In 2005, six years before Poshmark even began, its now-CEO, Manish Chandra started a company called Kaboodle. This was Chandra's first attempt at his idea to create a social shopping experience, but Kaboodle's focus was bookmarking home-decor you found for later viewing, and then share those collections of links with your friends. Two years later, Chandra sold the company for a reported $30M, but the real spark behind the idea never really left his mind. A few years later, he'd take some of the employees from Kaboodle to take on the next iteration of making retail into a social internet experience.
On February 1, 2011, Chetan Pungaliya, Gautam Golwala, and Manish Chandra (all from Kaboodle), plus Tracy Sun (an experienced fashion industry executive) came together to form Poshmark, a portmanteau of "posh" and "marketplace." While now available on all major platforms, in the beginning, Poshmark went mobile-first, starting as only an iPhone app (not on Android or web). Due to the team's past success with Kaboodle, they also quickly began fundraising from many of the same investors, and by the end of 2011 closed a successful Series A led by Mayfield Fund for $3.5M. In Poshmark's announcement of their fundraising, Chandra stated "We created Poshmark so that anyone can easily convert their closet into a stylish boutique with their phones. Poshmark’s virtual shopping parties transform the chore of reselling fashion into a fun and social experience."
The team knew from the start that they wanted to create a fashion app that centered around the buyers and sellers more than the actual goods, and that ideas manifested itself in the early feature set. From near the beginning, the app allowed users to participate in "posh parties" focused around particular themes, and comment on other user's posts of their closets.
By a year after the company's creation (2011→2012), Poshmark had acquired over 1,000 users, who on average opened the app at least seven times a day for a total of 20 to 25 minutes. Poshmark continued to grow even more rapidly, which caused technical infrastructure issues that almost killed the company in 2013 after it grew 10x bigger in just one year. This year was also characterized by the launch of the Poshmark "showrooms" feature, as well as in-person meet ups with fashion blogs who took part in live posh parties.
PoshFest and the Poshmark Community
The most notable Poshmark "feature" of 2013 wasn't actually in the app. In October 2013 in Las Vegas, Poshmark held their first conference, known as PoshFest, which is self-described as Poshmark's annual two-day conference for entrepreneurs. Beyond community networking and learn from industry experts, Poshmark's event site claims that attendees of the event "hear Poshmark success stories, gain insider tips, meet their PFFs (Posh Friends Forever) and SO much more!"
Poshmark 'PoshPost' shipping & Manish Chandra almost in jail
In 2014, as the customer base continued to grow, one of the largest problems facing the Poshmark ecosystem was effectively shipping goods. While hacky solutions like PayPal were getting Poshmark by while they were young and growing, shipping still proved to be a huge issue.
To combat this, Chandra decided to buy thousands of prepaid USPS labels and send them out to customers. His theory was that, on average, the shipping weights of items coming from Poshmark sellers would even out to be under the shipping weight maximum. However, this wasn't how USPS saw the situation — they wanted to bill Chandra for every item shipped that exceeded the maximum weight, and didn't see the need to discount items that were under the weight that he had prepaid for.
"At one point, the USPS was ready to put me in jail because we were hacking the partnership," Chandra recalls."We wanted everything to ship fast, but we wanted flexibility in sizing." USPS eventually demanded millions in shipping cost that they believed Poshmark owed.
After negotiation, this led to the creation of Poshmark's shipping solution known as PoshPost, which is a partnership deal between Poshmark and USPS to offer discounted and simply priced shipping for Poshmark sellers.
Poshmark Community, Sharing, Bundling, and Power Users
Through 2014 to 2016, despite raising several more rounds of venture funding, Poshmark chose to slash their marketing budgets by over 80%, and instead double down on their community. Reflecting on this decision in an interview with Sarah Lacy of Pando, Chandra notes that "Now we are 5x [our previous] size in terms of new buyer count. It’s all been done by community."
The largest aspect of Poshmark's community that led to rapid growth was their focus on user sharing powering the effectiveness of one's store. Poshmark's seller growth loop made it so that sellers' posts received more engagement if they shared more content, which attracted more buyers, which in turn attracted more sellers. Concepts such as "Poshmark share jail" began to arise as users began to share so much that Poshmark had to limit the amount of sharing a user could do in a day.
Another notable feature launched in support of the community was Poshmark bundles, which led to lots of bulk purchasing on the platform, and an increased ability for sellers to move large amounts of inventory at once.
Around the end of 2016, in a separate interview, Chandra noted in an Inc.com interview that roughly 10% of their total user base were "power users" that were seeing an average of 10 to 20 transactions a day, and netting $100,000 in revenue per year.
As no coincidence, the spike in Poshmark sellers and the rise of high-income power users occurred around the same time as another trend — the rise of Poshmark Bots.
Poshmark Bots started beginning around 2016 as a way for many in the community to support the amount of effort needed to be a top sharer and seller on the platform. Poshmark Bots are automation tools that perform common tasks for Poshmark sellers on their behalf. Examples of such actions include sharing, following, and sending offers to likers.
As Poshmark continues to grow and has raised over $160M in venture funding, the seller community and payouts also have continued to grow. In an interview with Reuters in 2018, Chandra noted that Poshmark had generated over $1B for Poshmark sellers, with a large amount of this one billion dollars "concentrated in a group of sellers making five, six and even seven figures," as opposed to evenly distributed across the platform's 4M+ sellers. Our data suggests that this rise of seven figure Poshmark sellers has been powered by the parallel community efforts to create automated Poshmark Bots to power the most efficient sharing and selling possible on the platform.
Poshmark Data Breach
On August 1, 2019, Poshmark released a statement that it had experienced a data breach. In their official statement on this event, they said "the data acquired does not include any financial or physical address information, and we do not believe your password was compromised. Regardless, we recommend that you change your password as a precaution and security best practice."
From our digging, it appears that Poshmark's statement is true — the leaked data was all encrypted so no usable information was acquired in the leak, and Poshmark users should have no reason for concern.
While data breaches always seem scary, Poshmark demonstrated good security practices in the face of the attacked hack. In some sense, for Poshmark sellers, this is a positive event. While no information was leaked, this hack represents something important about the platform — Poshmark is a large and valuable enough community that it is worth a lot of energy to access its users.
Today, Poshmark stands as a vibrant community of over 60 million social buyers and sellers across the US and Canada. According to Poshmark's 2020 Social Commerce Report, the platform has 38 million items shared per day, 1.8 million likes per day, and 365,000 comments per day. Poshmark shows no signs of slowed growth, and continues to add new sellers every day.