[News Inside Companies] What Kind of Company Is Poshmark, Acquired by Naver?

Naver has acquired the US secondhand clothing trading platform 'Poshmark' for approximately 2.3 trillion KRW. / Photo by Song Hyundo, Asia Economy intern reporter

[Asia Economy Reporter Lim Juhyung, Intern Reporter Song Hyundo] Naver announced on the 4th that it will acquire 'Poshmark,' a U.S.-based secondhand clothing trading platform, for 2.3 trillion KRW. In terms of consumer-to-consumer (C2C) transactions, it is similar to Korea's 'Danggeun Market.'

Naver valued Poshmark's net enterprise value at $17.9 per share (approximately 25,400 KRW), estimating it at $1.2 billion (about 1.7 trillion KRW), and combined with the company's cash holdings, set the total acquisition price at $1.6 billion (about 2.3 trillion KRW). This is the largest M&A deal in the history of domestic internet companies, including Naver.

After the acquisition announcement, Naver's stock price plunged more than 8% intraday, but Naver CEO Choi Soo-yeon emphasized at an online press conference, "Typically, mergers and acquisitions involve uncertainty about how synergies will be created from the acquiring company's perspective, so stock prices often weaken. Please do not worry too much." She added, "This acquisition seems to be receiving very reasonable evaluations overseas."

Poshmark Company Information / Photo by Asia Economy DB

Poshmark is a C2C secondhand trading platform established in 2011 in Redwood City, California, the heart of Silicon Valley, USA. As of last year, it recorded sales of $330 million (approximately 469 billion KRW), an annual gross merchandise volume (GMV) of $1.8 billion (about 2.5581 trillion KRW), and employs about 800 people. The service expanded to Canada and Australia in 2019 and 2021 respectively, and was listed on the NASDAQ last year. The total number of users approaches 80 million, with 7.6 million buyers and 5.6 million sellers active as of the end of last year.

C2C platforms operate by allowing users to trade secondhand goods directly, with the company acting only as an intermediary. However, Poshmark has achieved explosive growth by leveraging a differentiated 'community' feature compared to other trading platforms.

Poshmark goes beyond simple e-commerce to include community features. / Source=Poshmark official website

Users registered on Poshmark can configure their feeds and followings based on U.S. postal code 'ZIP code' units. It functions as a social networking service (SNS) separated by each region. Users who follow each other can view each other's posts, listed products, and conduct transactions. Users with many followers become influencers known as 'Poshers.'

Moreover, users can access 'Posh Parties' live video and virtual shopping features provided within the Poshmark app itself. These community features have especially captivated the younger generation in North America. In fact, about 80% of Poshmark's total users belong to the MZ generation. According to Naver, these users post over 500,000 new listings daily on Poshmark, generating more than 1 billion likes and shares each day.

To maintain and improve its dynamic community features, Poshmark aggressively invests in research and development (R&D). Approximately 20% of the company's revenue is spent on R&D, and research staff account for 32% of the total employees.

Posh Party held simultaneously through live events and video applications (apps) / Source=Poshmark homepage

There is a view that Naver's acquisition of Poshmark is a strategic move to build a 'secondhand trading platform' network connecting Asia and North America. Naver already owns 'KREAM,' a luxury resale and secondhand trading platform in Korea, and in 2020, it launched 'Vintage City,' a Japanese vintage product trading platform. With Poshmark incorporated into Naver's affiliates, it is poised to become a big tech player in the East Asian and North American secondhand trading platform markets.

Regarding this, CEO Choi said, "The most important principle when Naver enters a new business is whether it can successfully enter the global market and whether it can truly become number one in that market." She added, "We judged that C2C is such a business area."

She continued, "(Poshmark) has an average user dwell time of over 25 minutes per day, which is almost on par with Naver Webtoon," emphasizing, "It is an excellent platform that has secured the entire structure from users discovering styles that suit their tastes to making purchases."