Last Updated: 16th November, 2023
The trend of gently used pre-owned items is blowing up across the internet and getting more attention than usual these days. This is the result of growing consumer spending and rising demand for sustainable consumption methods. People are more and more relating to the quote “Make second hand the first choice”.
Traditionally, the thrift industry would rely on customers who would buy the previously-owned goods out of necessity, however, customers today are more aware and wish to contribute towards reducing the carbon footprint on the planet. Besides, thrift shopping also allows shoppers to buy cool and branded stuff on less budget which otherwise costs a lot.
All these factors combined have opened avenues for resale brands like StockX and ThredUP, which are believed to experience an uphill demand curve in the near future. Another popular name in this industry that holds center stage and is operating for 12-odd years is Poshmark.
This global online social marketplace allows users to list out their unwanted yet good-quality pre-owned clothes and accessories for the buyers to shop the closet and boutiques at affordable prices. Complimenting the trends of online shopping, Poshmark makes luxury brands more affordable to customers.
Founded by Manish Chandra, Tracy Sun, Chetan Pungaliya, and Gautam Golwala in 2011, the company has over 80 million users and over 200 million available listings. Poshmark has raised a total of $153 million in funding over 7 rounds. The company went public in 2021 at a valuation of over $3 billion and also announced its first acquisition.
If you are an aspiring entrepreneur and interested in the idea of a second-hand clothing app, here is an analysis of the Poshmark business that can help you build a similar marketplace of your own.
Before business owners plan to build a platform similar to Poshmark, it is essential for them to understand the working of this marketplace. The working of Poshmark is simple and works just like any other eCommerce marketplace.
Now that we have discussed the working of a peer-to-peer marketplace like Poshmark, let’s discuss how it earns money. Poshmark’s current revenue (TTM) in 2022 is $.35 billion. Firstly, let’s explore the revenue generation streams of Poshmark, and then we can discuss the other possible revenue channels.
This is one of the most common revenue generation streams of any marketplace. Sellers pay a fixed amount of fee to the marketplace when they sell any item on the marketplace. This fee does not burden the sellers as they only pay when they earn. Poshmark charges $2.95 on all sales under $15 and 20% on sales above $15.
Buyers pay a fixed shipping fee for every package they order. Poshmark offers some special discounts and offers on shipping fees on certain occasions.
These are the two ways Poshmark uses to generate revenue. Apart from this, a marketplace like Poshmark can earn revenue in multiple other ways.
The marketplace can charge listing fees from the sellers to list their products on the marketplace. This is a potential revenue generation channel as every seller will need to list their products every now and then.
Marketplace can charge additional fees from the sellers to promote their listed products for more visibility and reach.
Poshmark significantly stands out from other C2C marketplaces in the market because of the assurance of the quality of the products it offers. In terms of features and functionality of the marketplace, Poshmark surpasses its competitors. Let’s have a look at the USPs of Poshmark that differentiate it from its rivals.
Whenever two buyers are simultaneously moving ahead with the purchase of the same product, the one who makes the payment first owns the product. However, the “Reserve Product” feature in Poshmark helps the buyers to flag the products for 10 minutes to enter details and complete the purchase.
This way, even if a buyer is struggling with a slow internet connection or even abandons the cart, the product will only be available for other buyers after 10 minutes.
The bundle buy feature in Poshmark allows the buyers to ask the seller to create a bundle of the products and send the entire package together when purchasing multiple products from a single seller. The buyer receives the entire package as a bulk delivery which provides ease of shopping to the buyers.
Almost every social media platform has a story section and Poshmark also has a similar feature. Sellers post stories of the products which are visible to the following users in their app feed section for 48 hours. Clicking the tagged item will redirect the buyer to the seller’s closet to make an offer. This feature ultimately increases the organic user engagement of the products and sales.
When it comes to building a similar marketplace development, it is crucial to recognize and differentiate between the basic and advanced features of the marketplace. Below we have segregated the features that are required for the MVP development and the features that will make the platform more sophisticated in terms of functionality. Without any ado, let’s proceed.
Yo!Kart is a leading customizable turnkey marketplace solution that can be used to create a website like Poshmark. The core of more than 5000 eCommerce marketplaces around the globe, this ecommerce platform has robust features for the admin to manage the business effectively, vendors to sell hassle-free, and buyers to shop happily.
The platform has been purpose-built for eCommerce marketplaces and evolved to offer more ease and scalability to business owners. Once live, Yo!Kart manages everything from vendor onboarding to leveraging third-party integrations and order fulfillment to seller payouts, and everything. This platform is a one-stop solution to manage all your products, customers, orders, and everything under one roof.
Q1. How much does it cost to build a website/marketplace like Poshmark?
Ans: The cost of building a website like Poshmark depends on multiple aspects including the website’s complexity, the specific set of features required, and the need for technical skills and coding expertise. Besides, the choice between readymade eCommerce software or outsourcing the marketplace building needs to the custom development company will impact the overall cost.
Q2. How much time does it take to build a Marketplace like Poshmark?
Ans: The time required to create a similar marketplace to Poshmark varies based on the development approach followed. The custom development process involved market research, planning, and designing, followed by many other steps impacting the timeline, typically spanning from 6-12 months. On the other hand, leveraging eCommerce software reduces the timelines, taking around a week for setup, configuration, and customization.
Q3. How does Poshmark Work for Sellers?
Ans: Poshmark allows sellers to list items by uploading photos, adding descriptions, and setting prices. Poshmark handles the transaction process, deducting a fixed percentage of earnings as commission fees. The sellers can leverage multiple tools to track sales, manage inventory, and promote listings. Furthermore, sellers can gain exposure to a huge customer base and deliver exceptional shopping experiences to the customers.
Q4. How does Poshmark Work for Buyers?
Ans: Buying on Poshmark includes multiple steps. Firstly, buyers will register on the platform. Upon successful registration, they can browse through a wide range of product listings, filtering by preferences, and wishlist the desired items. Once chosen, the sellers can place the order and make the payment at the time of delivery. Buyers can expect a straightforward buying experience with secure transactions, buyer’s data protection, and a user-friendly interface.