E-commerce has seen a huge wave of growth during the pandemic, and my guest on today’s Decoder has gained experience riding this wave. Tracy Sun is the co-founder and SVP of new markets at Poshmark, a fashion resale company that just went public earlier this year. The Poshmark app is a different kind of riff on e-commerce, though — it’s part catalog, part social network, and part creator platform. It competes with similar apps like Depop and Etsy, but also things like Instagram and eBay.
All of that means Poshmark has a unique set of challenges: Tracy has to manage regular e-commerce issues like shipping logistics and customer service, as well as influencer economy problems like burnout and the incessant need to grow follower counts. Not to mention the universe of problems that come with selling fashion, like dealing with fashion labels. But if Poshmark can get it all right, Tracy thinks community is the future of retail.
Tracy Sun, co-founder and SVP of new markets at Poshmark. Here we go.
This transcript has been lightly edited for clarity.
Tracy Sun, you are the co-founder and SVP of new markets at Poshmark. Welcome to Decoder.
Thanks. I’m so happy to be here.
Yeah, I’m really excited to talk to you. Poshmark is really interesting. It’s a shopping app with a really strong social element. It has basically a social network embedded into it. Explain what it is and how it works.
Sure. So it is a bit of a different experience. Poshmark is a social marketplace, which combines the human connection of a physical shopping experience with the scale, reach, ease, and selection benefits of e-commerce. If you think about it, shopping has been around for a very long time. And if you think back to the markets and more recently, malls, and more recently, no more malls — people just like to connect, right?
You go to the local farmer’s market and you like to know who grows your lettuce, or you like to speak to the shopkeeper at a store, to find out how to style things. And with the rise of e-commerce, what’s happened is a lot of that human connection gets stripped out. And what you get is just, like I said, ease, selection, all that stuff. But what Poshmark does is it brings back a lot of that really innate human connection that happens around shopping and combines it with e-commerce.
That human connection in your app is, it’s people, right? You sign up for Poshmark, you open the app, you follow some brands, that’s the first prompt, but really you’re following people. There are strong echoes of Instagram in this entire experience, right? Is that the main focus for you, is you’re going to follow actual people on the app?
You follow people as a means for discovery, as a means for connection. So what we see on Poshmark is people are on the app 27 minutes a day, and that’s not an engagement stat that you typically see in commerce. It’s an engagement level you see when there’s more things to see, more people to talk to, content’s changing, there are conversations going on. That’s the level of engagement we really see today. And that’s what’s happening on Poshmark. People come, they look at their feed, they talk to people who are selling things, asking them questions like, where did you get that? How do I pair that skirt with a pair of shoes? How does this fit? There’s a whole bunch of conversations going on.
That 27 minutes, is that the mean or the median? Because it feels like you probably have some sellers who are on there eight to 10 hours a day, and then people like me that bang through all their social apps for 30 seconds before they go to bed.
Sure. That 27 minutes is an average of everyone who’s active on a daily basis.
One of the interesting problems for all social apps that I always think about is the flywheel of getting started. So you started Poshmark in 2011, now you’re a public company, you just IPO’d in January.
How’d you get the flywheel started, right? You’re asking people to sell products, to spend money, to put things in boxes and ship them. That’s a lot more than a TikTok or a Clubhouse or Instagram. You’re asking a lot of users, how’d you get the flywheel of engagement started?
That’s such a good question, and I actually remember back in 2010, Manish [Chandra] and I — Manish is a co-founder — I sat there and I asked him, “Do we get buyers first, do we get sellers first, do we get inventory?” because in 2010, not only were there not social marketplaces, people did not embrace reselling on a mass scale yet. So in addition to flywheel, we had to convince everyday people that you really do have items in your closet you can sell.
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So, what we ended up doing is inadvertently going after all three at once. We met people, so not buyers, not sellers, not people with inventory, but just people who we thought would want to connect over commerce, and these are everyday people. So people that you feel like you could walk down the street and see them on the street. We went and talked to some fashion bloggers who were not shy to take photos of themselves because again, Instagram had not really become big yet. So the idea of a selfie was not in our lexicon.
So we really found just digitally savvy, fashion-loving people who loved to get together and talk about style. And we actually had physical events that brought them together. And during these physical events, we taught them how to use the app. And they really, really took off and started making it their own. And so what we found, to answer your question about flywheel, is these people became buyers, they became sellers, and they switch back and forth. And so what we focused on is really recruiting people and the flywheel took care of itself.
It’s interesting, because you run a commerce platform, but the dynamics you’re describing, they’re the same dynamics as every social platform with creators. And I think that’s one of the more interesting tensions with every company that has creators on it. You have to service the creators, but you also have to make a great user experience.
You have many more people who are just consumers, but if you don’t have the creators, if you don’t have the sellers, you won’t have the buyers. Who do you think of as the more important cohort of users? Who do you spend your time thinking about?
