poshmark-business-model

How Does Poshmark Make Money? Poshmark Business Model In A Nutshell

Poshmark is a social commerce mobile platform that combines social media capabilities to its e-commerce platform to enable transactions. It makes money with a simple model, where for each sale, Poshmark takes a 20% fee on the final price, for sales of $15 and over, and a flat rate of $2.95 for sales below that. As a mobile-first platform, its gamification elements and the tools offered to sellers are critical to its growth.

Origin Story

Manish Chandra, Founder and CEO of Poshmark explained how his childhood growing up in India, with the summers spent with his grandfather in a pharmaceutical shop in Chandni Chowk, a traditional market in Old Delhi, he learned what makes up a marketplace.

By observing people interacting, transacting, negotiating, he learned what makes up a vibrant market. In the decades following, e-commerce would become the primary mode of consumption, and Manish Chandra wondered if he could still make the whole online shopping experience social.

As he highlighted as the iPhone 4 launched, around the 2010s he realized how technology could be used to connect people, enable them to share, while shopping. From an engineering standpoint, Manish Chandra developed his own blueprint centered around a social, and sustainable experience, where technology would enhance both the value proposition for users and sellers on the platform.

After building his team, comprised of Tracy Sun, Gautam Golwala, and Chetan Pungaliya, in 2011, they launched Poshmark.

Market Opportunity

Poshmark’s opportunity sits across three markets and trends, which are all under the umbrella of retail. As an online platform, driven by social commerce, selling primarily secondhand stuff, those three elements make up the market characteristics of Poshmark.

Value model

Poshmark value model moves along the lines of a shopping experience, improved by technology. As a digital platform, Poshmark creates value for two types of individuals: users/customers and sellers.

On the one hand, Poshmark offers a discovery and purchase process primarily driven by a social experience. As Poshmark highlights in its prospectus, perhaps in 2019, 87% of items purchased on the platform were preceded by a like, comment, or offer on its marketplace.

This discovery process is also user-generated, where users/buyers can curate their newsfeed with similar tastes and styles. Poshmark’s marketplace provides a listing with millions of secondhand items.

Mission and vision and core values

Poshmark’s mission is “to put people at the heart of commerce, empowering everyone to thrive.”

Poshmark’s core values are:

  • Focus on People.
  • Lead with Love.
  • Grow Together.
  • Embrace Your Weirdness.

Value propositions and key stakeholders

LOGO

Poshmark’s primary goals is to make “buying and selling simple, social, and fun.”

In the offline shopping experience, product discovery is inherently social. Shoppers seek the same in the digital world and increasingly turn to one another for recommendations and validation online. Social technology platforms take a central role in facilitating personal, meaningful interactions at scale through photos and discovery-based content. Also, consumers increasingly favor resale shopping, fueled by the desire for sustainable consumption and increased orientation towards value.

From the seller perspective, people continue to find ways to pursue their passions with a digital “side-hustle” or digital entrepreneurs. The growing demand for social shopping online creates a meaningful opportunity for sellers to expand their potential customer base from local to global, with the data-driven ability to reach, acquire, and retain buyers.

Key takeaways

  • Poshmark is a social commerce platform that enables buyers and sellers to engage and interact easily. In that way, the transactions’ flow is ensured and Poshmark, which takes a cut on each transaction on the platform, makes its revenues.
  • Poshmark combines elements of e-commerce, social media, and machine learning/big data to enable engagement on the mobile-first e-commerce platform.
  • Its distribution model is given by the variety of items available on the platform. And at the same time, the fact that sellers can easily set up their e-commerce and build their community makes the platform appealing to sellers.

Main Free Guides:

Published by

Gennaro Cuofano

Gennaro is the creator of FourWeekMBA which reached over a million business students, executives, and aspiring entrepreneurs in 2020 alone | He is also Head of Business Development for a high-tech startup, which he helped grow at double-digit rate | Gennaro earned an International MBA with emphasis on Corporate Finance and Business Strategy | Visit The FourWeekMBA BizSchool | Or Get The FourWeekMBA Flagship Book "100+ Business Models"