Poshmark Competitors Analysis

Poshmark, Inc. (POSH) is a social commerce marketplace headquartered in Redwood City, California. Manish Chandra, Tracy Kun, Chetan Pungaliya, and Gautam Golwala founded Poshmark in 2011 as a mobile-first platform where anyone could buy or sell fashion items for men, women, and children. As the company grew, it expanded its product offering to include home goods, pet products, and electronics.

Today, Poshmark is one of the largest social commerce platforms in the world, with over 80 million registered users. The company went public in January 2021 in an IPO that saw its shares soar 142% on the first day of trading, thus a valuation of $7 billion. But as is the norm with IPOs, Poshmark’s post-IPO performance hasn’t been as strong. As of September 12, 2022, the company had a market capitalization of $1.01 billion.

While that may be the case, Poshmark’s fundamentals remain strong. In FY 2021, the company’s GMV increased by 27% to $1.8 billion, and its revenue grew 25% to $326 million. Despite registering a net loss of $98.3 million, the company’s app-related activities like social media following, product listings, and job openings are growing at a healthy clip.

For investors and analysts looking into Poshmark as a possible investment, the competitive landscape is just as important as the company’s financials. Below is a detailed Poshmark competitors analysis.

Bottom Line Up Front

The fashion social commerce landscape is crowded with direct and indirect competitors. Poshmark’s main direct competitors are The RealReal, thredUp, Tradesy, Depop, and Vinted. Poshmark has a first-mover advantage in the US market but faces competition from international players like Mercari and Vinted.

List of Poshmark’s Competitors

1. The RealReal 
2. ThredUp 
3. Tradesy 
4. Depop 
5. Vinted 

Poshmark’s Growth Strategy and Revenue Model

Poshmark’s growth highly depends on its platform’s network effects. The more users join the platform, the more valuable it becomes to buyers and sellers. As such, it heavily invests in marketing to acquire new users. As per its 2019 SEC filing, Poshmark spent 60% of its revenue on marketing in 2018, which grew to 65% in 2019. 

Although it reduced its marketing expenditure due to the Covid-19 pandemic in 2020, the company announced that it would increase its marketing spend post-pandemic as it looks to regain its pre-Covid growth trajectory. However, a company that heavily relies on marketing to grow its user base will likely reach a saturation point at some stage. It begs the question: Is Poshmark’s growth sustainable in the long run?

Apart from its marketing efforts, Poshmark plans to grow its business by acquiring complementary companies and expanding its product categories. In 2021, it acquired Suede One, a sneaker authentication platform, in an effort to catalyze growth in the second-hand sneaker market. The company has expanded its product categories beyond fashion and is testing the waters with electronics and home goods.

Poshmark makes money by charging sellers a commission on each sale. It charges a 20% commission on sales worth $15 or more and a $2.95 flat-rate fee for sales below $15. As a peer-to-peer marketplace, it doesn’t carry any inventory risk.

Poshmark Competitors Analysis

Poshmark competes in a highly diversified market. While it operates as a social commerce platform, it also competes with manufacturing companies like Nike, Fast Fashion retailers like Zara, online retailers like ASOS, personal stylists, and other marketplaces like Amazon and eBay. 

However, the company isn’t short of direct competitors using the same business model. Below is a detailed analysis of some of Poshmark’s main competitors.

1. The RealReal 

The RealReal is a luxury consignment store founded in 2011, the same year as Poshmark. The company offers an authenticated luxury experience and has built a strong industry reputation. As one of the leading luxury consignment stores, The RealReal has partnerships with some of the biggest names in the luxury industry, including Bergdorf Goodman, Saks Fifth Avenue, and Neiman Marcus. 

Like Poshmark, The RealReal handles the authentication, pricing, shipping, and customer service for each item sold on its platform. The company’s product catalog includes women’s and men’s clothing, jewelry, watches, home goods, and art. To better serve its luxury customer base, The RealReal has brick-and-mortar locations in San Francisco, Los Angeles, New York, and Chicago. 