We typically spend most of our time thinking about our sellers because they, as you call them, they are the creators and we’ve focused our product strategy on helping the sellers become more and more successful. So we’re always thinking about, what are additional tools we can give them, to further engage their buyers? So in a way, we do focus on buyers as well, but through the lens of our sellers.
An example of that is we recently launched a feature called “Dropping Soon.” And what that does is it enables sellers to notify interested parties and say, “Hey, I have this special product and it will drop tomorrow at 9AM”. And our buyers love that. So they get notified, they’re so excited. They like the item in order to receive this notification. They wait for the drop to happen. The drop happens, our seller can schedule it. It fans out to everyone who has signed up to be notified and then buyers come in and then they purchase and have a great time.
So this tool, we built it for sellers, but the sellers are using it to engage with their buyers, and that’s the approach we’ve taken for so much of the product strategy at Poshmark, we enable people, and the people that we’re enabling are our sellers, and then our sellers go and talk to our buyers through our tools.
One of the things I think is really interesting about that approach is you’re talking about your sellers, your creators on your platform, is like primary users of your platform, people who are, they call themselves “Poshers,” right, which is really a great word.
Other platforms like Depop, I see a lot of TikTok stars who are just selling some stuff over on the side on Depop, and they’re using that platform to monetize their main platform. How do you think about that relationship to Instagram and TikTok, all these places where there are other kinds of influencers who are looking for alternate revenue streams?
I think everything is converging. The idea of the rise of creators and creator economy — Instagram, TikTok — what we’re entering into is an era where content is easily created and accessible, and you don’t have to be what we used to call influencers, who have millions and millions of followers. You can be a creator and be a star in your own right.
So I do think worlds are colliding, and it’s a really interesting time where people are just creating a lot of content. And we’re seeing that in Poshmark, where the idea of creating a closet and putting it up for sale, that was something 10 years ago people only did if they wanted to make a career out of it. And what we’re seeing now is it’s now very easy through Poshmark to come in, and within a few minutes, you can have something up for sale, make 20 bucks, go on with your life, and come back whenever you’re ready.
Are you actively out there recruiting influencers on other platforms, creators on other platforms, to use Poshmark as a secondary revenue stream or even a primary revenue stream?
We do have a lot of creators on Poshmark and most of them are coming in through organic means. We’re creating more and more tools to help people express themselves in this way. So for example, last year we launched our short-form video called “Posh Stories.” And what it enables anyone to do on Poshmark, is really tell a story behind something you’re selling or in your closet or your inspiration. And that was received really well by our community because as you know, video is just so much more vibrant and so much easier to create.
And then just last week, we added to that product by launching listing videos. So now, as a seller, you can add a video product to every single item in your closet, but even more interesting as a consumer, you can just consume a stream of just what people are selling, they’re styling it, they’re telling you how to wear it, what it looks like. So it’s a really well-received engagement mechanism that is being consumed by both sides.
You said everything is converging, and as you’re describing your new features, the app that converges the most things into itself is Instagram, right? Any kind of interaction you can have in a social platform, Instagram either already has, or is rapidly copying. Is Instagram your biggest competition or is Depop your biggest competition?
Wherever people are spending their time is where we focus on, right? Because for us, we really want to help our sellers be successful and really engage them. So we want to build as many of those engagement tools as possible, so that they can stay on Poshmark and achieve as much of the social needs, as well as commerce needs, as they want. So we’re just heads-down, just focused on building out our social marketplace, and making sure that we really serve our sellers.
No, but let me push you on that. Instagram has shopping tools. They want people to spend money in there. Every time I’ve talked to Adam Mosseri, I ask him why he won’t just take my credit card and turn [Instagram] into a catalog. Is that the biggest threat or is it a more head-up competitor like Depop?
Well, let me tell you what our competitive advantage is. We built Poshmark grounds-up with commerce in mind. So when we say it’s a social marketplace, I don’t think all social features are equal. This is something that we thought about a lot in the early days of building Poshmark is you have to laser-focus on innovation, and you can’t just take innovation elsewhere and plop it onto a new customer without really understanding your customer.
So where we really focus is not just social, but how does social enable and unlock commerce. And so for us, nouns that we see elsewhere, like video or like follow. These are very standard social actions. On Poshmark, there’s always commerce intent behind them. So you’re pushing at competition, sure, you can shop on Instagram, you can shop on Amazon, you can shop at your physical boutiques on Main Street when they start to open, there’s many places to shop, and there are many places to spend your time.
It used to be more TV, now it’s more online and TikTok. There’s many places to shop and spend time online. There’s very few places where you can socially engage and have every engagement point you do translate into a better shopping experience for you. And that’s where, yes, if you decompose Poshmark into pieces, we’re not inventing shopping, but everything you do, it changes your experience on Poshmark. So it’s like you have this virtual mall that’s ever-changing, and that’s what we’re focused on building.
