.com/gp/help/customer/display.html/ref=hp_primeland_overview_2day?nodeId=200444160#free_2day

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All barriers are down! The transformation of Ecommerce by Hosted Shopping Carts.

The emergence of the ecommerce decades ago revolutionized the retail world in so many different ways. As an alternative to brick-and-mortar stores, online stores put down most of the barriers that prevented non-traditional players from entering the market and therefore enabled diversification and innovation. Small businesses that could not afford the investment and maintenance costs of physical stores found a way to sell their products; innovative ideas whose cash flows were uncertain became feasible given the low fixed costs of virtual stores. That was an enormous change but barriers to entry still persisted; creating an ecommerce still demanded time, money and programming skills. Hosted shopping cart systems have come to eliminate once and for all any barrier to entry in this business.

Pioneer online merchants had to overcome a few obstacles that could still prevent many potential players from launching their ventures. Besides having to make an upfront investment to hiring a programmer and a web designer, they spent a lot of time and money on trial and error to map all possible user flows, the desired features and the ideal layout. Along the years, companies specialized in developing this kind of sites created their own proprietary platforms and licensed them to their clients – this was a shortcut to the development process, saving time and guaranteeing the use of proved practices. Another wave of innovation in the market happened with the emergence of open source ecommerce platforms, like Magento, Prestashop and others. These platforms provided the same benefits of licensed platforms plus the fact that any programmer could customize them. Retailers were therefore free to choose programmers independently from the platform they wanted to have.

Although the development process as well as the outcome improved a lot, merchants still had to think twice before going online. The upfront investment and the need for a programmer continued to be a barrier and demanded at least a rough analysis of feasibility. Retailers had to have a good operational plan to make sure that the investment wouldn’t be wasted.

Hosted Ecommerce Solutions are platforms that work just like SaaS; merchants pay a monthly “rent” that includes the software, the hosting and technical support. Companies like Shopify, BigCommerce and Volusion offer different plans to fit retailers’ needs and rates vary from $19 to $299 per month among the most popular providers. No programming skills are required to customize the online store and a long list of features is available. The layout and design of the website can be customized but retailers can also buy ready-to-use templates for less than $200 and start using them immediately. Flexibility in the software is obviously limited but most of the features and customization that retailers need is already enabled by the platform; if not, add-ons can be purchased and installed.

Many experts criticize hosted solutions for their limitations, lack of flexibility and standardization of stores. However, it’s undeniable that with no upfront investment, no programming skills required and very little time needed to start operating, these platforms have put down all the barriers to entry that had remained. Just like a street stall, merchants can open online stores with minimum efforts and test their operations before investing on a more sophisticated solution. The concept of doing a Minimum Viable Product to confirm demand can now be implemented by online retailers. It is reasonable to expect an increase in the number of new businesses being created and also in the rate of failure of these businesses. The good news is that online consumers will benefit from innovative and diversified options. Some questions arise though: “In a world without barriers, merchants can come and go overnight; will this reduce the quality of online retailers and maybe increase the number of fraudulent businesses? Will the Internet be flooded by virtual versions of street stalls?”

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