Poshmark is a social e-commerce platform where people buy and sell secondhand goods, mostly used clothes. It went public last week and closed its first trading day worth $3 billion.
In the Barron's article Poshmark CEO Sees Huge Market for Used Goods. Investors Agree the firm's CEO described the trends driving their growth and opportunity. Key quote:
In a Zoom interview on Thursday with Barron’s from his office in Redwood City, Calif., Poshmark CEO Chandra said the company is riding three trends: the acceleration of e-commerce; consumers embracing social selling; and the growing market for second-hand goods. He sees a huge opportunity, and one the company is only just beginning to tap.
While we track all three trends, consumers embracing social selling is a powerful trend that we regularly see in our research.
Social selling is defined a variety of ways, but at a high level we like LinkedIn's definition:
"Social selling is about leveraging your social network to find the right prospects, build trusted relationships, and ultimately, achieve your sales goals."
Social selling isn't new.
The traditional direct selling industry (also known as multi-level marketing) has been around at least since the 1940's, with well known brands such as Avon, Tupperware and Mary Kay.
The direct selling industry is also large, with about 6.8 million direct sellers serving about 37 million customers.
But the growth of social media has made it easier and cheaper for consumers to leverage their networks to sell things. This has expanded the interest in social selling.
The chart below (click to enlarge) is from the MBO Partners State of Independence study series. It shows the percent of independent workers who said social media was their top source of customers (orange) and one of their top 3 sources (blue).
As the data shows, the use of social media by independent workers (self-employed, freelancers, independent contractors, etc.) to find customers has substantially increased since 2014.
Especially interesting is the percent of independent workers reporting social is their top source of customers has gone from effectively zero in 2014 (it was .3%) to 10% in 2020.
Social media is just one part of social selling - there are obviously other ways to leverage a network in the sales process.
But as this data shows, social media has become an important customer acquisition tool for a growing number of independent workers. We expect this growth to continue.