I think this brings me to the question that I ask almost every co-founder and executive that comes on the show. This is a 10-year journey. You’re now a public company. You have this huge competition. You were talking about your focus. What is your decision-making framework, as you think about ways to expand Poshmark, you’re in charge of new markets. How has that decision-making changed?
It’s been a really interesting journey for me to go from being a really, really small founding team to now being an executive at a public company. I have never gone through that career journey before, just seeing a company evolve. And I love this question because, it’s really true, that decision-making, I might’ve said it gets more complicated as you get bigger, but now that I reflect on your question, I don’t think it gets more complicated, I think the inputs just change.
So let me give you an example. In the early days, when there’s a handful of people, you just assume that everybody has the same amount of information, the same amount of context. Because it’s a startup and you’re an entrepreneur, and it’s like find product market fit or die, your north star is so focused. And there’s energy and adrenaline to getting there as a team together.
The urgency is so clear. And so all of that context enables really fast decision-making. A small number of people, everyone has the same amount of information, the urgency is extremely high, so you can’t really sit and contemplate it for a very long time. And so innately that small team makes the decision-making in a fast, urgent way.
What I see now when we’ve got many, many stakeholders, many more than the early days, is now you have to really intentionally ask yourself, when you’re making a decision, who can help you based on the information they have? Do they have the context to help make the decision? What’s the level of urgency? There are some decisions we’re making that need an answer that minute.
And then there are other questions we’re asking that we’ve been asking for a year now and still contemplating, right? Some more of the strategic questions that aren’t urgent, but super important. So that’s how decision-making has changed. What I would say is, I now have to be more intentional to think about all these factors and then incorporate that into what type of decision-making I am going to employ today, versus the early days, it was usually one type of decision.
When you say what kind of decision-making I have to employ today, what are some types?
It’s like I was saying before, we make hundreds of decisions every day. Some of them are very tactical, and they’re small and they’re between maybe three people. So anyone in that foursome, if they have the same amount of information, they understand the same amount of risk and urgency. Any one of those people can make a decision. So someone raises their hand and goes, and we move on.
What’s become newer at Poshmark, and in my world, is we look at what’s next. Where do we want to be in five years? Where do we want to be in 10 years? These are types of questions we’re asking that everybody’s coming in with a different context, different amount of information, different opinions. They’re so important to the future of the company, but not super, super urgent, they don’t have to be answered today.
And so this decision-making involves a lot of people. We’re soliciting input from different departments, different levels inside the company and outside the company, and we’re taking our time to process and synthesize this information. This is a type of decision-making we didn’t make in 2011, right? It’s like contemplating, it’s existential. So more of this is coming and what I’m learning is to have some peace and not rush things.
I think I’m telling you an example at the extreme endpoints of my Poshmark journey from day one versus today. But the truth is somewhere along the middle, like year five or so, is when things slowly started to shift and more important strategic decisions or questions started to come up. And I think, as that transitioned, I would feel urgency to move quickly because I might not have processed that these questions are slightly different and require slightly different decision-making frameworks.
You’re three months into being a public company now, I think. One of the things I hear from the people who work and who manage public companies is suddenly there’s a score every minute of every day. There’s a stock price that moves up and down. People want to see growth, investors want to see growth.
My friends who are anchors on CNBC will bring executives on and say, “What are you going to do to move the stock price?” Have you felt that influence yet, just in this early moment of being in charge of a public company?
Well, we certainly see the stock price. We certainly see people talking about the company in an hourly, daily, quarterly mindset. So we see it, we saw this coming, and I’d say that we have been building a culture of long-term mindset within the company for multiple years now. So as we prepare for this process, we really had to take our own mindset and make sure that we stay focused, be really clear on what you want to achieve and what it takes to achieve it, and spent some time working with our executive team and our overall team to just say, look, we’re making this change. We’re going from a private company to a public company. Here’s what’s going to happen, and here are the changes we have to make to be good stewards of the company to all of our stakeholders.
However, our mission and our strategy and the way we operate, which is the culture with which we operate, will remain the same. And so we’ve really focused, we put a lot of energy into providing stability in the team and with ourselves to go through this transition and not have it rock your world. It shouldn’t rock your world, right? We’re still operating as Poshmark. It’s just now we have a new set of investors.
Yeah, but they have a ticker. Walk me through, you had a meeting. Did you have a series of meetings where like this ticker is going to exist, we want you to pay not so much attention to it?
