Breaking Down Poshmark’s Selling Strategy
Now more than ever, opportunities to make money from home are sought after. Many people have turned to content creation, virtual assistant gigs, and various eCommerce ventures to generate extra income and transition away from traditional office jobs. A popular side hustle and avenue towards working from home is online reselling, sourcing items from thrift stores or personal closets and listing them on virtual marketplaces. While there are benefits to taking this path, such as siding with sustainability in the battle against the fast fashion industry, making money from online reselling is not as easy or as reliable as leading reseller platforms like Poshmark make new users believe.
To clarify, it is possible to make money from reselling on Poshmark, but with its high fees, haggle culture, and its dependency on direct marketing, you will not make nearly as much money as you think you will.
Poshmark, a marketplace for buying and selling new and used clothing, is the reselling platform of choice for 5 million people. The platform combines social networking and commerce to connect buyers and sellers, advertising itself as a way to repurpose past purchases into quick cash. According to Business Insider’s interviews with five top sellers on the platform, with earnings ranging from $10,000 to around $100,000 a year, taking good pictures and engaging with other users is key to making sales.
However, in the community of Poshers, it is common to share success stories in gross sales, not net earnings, and to simplify the hours required to engage with the app properly through the understated label of hard work. For an industry built on the return of investment, both money and time, it seems misleading to new sellers to not makes these distinctions.
Poshmark is not a passive marketplace where snapping a picture and hitting the post button will result in a sale. After a user photographs their items, creates the copy for the listing, and posts it with a competitive price, the platform’s social aspect requires the user to continuously share their item for it to be seen and receive likes. Sellers are encouraged to follow other sellers and share other users’ listings to increase their visibility. Buyers and sellers can negotiate the price of items and shipping costs. However, any discount to the fixed rate of $7 the buyer pays for shipping will come out of the seller’s earnings. Poshmark also makes a commission from every transaction, taking 20% on sales greater than $15 and a flat fee of $2.95 on sales $15 and below.
When listing a few articles of clothing that would otherwise sit unworn in a closet, making money back on a prior purchase seems worth the fees. Some return is better than nothing. However, issues arise when users transition from using Poshmark to empty their wardrobe into using it as the platform for their online reselling businesses. New resellers are blinded by the “buy low sell high” mentality, purchasing name brand clothing from second-hand stores to list on their Poshmark closets. What new resellers don’t realize is the retail value of the items they source is not what they are going to get for it. People are not going to pay full price or even half price for a pre-owned item, especially when Poshmark itself promotes the platform in advertising campaigns as a way to find popular brands like Madewell, Nike, and American Eagle for 70% off retail price.
Poshmark constantly encourages sellers to lower the price of their items through the very structure of the platform. For sellers to offer their item to Poshers who have liked it, the platform’s “Offer To Likers” feature must be used. The “Offer to Likers” feature requires sellers to drop their item’s price by 10% off the listing price and offer discounted shipping, lowering the seller’s potential earnings.
The combination of Poshmark’s social components and the emphasis placed on low prices makes the platform resemble the dynamic of a yard sale rather than a retail store. Buyers see listing prices as the starting point for the best deal, not as the tag of an item in a small business. There is a disconnect between how both sides making up Poshmark perceive the service because of how the platform promotes buying compared to selling.
Poshmark tries to motivate sellers holding out for full price buyers to make deals and accept lower offers through titles and deal day incentives. Each sale gets a reseller closer to the label of Poshmark Ambassador, an indicator to buyers that a seller is reliable for having met platform criteria. When a seller has 15 sales and an average shipping time of fewer than three days, maintains 50 active listings, and promotes their own listings and those of other Poshers for a total of 10,000 shares, they will earn the title of Poshmark Ambassador. While flashy, this title is not an indicator of success. The title does not come with any rewards. It is really just a measure of how well a seller engages with the platform.
Poshmark depends on its users to make a profit. The more active its sellers are, and the lower the listings prices, the more buyers will be attracted to the platform. Sellers are encouraged to share referral sign up links that offer first purchase incentives to new users. New users who sign up using an existing Posher’s code will get a discount on their order, but the person whose code was used will only receive a credit when the new user buys something.
In the Posher community, not making sales is pinned on the idea of not trying hard enough, not sharing enough, and not wanting it bad enough. But the reality is, the amount of work the platform requires to make sales and the cut it takes from them helps Poshmark more than it does the resellers. It is hard to call something a side hustle when it takes up all of someone’s time only to have such slow returns.