Given the high barriers to entry in the luxury market, The RealReal has a first-mover advantage over Poshmark. Moreover, it employs in-house expert authenticators, like horologists, gemologists, and art specialists, to ensure that each item sold on its platform is authentic. This gives it a significant competitive advantage over Poshmark, which relies on its community of users to authenticate items.

However, Poshmark takes the lead when it comes to financials. The RealReal went public in 2019 in an IPO that saw it raise $300 million. Before going public, it had raised $356.9 million from 24 investors after ten funding rounds. The company’s valuation at the IPO was $1.7 billion against $7 billion for Poshmark. It also has a lower market capitalization which currently stands at $239.081 million against $1.01 billion for Poshmark. 

If we are to compare growth rates, RealReal has better metrics. In FY 2021, RealReal’s had a GMV of $1.482 billion, representing a 50% YoY growth. The company’s net revenue was $468 million, a 56% YoY growth. However, its net loss was relatively high at $236 million from 176 million in 2020. If you are to invest in either company, RealReal is the better pick regarding growth potential, but Poshmark is a more stable investment and is likely to become profitable sooner.

2. ThredUp

ThredUp is an online consignment and thrift store founded in 2009. Unlike RealReal, it doesn’t focus on high-end luxury items but offers a more affordable and mass-market experience. The company’s product catalog includes clothing, shoes, and accessories for women, men, and children from over 35,000 brands.

The company’s proprietary technology and logistics platform enable it to recirculate second-hand clothing quickly and efficiently. ThredUp claims its platform can process and list a piece of clothing in as little as 30 seconds. Through its Clean Out program, the company makes it easy for customers to donate or recycle used clothing. 

One of ThredUp competitive advantages is the seamless service it offers sellers on the platform. Apart from taking care of authentication, pricing, shipping, and customer service, it also provides sellers with a shipping kit. Moreover, it has distribution centers across the US, which enables it to offer faster shipping times than Poshmark. Unfortunately, these distribution centers are costly to operate and eat into the company’s top line by close to 50%.

ThredUp has a strong market position and is one of the well-funded companies in the resale industry. According to Crunchbase, the company has raised $304.1 million from eight funding rounds. It went public in 2021 and raised $168 million in an IPO that saw its valuation soar to $1.3 billion. As of September 12, 2022, the company had a market capitalization of $290.738 million.

In terms of growth, ThredUp is in a good position. In 2020, the company’s revenue grew 35% YoY to $251.8 million. The company’s gross margin expanded from 68.9% in 2020 to 70.7% in 2021. I can confidently say that ThredUp is a company with good growth potential. However, it is important to note that the company is not profitable and reported a net loss of $63.176 million in 2020. 

3. Tradesy

Fashion is circular, and Tradesy understands this better than anyone. Established in 2009, Tradesy is an online marketplace that enables women to buy, sell, and consign clothing, shoes, handbags, and accessories. It focuses on luxury fashion brands such as Louis Vuitton, Chanel, Gucci, and Prada. 

As one of the first companies in the resale market, Tradesy has a strong market position. The company is still a private company with no plans to go public anytime soon. Data from Crunchbase reveals the company has raised $200.7 million after eight rounds of funding from 17 investors. While it has a similar business model as that of Poshmark and ThredUp, Tradesy differentiates itself with its focus on luxury fashion and its direct-to-consumer approach. 

Tradesy doesn’t have brick-and-mortar stores but relies on a network of carefully curated consignment shops and boutiques. The company also has a strict authentication process that only accepts items in excellent condition and from luxury brands. This strategy ensures that the quality of products on the platform is high, a key selling point for luxury consignment. 

However, this focus on luxury fashion also limits Tradesy’s growth potential as the market for luxury goods is smaller than the mass market. It doesn’t reveal its financials, but from the amount of funding above and the focus on luxury fashion, we can infer that the company’s growth has been slower than that of its competitors. 

Despite being a pioneer in the fashion resale industry, Tradesy still has a long way to go to catch up to its larger and better-funded competitors, such as Poshmark and ThredUp. In a saturated market, the company will need to focus on differentiating itself and expanding its luxury fashion offering if it wants to stay ahead of the competition.