I wouldn’t say we had a meeting specifically for that. It was more like, we care a lot about our culture and our team, and we know the pressure of what happens when things go up and when things go down, it can be very confusing for a company and for a team. And so because we care so much, we thought ahead of time, well before we listed; how might this impact our team, and what can we do to provide stability? And so we came out with consistent messaging well before we had to make sure that people’s north star was clear to them and you have to show, by example, things go up, things go down, but our strategy remains the same, and we reinforce that messaging through our all-hands and through individual conversations.
So I wouldn’t say it was like everybody attended, but it’s part of, it’s weaved into everyday conversation. So when earnings calls happen or when these things happen, it’s not like, “Oh my gosh, crisis, everyone drop everything we’re doing.” It’s like, no, this is one more thing we have to do as a company, but we have 50 other things we’re doing, so let’s keep going on the 50 things, and we’ll have to do this 51st thing as well.
Let me connect this to the people who use Poshmark; your sellers. I think a lot about hustle culture. I think a lot about creators, obviously. There was recently, I think, in December, there was a Wired piece about people trying to make a living on Poshmark doing resale. Do you think now as you’re getting bigger, is Poshmark a career for people or is it just a way to make extra money?
It’s both. So, definitely there is a large group of sellers on Poshmark who are here to do it part-time or as a hobby. And the reasons they might do that is either to make extra money, it’s entertainment, it’s sustainable. There’s lots of different reasons why someone would want to casually sell on Poshmark.
What we do see is a growing number of people who are either full-time, professional, or wanting to be full-time and right on that precipice where they want to make that plunge, but they’re not sure how. And that’s a growing constituency on Poshmark and that’s something that we’ve seen, and I think it’s really exciting to be able to run a platform that could support people full-time.
So when I think about what’s ahead, there’s many things we’re focused on building and supporting high-volume sellers and giving them more and more tools, so that those who want to take the lead, find more comfort and find more support. And those who have taken the lead finding that they have more and more tools to be successful with this decision is something we’re really focused on. It’s one of our key growth strategies going forward.
The reason I wanted to connect it to your journey and the public company conversation is, we’ve been talking about the path you’ve been on, how you make decisions over the course of the past 10 years. It’s very clear that there have been periods of just exponential growth for you as a person who runs a company, as an executive, the company going public. That’s an exponential growth moment in terms of investor dollars and in terms of the size and influence of the company.
As you think about an individual seller on your platform over the course of 10 years, the dynamic between the people who use the platforms and the platforms that serve them, it feels like it can remain very fixed. Are you thinking that, okay, if you are on Poshmark and you dedicate yourself to it for 10 years, you will have opportunities to scale with the business the same way that you had the opportunity to scale Poshmark itself?
Yeah, I don’t think that an individual seller on Poshmark, if they joined many years ago, their experience is fixed. There’s a few major ways in which their experience has grown. What’s been really, personally, a beautiful career experience for me with Poshmark is everything we do, we’re on the same side of the table as our sellers. So we’re constantly trying to make their world unfixed. And we do it in a few ways. One is, the community’s grown. The number of users on Poshmark has grown astronomically over the years. And what that means for our sellers is fresh eyeballs, fresh buyers, more people to connect with. It’s a service we provide that we don’t often talk about. You’re building a business on Poshmark, but you don’t have to look for traffic.
Not only do we bring traffic to you, we bring traffic to you every day, and as we increase our personalization tools, we’re bringing qualified traffic to you. And so that’s a way in which there are more buyers to acquire for each of our sellers, and as they get buyers, there’s more people that they can engage with and try to get as repeat buyers. So that’s the first. The second is we have increased our categories. So we used to be only a women’s fashion site, and we have since, a few years back, launched our men’s category, which actually both genders are participating in buying and selling. We’ve launched a home category, which last year during this crazy time we’ve been in, has skyrocketed as people are in their homes and finding more and more things to buy and sell.
We launched beauty last year as well, and just recently last month, we launched pets for the four-legged family member. So as a seller, we have and will continue to increase the universe of the store that you can build and therefore the customers can build. And then the last thing I would say is there’s been a lot of innovation. So there’s video, there’s drops, there’s a whole bunch of new tools that we’re inventing for people to play with and see if it works for them and their store. So I would challenge your assertion that an individual seller over the course of years is fixed. I think that we’ve made it our mission to grow the platform, so they can grow, and I hope that they’re using these tools as they see fit.
Let me stay on the challenging side of this question for a minute.
That is the path of all social platforms. They add new features. There’s more buttons to push, there’s more formats to develop, there’s more categories to plan. In one sense, that’s all just more work. You talked about traffic, one of the clearest user / seller criticisms of Poshmark that I have read is you have to spend a lot of time just sharing stuff, sharing other people’s stuff to participate in the feed and draw traffic to your own store, and that’s just a lot of time.
And there are some Poshmark sellers that just hire another person to do that sharing work, so they can get on with the other stuff. As you add more things to do and find more ways to be competitive, are you thinking about, “Okay, how do we scale sustainable business growth?” or are you looking at, the users are going to figure out how these tools all work?
