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Naver, the South Korean search giant, today announced plans to acquire second-hand clothing marketplace Poshmark for $1.2 billion in cash. The deal values ​​Poshmark’s publicly traded shares at $17.90 – a 15% premium to today’s closing price – and the companies expect it to close by the first quarter of 2023, subject to Poshmark shareholder approval and “the satisfaction of certain other customary closing conditions”.

Assuming the transaction goes through, Poshmark will become a stand-alone subsidiary of Naver led by CEO Manish Chandra and Poshmark’s current management team. It will continue to operate under its existing brand, Naver says, and maintain its staff, user base and headquarters in Redwood City, Calif.

In a press release, Naver and Poshmark lay out several arguments as to why the deal makes sense for both parties. By acquiring Poshmark, Naver plans to combine the service’s growing social shopping platform, where users buy and sell second-hand clothes, with its “tech prowess” and existing communities, like the Naver online forum. Coffee. As for Poshmark, it will benefit from Naver’s image recognition and search technologies, which Naver says will enable the shopping platform to offer new discovery and recommendation experiences that allow users to find clothes. by researching colors, designs and materials and identifying where to find products by scanning clothes using their smartphone camera (à la Google Lens).

Naver also touts its robust ad serving and payments infrastructure, saying Poshmark will be able to leverage it to better analyze sales statistics and serve international customers. The long-term plan is, with support from Naver, to expand Poshmark’s business into other developed markets in Asia and elsewhere where Naver has significant stakes, in part by integrating some of Naver’s live shopping services. to the Poshmark platform. At the same time, Poshmark will help Naver build its US presence, including US properties the tech giant already owns, like digital comics portal Webtoon Entertainment and online storytelling platform Wattpad.

Naver optimistically predicts the acquisition could boost Poshmark’s annual revenue “beyond” 20% and save the company $30 million in annual run rates within two years. This no doubt takes into account the expansion of the online “re-commerce” market, which is estimated at $80 billion in the United States alone and is expected to grow by 20% per year to reach $130 billion. by 2025, according to Activate Consulting data cited by Naver. .

Poshmark CEO Manish Chandra said in a press release:

The opportunity to join forces with Naver – one of the most innovative and successful internet companies in the world – is a testament to the strength of our brand, our operating model and what we have built over the of the past decade with our talented team and incredible community. . Our industry continues to evolve at a rapid pace, and we’re excited to continue leading the future of shopping by providing our community with an unparalleled experience that’s simple, social, fun and sustainable. This is a very attractive opportunity for our employees, who will benefit from being part of a larger global organization with shared values ​​and complementary strengths. This transaction also delivers significant and immediate value to our shareholders. Longer term, as part of Naver, we will benefit from their financial resources, significant technology capabilities and leading presence across Asia to expand our platform, improve our products and user experiences and penetrate new and vast markets. I look forward to partnering with Naver as we take our business into its next phase of growth.

Naver CEO Choi Soo-Yeon said in the same statement:

The combination will create the strongest platform to power communities and reshape commerce. Poshmark is America’s definitive fashion brand that provides a social network to buy and sell clothes. Naver’s cutting-edge technology in search, AI recommendation and e-commerce tools will help propel the next phase of Poshmark’s global growth. Poshmark is a natural fit for our business – our two companies share a common set of values ​​and vision around content, community and empowerment. The combination of Naver and Poshmark will immediately put us at the forefront of creating a new socially responsible and sustainable shopping experience designed around sellers of all sizes and interests – from individual sellers and influencers to professional sellers. , brands and specialty shops – and a large, loyal and highly engaged social community. We are excited to work closely with Manish and his talented team to create lasting value for all of our stakeholders.

Poshmark’s exit comes more than a decade after it was founded in 2011. Chandra – alongside Tracy Sun, Gautam Golwala and Chetan Pungaliya – started the business out of Chandra’s garage, funding it in part with proceeds from sales from Chandra’s former company, social shopping startup Kaboodle, to Heart. They opted for a simple business model: similar to eBay, users pay a fee to Poshmark when they make a sale.

Prior to its Nasdaq IPO at a valuation of over $3 billion (and reaching as high as $7 billion), Poshmark raised over $160 million in venture capital from venture capital firms such as Temasek , Menlo Ventures, GGV Capital and Mayfield.

Poshmark claims to have over 80 million registered users. But despite this large potential customer base, the company has performed unpredictably in recent years, posting a loss of $44.4 million for 2021 after raking in a profit of $25.2 million in 2020.

CNBC and Bloomberg note in their coverage of the acquisition that it adds to recent consolidation and turbulence in the second-hand clothing space. Etsy last year acquired fashion resale app Depop for $1.62 billion, a startup that competed with Poshmark. Meanwhile, shares of The RealReal are down 93% since its IPO in 2019, while ThredUp, which went public two months after Poshmark, is down 87%.