4. Depop

Depop is a social shopping platform that enables users to buy, sell, and discover new fashion items. Launched in 2011, Depop is headquartered in London but has offices in New York, Los Angeles, and Milan. The company differentiates itself from its competitors by focusing on Gen Z and Millennial shoppers. In fact, over 90% of its active users are under 26.

Depop became a whole subsidiary of Etsy in 2021, which will enable it to tap into Etsy’s user base and expand its reach. While the company doesn’t reveal its financials, data from Crunchbase shows that it has raised $105.6 million from seven funding rounds. Depop can only go public if Etsy decides to spin it off as a separate company. 

Poshmark and Etsy have been longtime partners, and Depop competes with both companies in the US. While it is a smaller player than its rivals, Depop is growing quickly. The company boasts more than 26 million registered users, with more than 32 million items on the platform. Since its founding, the Depop community has made over $1 billion in transactions. 

Depop is a smaller company than Poshmark, with a narrower focus. It has much fewer registered users than Poshmark, and it doesn’t have the same breadth of merchandise. However, its focus on Gen Z and Millennial shoppers gives it a key advantage in the market. 

These demographics are notoriously difficult to reach, but they are fashion companies’ most important target market. Depop must continue growing its user base and expanding its product offering if it wants to compete with Poshmark.

5. Vinted

Vinted is a fashion resale marketplace that enables users to buy, sell, and swap clothing and accessories. Founded in 2008, the company is headquartered in Lithuania but also has offices in the United States, Germany, the Czech Republic, Spain, and the United Kingdom. Unlike its competitors, Vinted doesn’t focus on luxury fashion; instead, it offers a more affordable option for fashion-conscious consumers. 

The company’s product catalog includes men’s, women’s, and children’s clothing, shoes, accessories, and beauty products. According to its website, the company connects more than 65 million members in 17 countries. Although it doesn’t have the same reach and scale as Poshmark, Vinted is a strong European competitor. 

According to Crunchbase, Vinted has total funding of $562.3 million from six rounds and ten investors. The company’s latest funding round was in May 2021, after raising $303 million led by EQT Growth, Accel, and Burda Principal Investments. This funding round saw its valuation hit $4.5 billion, making it a unicorn. 

While Vinted is a strong European competitor, it doesn’t have the same presence in the United States. The company will need to expand its operations if it wants to take on Poshmark in its home market. While Vinted has a narrower focus than Poshmark, its extensive catalog and global reach make it a significant player in the fashion resale industry. 

Poshmark SWOT Analysis

Below are the strengths, weaknesses, opportunities, and threats for Poshmark: 

Strengths

• Extensive catalog of luxury and affordable fashion items 
• Global reach with users in more than 100 countries 
• Strong partnerships with major brands 
• A highly engaged user base
• Strong growth prospects

Weaknesses

• Lack of brick-and-mortar presence 
• High dependence on social media platforms 
• Unprofitability
• High expenditure on marketing

Opportunities

• The continued growth of the resale market 
• Expansion into new markets 
• Launch of new product categories 
• Partnerships with brick-and-mortar retailers 

Threats

• Competition from other online marketplaces 
• Regulatory threats 
• Volatile macroeconomic conditions

Poshmark Competitors Analysis (FAQs)

Bottom Line

The fashion resale industry is growing rapidly, and Poshmark is one of the leading companies in this space. Although it faces competition from other online marketplaces, Poshmark has several strengths that continue to allow it to compete effectively. These include its extensive catalog of fashion items, global reach, and partnerships with major brands. 

Given the continued growth of the resale market, Poshmark has the potential to continue its strong growth in the coming years. Some of its closest competitors include The RealReal, ThredUp, Tradesy, Depop, and Vinted. The RealReal stands out as the strongest competitor because of its brick-and-mortar presence, which allows it to reach a wider audience. 

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John Hughes

John Hughes is a seasoned expert in digital marketing strategy, business model analysis, and financial insights. Possessing a robust background in finance, his expertise extends into deciphering complex business models, conducting comprehensive SWOT analyses, and staying attuned to the latest market trends.

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