That’s a good point. So, there’s two things that come to mind. So first of all, as you add more features and it gets more complex, particularly for a new user, it can get very daunting, right? A new seller comes to Poshmark today, for sure, they’re seeing so many more features than someone who joined eight years back. So I do think putting extra attention on really guiding the seller, if they’re starting their journey today, to not get overwhelmed with all the advanced features.
Really just laying it out for them: here’s how to be successful, and let’s not overwhelm you, as a way of just supporting you and empowering you. So that’s the first that I recognize as something we’re putting energy into, but we’ll have to continue doing that with time. And then going to the other part, for those that are not confused by features, but are just like, “Man, it used to be two things I have to do, and now there’s 15 things I can do.”
To me, that is a good choice to have. I don’t think that every tool we create is appropriate for every type of seller. The drops that I mentioned work really well for people with deep inventory. So boutiques that have 50 T-shirts, they used to have to create 50 listings, now they create one listing and they can market it to everyone who’s liked it and say, I have 50 SKUs behind this, and so it won’t sell out in a second. And so for them, the drops is an efficiency tool and we can measure that over time.
That’s not going to work for an everyday, like, I just want to flip some of my closet items that I’m not wearing anymore. That tool doesn’t work. So we have different seller segments that require different types of tools, and I don’t think they’ll work for all of them. And we do want to be mindful and go towards seller efficiency and make sure the ROI is there, but I’m not sure if the goal should be, I want to do less work and make more money.
Wait, that’s everyone’s goal.
I don’t think that that should be our goal, right? We are in the business of helping people be successful. We want that person who is making $20,000 on Poshmark, if they want to make more, we want to give them the tools to enable them to do that.
Well, if I think about Poshmark, right? If we want to grow, we need to grow our team. We need to grow our infrastructure. We need to build. There’s work to do to grow. And so we’ll always focus on ROI and try to make the effort as efficient as possible. But I don’t buy the “I must hire someone therefore I’m not successful.” It’s like, no, I think that’s amazing. If you are hiring someone to run your store, we just have to make sure we make it worthwhile for you, and we help direct your attention, so that that person knows what to do, and make it easier and easier for you, right?
Yeah, that’s the tension, right? You hire somebody because you think they’re going to enable you to achieve an even higher profit margin than you could do yourself. But once you start going down the road of servicing that community, the initial community of people who just want to try it out, they’re faced with doing the work of maybe three or four people, and that seems like the hard tension there for me.
On Poshmark, we have some sellers who have 12 listings, right? And then we have some sellers with 12,000 listings and what’s required to run these two stores is vastly different. And if we can segment our sellers and really look at each persona and say, okay, the person who has 12 listings, they need this and let’s keep going on that, but the person who has 12,000 listings, they have a completely separate suite of needs.
And that 12,000-listing person, they would definitely fall under this high-volume seller that we’ve identified, and it is one of our focus areas right now, because that’s where we think that we haven’t done enough work. We were built for the 12-listing seller. We have a lot of tools to serve him or her, though the one who is more high-volume, that’s where I think we have some gaps in our platform that we’re working to address.
I would make the comparison here to a more traditional social platform, YouTube, for example. YouTube is always described to me as the gold standard of creator monetization, and really all they do is serve ads for you and make it easy to do branded integrations and videos. People make a lot of money doing this. One of YouTube’s big benefits, though, is that your videos continue to exist on YouTube’s website, AdSense just keeps paying you for that long-tail archive of content. I think the best example of this is like kid video channels.
I have a toddler, my toddler watches the same five videos all the time. They’re just collecting that money. They don’t have to make any work, right? They get software-style margins from their content; they’ve paid to make it once, they’re selling it over and over and over again for effectively zero incremental cost. Depop sellers don’t have that. They have to get the clothes, they have to take the photos, they have to sell the clothes, get more clothes. Can you think of a way to add that higher-margin revenue line for your creators?
Well, in the world that we see today, it is possible for a boutique seller who has a store to put up 50 listings and kind of let it run itself. I don’t think that’s a great merchandising strategy and I don’t think anyone would do that in fashion, who runs a store. Because freshness is what drives the shoppers in, and talking to your customers is what converts them. So I don’t think the analogy is exactly the same. So, for example, this boutique seller, she has her store going, now I’d say it’s less about running the store and more about talking to people who come in and converting them.
And that’s where the energy goes. If you have a past customer who comes in again, being able to say to them, “Hey, you bought this size last time, do you want to buy the same thing in a different color?” Or, “I think this necklace would go great with it.” Those are the things where the energy and attention make sense. And that’s just very much part of commerce. I think what’s really great about that type of energy is I think we tend to gravitate towards the things we enjoy, especially if you spend that much time doing it. So I have to imagine people who create content on YouTube love creating video content.
