How Poshmark Captures the Sneakerhead Market
Poshmark (NASDAQ: POSH) just acquired Suede One, a sneaker authentication service, signaling interest in sneakerheads and the sneaker resale market.
In this episode of Upgrade or Topgrade registered on 12 november, Deidre Woollard, editor-in-chief of Millonacres, and Jeremy Bowman and Nick Rossolillo, contributors to Fool, discuss this acquisition and the recent stock market performance of Poshmark.
Deidre Woollard: Let’s go ahead and talk about Poshmark. I think Poshmark is fascinating because it is the one that is closest to a social network. I’ve talked about Poshmark before in Backstage and one of the things I really like about it is this social rigidity, the identity of being a Posher, this idea that it’s really a fad. of life. People love to go to thrift stores and find their treasures. People are very picky about not telling people which thrift store they are going to because if they find a good one that has good brand name clothes that they can resell on Poshmark, it’s like a secret treasure. There is this quality at Poshmark. The stock did not do well. It’s down about 80% since the IPO since the start of the year, it’s down about 83%. This is interesting to me because they have a lot of buyers, they are lagging behind the active buyers, 7.3 million in Q3 2021, net revenue was 79.7 million, up 16% from one year to the next. But the market doesn’t like this stock at all, although it is, I would say, somewhere between The RealReal and something like thredUP in the sense that it’s not the cheapest stuff, a little more focused on the designer, but not so focused on the super high end.
Jérémy Bowman: Yes, it’s more of a mid-range option. I think maybe like you said too, it looks like it’s the closest to that direct thrift store, a thrift store that you can find. I think Poshmark is pretty cool for shopping, there is a pretty wide range of stuff. I actually got a pair of sneakers for seven dollars once. I don’t know who made money with it like we said before. But yeah, I think as a customer-centric platform they have a pretty wide product line, which is good.
Deidre Woollard: You mentioned basketball shoes. This is something they announced in their results when acquiring this company called Suede One which will virtually authenticate the sneakers. I would love this movement for them because I think the whole sneakerhead culture is huge. There is certainly a need for this. This gives Poshmark a little more reason and incentive for sneakerheads to go to the site. It’s already a very social community anyway, people who are interested in shoes are very interested in talking to each other. I think that is also a factor.
Nicolas Rossolillo: Yes. I think it’s an interesting acquisition from their side. I could see it was working really well. I was able to observe a good synergy between these two companies. You mentioned earlier, Deidre, about the footwear market. It really is a small subculture in itself. A number of friends, it’s their hustle aside and they appreciate it. On the weekends, they buy limited edition sneakers and they have a closet full of inventory, and when they need the occasional cash for something like a trip, they go to the closet and sell a pair of sneakers on. a platform like this. Pick one that has risen in value and sell it. It’s a good fit that matches what Poshmark is already doing.
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