Poshmark: from second -hand store to fashion market

Por Biz Carson

Manish Chandra, 51, wears a Silicon Valley engineer who became the CEO of a fashion application, combining his Louis Vuitton belt and his dressing shirt of Tommy Bahama, with Adidas NMD sneakers.There are all the items he bought in Poshmark, the Social Shopping application (social purchases) that he co -founded with Tracy Sun (now in charge of expanding to new markets), Gautam Golwala (CTO) and Cetan Pungaliya (Chief of Engineering)."My first job was to work for the creation of Intel databases, for semiconductors, and today I help men and women sell shoes," says Chandra.

It is an increasingly lucrative trip, largely due to Poshmark, in which Chandra has an estimated 15%participation.Poshmark began seven years ago as a way for women to earn money, by getting rid of some articles from their cabinets, that is, an eBay for used clothes.But now it is becoming more than that, and is selling new clothes and creating its own wholesale market, with local fashion businessmen who sell their own clothing lines.

The company has created a niche that mimics the Window Shopping (see the products in the sideboards, without buying) through the phone, instead of the purchase experience obtained in Amazon.People can see the virtual cabinets of other users, full of clothing for sale, often pre-uted items, with a mixture of boutique items that wholesale purchased, and share items that find interesting.It is a social network of 40 million people, which is a combination of influencers and friends, similar to Instagram or Pinterest.The difference is that everything you see is for sale.

Of those 40 million users, about 5 million, or 12.5%, are also sellers in the application. Poshmark, based in Redwood City, California, has no inventory. Its users are sold directly from each other. In the manner of Etsy and Ebay, the application has generated a flock of small entrepreneurs who have developed business around Poshmark, either as professional realers or fashionistas of Bootstrap that have designed and launched their own brands of private clothing. Poshmark takes 20% of each sale, and the income is expected to have reached 140 million pesos in 2018. The firm, which has more than 300 employees and plans to hire 100 more, is not yet profitable, since it focuses on expand more in new categories (for example male clothing and makeup) and internationally (Canada, the first destination). Poshmark has raised 160 million pesos in risk capital with a recent valuation of 625 million pesos, and the anticipated growth of 70% of its income for 2017 (which coincides with its growth from 2016 to 2017) earned a place in the forbes list of Forbes of Startups that will soon be worth 1,000 million pesos.

Poshmark is just a market slice of 600,000 MDD of electronic commerce in the United States.But the demand for discount clothes is huge.In the offline world, nine out of 10 buyers acquire products in discount stores;75% seek, specifically, offers of clothing, according to the National Federation of Retails.With online retail sales that grow around 4,000 MDD quarterly, Chandra believes that it is finally time for her idea of building a social purchasing network.

His first startup, Kaboodle, in 2005, was Chandra's initial attempt to combine social activity with purchases.At the launch, the theme was home decoration.A site called Bookmarking, after the popular Kaboodle, which is found in the first versions of Internet browsers, allowed people to collect links to items that wanted to buy and share them with friends.Kaboodle had a moderate success: Chandra sold it to Hearst for a total of 30 million pesos in 2007. But true social purchases would have to wait for the mass adoption of social networks.

Poshmark was his next idea, built on a culture that believed that the way of presenting people new trends was through people themselves, and not of the brands.

"Like a 51 -year -old man, I'm probably more in tune with pop culture than many people," says Chandra."I could tell you the latest lines of a drake song, but I could probably not tell you what is happening in business software."

His career began, however, in business software.Chandra grew in India and spent the first 15 years of her life moving every two or three years to follow her career, who was a judge.He presented himself at the Indian Institute of Technology of India, Kanpur, to study computer science, and was the last person admitted in his class.She obtained her mastery at the University of Texas in Austin, where she was temporarily interested in the Mexican popular dance.After graduating in 1989, he went to Intel to work in databases.She stayed a year before going to work in a series of new database companies in northern California and obtained her mastery in science at the University of California at Berkeley, in 1995.

You may be interested: second -hand clothing, a 4,300 million peso market per year

In his daughter's preschool he met Pungaliya, with whom he had worked in a previous company, and shared with him the idea of Kaboodle.The couple recruited a third co -founder that would help with engineering;Each one put $ 10,000 and worked from her garage, the same one that Chandra would return when Poshmark began.He spent time before Kaboodle took off.Poshmark proved to be an easy sale for investors, at least at the beginning.“It was a different trip due to my reputation and I had already had a success.I had a terms sheet, even before starting my company, ”says Chandra.

From the company's foundation, in 2011, Chandra wanted attention to focus on individual buyers and sellers, whether mothers from the west or fashion stylists of L.A.The market played in her favor.Poshmark launched with only an iPhone application, at the same time that the mobile phone was beginning to replace cameras and computers.And, a few years after the great recession, people were looking for ways to make some extra money.

Poshmark and other startups, such as the real luxury revenue and the second -hand market Ketplace Thredup, tried to take advantage of the change experienced by consumers.Both competitors bet on a different digital perspective, in which people get rid of their things and earn money when they sell them online.

While Thredup and Realreal took charge of setting prices and sales, Poshmark followed the Ebay route, leaving it in charge of individuals."It is a completely different customer," says the CEO and co -founder of Thredup, James Reinhart.

The Poshmark differentiator was to build a social network, not so much around who you know, but around people with a similar style.People follow and share lists that seem interesting to see their own followers.

The POSH Parties (elegant parties) daily within the application allow people to navigate a given topic, such as buying only booties or graduation dresses.Each list has a comment section so that anyone can ask questions about the products that are for sale, and buyers can ask vendors to put a style combining the appearance of their closet in a package.

Most of today's electronic commerce giants depend on searches based on searches, but humans do not necessarily buy that way in the real world, instead of navigating a store or asking friends about the pretty clothes thatuse."Amazon and Alibaba should not be the only player in the city," says Hans Tung, managing partner of GGV capital and investor, both in Poshmark, and in Alibaba."Discovery -based purchases are the best way to differentiate."

The company had 1,000 users in 2012, but they spent a lot of time in the application, opening it at least seven times a day for a total of 20 to 25 minutes.People still spend a lot of time in Poshmark, but now, of course, there are millions of users.The rapid growth almost killed the firm in 2013, after it grew 10 times more in a year.Now, after climbing his servers, Chandra is less concerned about technical challenges, and more to find enough buyers and vendors to compete with eBay.

Entrepreneurs such as Suzanne Canon are a byproduct of Poshmark growth and the key to celebrating their future. At 39 years of age, and from Gainesville, Texas, she began selling her used clothes through the application, starting in December 2012. After checking her own closet, she decided that she would start buying clothing wholesale in order to resell it. Later, she launched her own clothing brand, Infinity Raine, with her commercial partner, Tiffany Kroeger, and also chose to sell to other Poshmark vendors through the company's wholesale market. In April, after six years of dedicating himself to this, Canon became the first person of Poshmark to sell merchandise for a total of 1 million pesos, and the duo opened his first physical retail store in Gainesville, in May. "It is a blessing, in reality, that everything has happened as it happened, because we both got to work nothing more because we were trying to get rid of some of our clothes," says Canon.

The following for Poshmark: a deeper expansion in gentleman clothes, children's clothing, more luxury sizes and goods.One in five new users is already male gender, and the company is seeing new markets, such as makeup and home decoration."We think of Poshmark as a social trade platform where fashion was just the beginning," says Chandra, "but, certainly, it is not the only place we will go."

Final reflection

"Anyone can buy, but only an artist can do it with style" Jennifer Finney Boylan