And like you said, you’re not one of them, I’m not one of them, but the people who run a store, they are merchants. They love running the store. And for most of the people I talk to who are in this world, the part they love is engaging with people. What they don’t love is dealing with logistics, shipping, the grungy part of customer service, like catalog stuff, but they love creating their store. And they love merchandising it there; what the entire assortment means together, how a shopper feels when they come into their store, those are all the positive, creative aspects of running a store.
So I think if we continue to give them room to innovate and create in those worlds and tackle as much of the stuff they don’t want to do, like inventory management, that kind of stuff, then we just enable people to really harness their love and tie that into whether it’s their job or their hobby.
That logistics stuff is kind of the heart of the Poshmark business. And it’s probably important to talk about, although I could talk about creator stuff forever. How do you make money? You charge creators a fee and then you help them with shipping, you help them with customer service, those are costs. But what is the fee structure like? When someone starts to sell on Poshmark, how much are you taking and what do you provide in return?
We take 20 percent of each sale, and getting started on Poshmark is completely free. Opening up your store, engaging with people, building your following. So the key to Poshmark is, as more and more people discover you and your store and they follow you, your reach gets bigger and bigger. So building that reach is part of the customer experience, and the only thing we monetize right now, if you’re successful, we take a cut.
What’s included in that? A whole host of things. So, starting from store setup: you set up your store, your catalog, all of that is managed and included. We maintain a growing community of shoppers. So like I said, you don’t need to drive traffic to your store unless you want to. We have a whole bunch of sellers who organically drive traffic to their stores from other social networks, and that’s just good for them. They’re practicing good customer acquisition strategies. However, we do have millions of buyers on Poshmark as well.
We take care of shipping through a partnership with USPS, so that as a seller makes a sale, they just have to print out the label and it’s already been paid for, and it’s already been pre-addressed. They just put it on and it’s priority mail, so it gets there super fast to their buyer. We take care of all customer service disputes, and we protect both the buyer and seller through our Posh Protect program. The world of chargebacks, for example, is a very painful reality for a lot of sellers out there in the world.
And our sellers do not really know what a chargeback is because we take care of it. We take care of all credit card processing. If there’s a problem with an item and a buyer’s not happy, we take care of that. So there’s a lot of not-so-fun logistics things that our team has solved, and then how we do it, honestly, is we understand it, we put people on it. But then, because at the end of the day, we’re a software company, we create software to help make it more efficient for us, so we can scale.
So you build your own internal software to scale things like shipping and customer service?
That’s right. So I’ll give you an example of something that we’ve had to deal with that no one else would have to deal with, right? Oftentimes, you come and you engage with people and then you go away, but that engagement often leads to a sale. So you answer questions about how it fits, you do some price negotiation, whatever. So what you find is that, especially for casual sellers, their sales can come together in one day, right? So what we would see is people would make like three or four or five sales in one day, and they might, by accident, swap the labels, right? So they would send the wrong thing to the wrong person that would go across the country, and our customer service would get an email that was like, “I didn’t order this.”
And then simultaneously someone on the other side of the country would be like, “I didn’t order this,” and it’s just such an honest mistake for a busy person who’s trying to ship packages. So it would create such havoc in the early days because we’d have to track down this package and track down that package, and now everything is automated. So we have actually built it into the flow where the seller can say, “Oops, I swapped a package,” and then automatically our system takes care of it.
We auto-generate emails to the respective buyers with an apology. And in that email is a label that’s pre-paid, pre-addressed, so that all the buyer has to do is put it on. And in any case where there’s any bad buyer experience or bad seller experience, because everything is centralized and managed by Poshmark, we can pay attention to our levels of service for various people. And so we know when someone’s a seller who has a pristine track record, and then all of a sudden they make a human error — which happens — we can see their history and factor that into our decision-making and our systems do that as well.
Paying attention to your sellers, they have a pristine track record; there’s an element of this that Instagram creators don’t have, like star rankings. eBay merchants do. Where on the spectrum of that are you keeping track of your sellers?
Well, I think when you’re trying to build a community of sellers, we were very intentional to try to create a world where anyone can enter today to become a seller and really have a great selling experience. You can imagine, over time — this happens in other places — where over time the sellers who are high-volume and do really well tend to dominate the entire platform because they have a million five-star reviews and they filter to the top and all these things.
And so we do want our high-volume sellers to succeed, and we want to create a world where anyone can start selling today and be successful. So that’s been something we’ve intentionally thought about from the beginning. An example of something that we’ve done a little bit differently to help manage that tension, is how we approach reviews.
