South Korean research giant Naver today announced plans to acquire the Poshmark second-hand clothing market for $ 1.2 billion in cash. The deal values Poshmark’s publicly listed shares at $ 17.90 – a 15% premium over today’s closing price – and the companies expect it to close by the first quarter of 2023, subject to the approval of Poshmark’s shareholders and “the satisfaction of some other customary closing conditions”.
Assuming the transaction goes through, Poshmark will become a standalone subsidiary of Naver headed by CEO Manish Chandra and Poshmark’s current management team. It will continue to operate under its existing brand, says Naver, and will keep its staff, user base and headquarters in Redwood City, California.
In a press release, Naver and Poshmark made several arguments as to why the deal makes sense for both parties. With the acquisition of Poshmark, Naver plans to combine the service’s growing social shopping platform, where users buy and sell used clothing, with its “tech prowess” and existing communities, such as the Naver Café online forum. As for Poshmark, it will take advantage of Naver’s image recognition and search technologies, which Naver says will enable the shopping platform to offer new discovery and recommendation experiences that will allow users to find clothing by searching for colors, designs and materials and identify where. find products based on scanning clothes using smartphone cameras (at Google Lens).
Naver also promotes 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 Naver’s support, to grow Poshmark’s business in additional developed markets in Asia and elsewhere where Naver has significant stakes, in part by integrating some of Naver’s live shopping services with the platform. Poshmark. At the same time, Poshmark will help Naver establish a stronger foothold in the US, including properties in the US that the tech giant already owns, such as the digital comic portal Webtoon Entertainment and the online story platform Wattpad.
Naver optimistically expects the acquisition could grow Poshmark’s annual revenue “over” 20% and save the company $ 30 million in annual run rates within two years. This is no doubt taking into account the expansion in the online “re-commerce” market, which is estimated at $ 80 billion in the US alone and is expected to grow 20% annually to $ 130 billion by 2025, according to the data. by Activate Consulting cited by Naver.
Poshmark CEO Manish Chandra said in a press release:
The opportunity to join forces with Naver, one of the world’s leading, innovative and successful Internet companies, is a testament to the strength of our brand, our operating model and what we have built over the past decade with our team. talented and our amazing community. Our industry continues to evolve at a rapid pace and we are excited to continue driving the future of shopping by providing our community with an unprecedented experience that is simple, social, fun and sustainable. This is a very exciting opportunity for our employees, who will benefit from being part of a larger global organization with shared values and complementary strengths. This transaction also offers significant and immediate value to our shareholders. In the long term, as part of Naver, we will leverage their financial resources, significant technological capabilities and leading presence across Asia to expand our platform, elevate our product and user experience and enter new and large markets. . I look forward to partnering with Naver as we take our company into its next phase of growth.
Naver CEO Choi Soo-yeon said in the same version:
The combination will create the strongest platform to power communities and reshape trade. Poshmark is the definitive fashion brand in the United States that provides a social network for buying and selling clothing. Naver’s leading research technology, AI recommendation and e-commerce tools will help fuel the next phase of Poshmark’s global growth. Poshmark is a natural choice for our business: our two companies share a common set of values and a vision on content, community and empowerment. The union 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 boutiques – and a large, loyal and highly committed social community. We are thrilled to work closely with Manish and his talented team to create lasting value for all of our stakeholders.
Poshmark’s exit occurs over a decade after its founding in 2011. Chandra, along with Tracy Sun, Gautam Golwala and Chetan Pungaliya, started the business in Chandra’s garage, financing it in part from the proceeds of the previous company’s sales. by Chandra, the social shopping startup Kaboodle, in Hearst. They opted for a simple business model: similar to eBay, users pay Poshmark a commission when they make a sale.
Prior to its Nasdaq listing with a valuation of over $ 3 billion (and reaching $ 7 billion), Poshmark raised over $ 160 million in venture capital from venture capital firms including Temasek, Menlo Ventures, GGV Capital and Mayfield.
Poshmark claims to have over 80 million registered users. But despite that large base of potential customers, the company has made unpredictable results in recent years, posting a loss of $ 44.4 million for 2021 after making a profit of $ 25.2 million in 2020.
CNBC and Bloomberg note in their coverage of the acquisition that it adds to the recent consolidation and turbulence in the second-hand apparel industry. Last year Etsy acquired the fashion resale app Depop for $ 1.62 billion, a startup that competed with Poshmark. Meanwhile, shares of The RealReal fell 93% from its IPO in 2019, while ThredUp, which was listed two months after Poshmark, was down 87%.