If you’re one of the thousands of shoppers still searching for key pieces from Lilly Pulitzer’s Target collection, it might be high time to check out Poshmark, an app that lets its users buy and sell clothes via the iPhone. The app currently boasts hundreds of listings from its members, making it a veritable alternative to eBay for fashion items.
To be sure, there are plenty betting that Poshmark can become your go-to resource in times like these. In fact, the Menlo Park, Calif.-based company announced Tuesday that it has collected another $25 million in venture capital funding, bringing the total raised to $47.2 million. This round’s participants included Mayfield Fund, Menlo Ventures and Inventus Capital.
Poshmark is not the only second-hand marketplace that's been able to to raise money, though. A few weeks ago, luxury consigner The RealReal announced $40 million in additional funding, bringing its total to $83 million. Other startups in the space include Threadflip, which has raised $21 million to date, and Santa Monica-based Tradesy, which has raised $44.5 million.
With 95 percent of its members using the app via a mobile device, Poshmark has doubled its revenue in the past six months, and is on track to sell $200 million worth of merchandise in 2015. More than $2 million worth of inventory is uploaded every day, according to CEO Manish Chandra. Poshmark takes a 20 percent commission on sales that are $15 or more, and a flat commission of $2.95 for any sales under $15.
Poshmark says that the tightly knit community around buying and selling that its social-friendly platform has fostered is the key to its rapid growth. It also helps that while many marketplaces have significantly more sellers than buyers, Poshmark’s two camps have “scaled in parallel,” according to Chandra, with nearly equal buyers and sellers, and millions of registered members.
The company currently boasts 700,000 sellers, many of whom have built legitimate businesses out of their Poshmark boutiques. Like eBay before it, Poshmark has become a sort of breeding ground for entrepreneurial types who aspire to build the next Nasty Gal. For instance, a former owner of three Midwestern boutiques now runs her entire business within the Poshmark platform. The Miami-based Simonett’s Closet and the North Texas-based Suzanne’s Closet are other examples of casual sellers-turned-shop owners.
Poshmark’s users share up to a million items a day, and love to help each other find specific products. Perhaps this is the key to Poshmark’s success: the more followers you have, the more likely you are to sell stuff. And the more helpful you are to others in the community, the more followers you’re likely to gain. Poshmark users hold virtual shopping parties, and some have even become licensed re-sellers and wholesalers so that they can buy and sell new items. (A group of Poshmark “Stylists,” as they’re called, even attended the most recent apparel Magic trade show in Las Vegas.) Right now, Chandra says that about one-fifth of Poshmark’s sellers are running a shop -- not just selling things from their closet -- and the top performers are bringing in $200,000-$300,000 in annual sales. The exec says the sweet spot for selling is the contemporary market: more affordable than designer, more exclusive than fast fashion.
To help its users sell even more items, Poshmark offers operational support to help with accounting, taxes, etc. With the new funding, it wants to do even more to make it easier for sellers to connect directly with larger brands so that they can buy more inventory. “Today, we have 700,000 sellers. Tomorrow, we want 7 million.”
The dollars will also go towards opening up “one or two” international markets, and making technology upgrades, including an Apple Watch app. The company has also considered acquisitions, although nothing has come to fruition yet.
Grand ambitions aside, Poshmark's stickiness still compels. “When we first started, users were spending 15-20 minutes on the app and checking seven to nine times a day,” Chandra says. “That stat still stands.” The next step will be transforming more of its users into full-fledged business owners.