So, like I mentioned, in a lot of websites, you filter, or the sellers who have the most five-star ratings, they get preferential treatment. And as a buyer, why wouldn’t you want to gravitate towards those sellers? It guarantees a certain level of, they’re going to ship, they’re not going to steal my money or whatever. At Poshmark, what we have is we collect ratings on every sale. So we know if a buyer has complained about slow shipment or product quality or something like that, but we don’t expose it to the marketplace.
What we expose is if a buyer gives a seller a five-star review and they leave a comment like, “Wow, I love the seller, she gave me some freebies and she was a super fast shipper, I’ll buy from her again,” what we do is we post that comment to the seller’s page, and we call it a love note. And so what happens is these are just positive comments that people are leaving. So you can go to any seller’s page on Poshmark, and just read all of their love notes that were given by people who shop for them.
But you’re curating that? You have a team that’s looking through everyone’s love notes and saying, “We’re going to post these ones.”?
No. We post any comments as love notes that were published by buyers and gave a five-star rating.Out of five. Right?
Now, if someone’s giving a one-star rating and they post a comment, we don’t expose it, so we don’t publicly penalize the seller, but internally we use all that data to make sure that the buyers are having a positive experience. And so if we have a seller that’s misbehaving or not providing the customer service that we would like, we can take corrective action, but we do it behind the scenes.
What does corrective action look like? So you have a seller, they’ve got a bunch of one-star notes from people with bad experiences. Do you schedule a Zoom? How does that work?
There’s an infinite combination of things that sellers can do where they start to — sometimes slowly, sometimes quickly — provide a terrible buyer experience, and we have a team of people that focus on that and create nuanced schedules of how we might deal with that.
So an example is, someone who ships slow has a different course of action versus someone who is violating our community guidelines, right? We think one is tolerable and can be rehabilitated. The other one is such a terrible experience and we have less tolerance for it. So each of these instances have different courses of action, but generally, once we sense that it has hit some sort of threshold, we will reach out to the buyer or the seller, and let them know that this is a problem, fill in the blank, and we expect something to be corrected.
And if it’s low urgency and the problem gets resolved, it could end there. But there are instances where a team does get on the phone with a buyer or seller, and really talk to them and try to understand, this is a repeated problem. It’s now escalated. What’s going on? And so we do have a team that reaches out and talks to people and gathers data on what’s going on. And in the extreme case, we will cut a seller off or a buyer off if they’re violating our guidelines.
Well, we’ve made it almost an hour and I have an executive from a platform company, and here we are at content moderation, which comes up on, I think, every episode of this show. You’re describing a content moderation policy. You’re saying there’s some stuff that’s against the rules.
One of the important constituents that you have to deal with from a moderation and policy perspective that most other platforms don’t have to is big brands, high-fashion brands, big consumer brands.
Your users are buying and selling their goods, they’re using their trademarks. Some of those brands are notoriously litigious. I know that Chanel and a competitor called The RealReal have just been in court forever. What is your relationship to the big brands like?
Well, in the world of content moderation, if any brand, big or small, flags for us that we’re in some way violating any of their trademark policies, we take that very seriously and work with them. So our relationship has been positive even from a content moderation standpoint, or like a trademark standpoint.
On the flip side, I think what we’re seeing is a shift as we grow, and as online is becoming more important and resale is becoming more important, and our engaged community is thriving. We’re actually seeing a whole bunch of inbound interest from brands on a positive note. Oftentimes, we’re seeing that a brand’s community on Poshmark is one of their largest online communities ever.
So we’re getting a lot of inbound interests saying, “Hey, how do I be part of the solution?” Whereas in the early days, it might’ve just been moderation. I think the future of working with brands is really bright in a way where we can combine forces and figure out how we can really help their customers connect with the brand more.
You have an interesting intersection of problems. There’s chargebacks and shipping fees and stuff that is very much in the physical world, and then you have the same set of digital problems as every platform, which is you have a content policy. People can post fake listings of things that are against the rules, like misrepresenting, I’m reading here, misrepresenting Native American, or American Indian arts and crafts. How do you think about making a content policy for, not a store, but a platform that enables stores?
So when we think about content moderation or any other topic, we really start from a place where we’re committed to ensuring that our marketplace reflects our values and the values of the community we serve. And we start from that place. And as we’ve scaled our content moderation, strategy is something we put a lot of time and energy into, as you’re alluding to. The first thing we do is we really harness the power of our community to help us. It’s a growing problem, and as you grow, it grows. So what we do is we enable our community to flag any items that they think might violate our policies or our values.
And then we have a team that monitors those flags and resolves them. So it’s a three-prong approach. It’s community, we have a team, and the third, which is the place we’re innovating the most, is really seeing how technology can help us. So we’re using machine learning and rules-based detection algorithms that help to go out into our marketplace and proactively identify anything that might be suspicious, or in violation of our policies.
I hear a lot about machine learning and AI-driven moderation. Have you had good results?
We have had good results in that they are helping.
[Laughs] That’s a very politick answer there.
Well, it’s true. We’re finding things, right? We’re finding things we might not have found before. And so it’s enough of a positive result for us to say, we need to continue this work, and we need to invest. And what we’re seeing is the smarter we get, the smarter other people get. And so you have to be committed to really fighting this battle in order to stand a chance, and so we have to.
What we’re seeing is that if we don’t pay attention to this, it can really, like I said, it’s a violation of our values. And that’s the most important thing is to create this safe place where people can connect and transact. So yes, we’re very focused on it, it’s working, but by no means does it mean that, oh, it’s working, we can stop investing. We have to continue to invest in this area, for sure.
Is this something you’re building? Is there an ecosystem of vendors that are working on it? When I hear about, particularly, computerized solutions to content moderation, it seems like every company trying to build their own is actually the wrong approach because the necessary rate of improvement is such that a handful of specialized firms would get there a lot faster.
Yeah. Yeah. We do both. We do both.
One of the more interesting debates that I’ve read about platforms like Poshmark and others is around the ethics of thrifting for resale. Most people have done it. Arbitrage is just a part of the world economy forever. Platforms like Poshmark enable you to buy out all the good stuff at a local thrift shop and then sell it for profit at a massive scale. Do you think that poses any issues?
When I think about thrifting, to me, that’s a very positive consumer behavior. I love how shoppers are embracing secondhand, in that we are spending more time thinking about sustainable choices. And the more we can do that, I think it’s better to not waste what’s out there and to continue to value what we have.
But the physicality of it is you’ve got a thrift store in a local community, and then you’re going to redistribute all the stuff out of that local thrift store across the United States, across Australia. Do you see that digital scale applied to a local community as a net positive or a negative?
Yeah, I think it’s a net positive to be able to support a local thrift store and to go in and provide liquidity for something that is not currently being used. And so as things distribute from a physical store to online distribution, I think it would be really interesting to think through how we can evolve as a system to see it as a positive to increase distribution, and finding homes for items is a net positive end result. So the more we can innovate and help everyone thrive in that type of system, the better.
Have you thought about working with thrift stores, Goodwill, things like that?
We have. In fact, we worked with Goodwill last year and during the pandemic, they helped distribute boxes from their physical store, they actually came to us and said, “How do I bring my stuff online to your sellers?” So we helped them distribute their product to the Poshmark community.
I can’t end without asking you some pandemic fashion trends, which I’m very curious about, right? You run an e-commerce platform. We’ve obviously seen a huge surge in e-commerce during the pandemic. I’m hopeful that we’re at the finish line. There seems to be a lot of light at the end of this tunnel.
Have people been buying and selling more fashion during the pandemic? Is that something you’ve seen, or are they just transacting more in general?
I don’t love the fact that we’ve gone through a pandemic, but I am a bit of a data junkie and I started my career in data and in neuroscience, like how does data show human behavior? And so this is such a fascinating topic because we did see shifts in our data based on what everyone was going through.
And we’re commerce, right, so we didn’t really see the data of everything that’s going on, but we did see how, at least, this pandemic changed the way people are shopping. So, some trends that we saw: We saw a decline in luxury shoes and handbags. Everything makes sense, right? We saw a decline in dresses. We saw an astronomical increase in home goods and athleisure, and oddly, jewelry, right?
And I attribute that to Zoom, it’s like, you want earrings. We also saw some strengthening of brands that are already popular, but became more popular. So I’m talking about, for women, Lululemon; for men, Nike and Adidas. So, that was a lot of the pandemic stuff. I think what’s really interesting is now we’re getting into a phase where the data’s changing again.
And so what do I mean by that? We’re seeing searches go up for summer dresses and jean shorts. And to me, that’s not athleisure, right? That’s not “I’m hunkering down” type of consumer behavior. That’s a bit more optimistic. That’s like, “I might be able to go to a beach this summer, so I want bathing suits. I want dresses because I might be able to be much more social again.” And so what I’m reading into the data, it’s just a lot of optimism in our shoppers.
What do you think post-quarantine fashion looks like? I have this dream that it will be super futuristic. Everyone’s going to be wearing space suits. But what does your data tell you that post-quarantine fashion looks like?
Our data does not predict that [Laughs]. I can conjecture, not from data, that just like anything else in our daily life, the post-pandemic world is going to look nothing like the pre-pandemic world, and it’s going to look nothing like the pandemic world.
There’s going to be some sort of weird hybrid of both. It’s such an interesting time, a year plus of, I don’t even know what to call it, like a complete upside down. Everything got changed to the point where I don’t think things are going to go back, right?
The shift to online that was already happening and exploded during the pandemic, it’s not going to go back. Some sort of hybrid is going to happen, and this is where innovation is really possible.