Naver to wholly acquire PoshMark, U.S. secondhand fashion e-commerce service

Online resale service PoshMark [NAVER]

 
Naver will acquire a 100 percent stake in PoshMark, the largest online fashion commerce service in the North American market, for $1.6 billion, the company said Tuesday.
 
This is the biggest investment for Naver to make in a single company and also the biggest investment to come from a Korean IT company.
 
Naver will buy all shares of PoshMark at $17.9 per share — $1.2 billion in total — along with PoshMark’s cash assets of $580 million, bringing the price to $1.6 billion.
 
Naver said it will try to seal the deal by the first quarter of 2023, but an exact date has not yet been decided.
 
PoshMark’s CEO Manish Chandra will stay on board to operate the company. Naver will keep PoshMark’s existing management structure to the fullest and only intervene in major decision-making tasks.
 
Founded in 2011, PoshMark is a social marketplace with over 40 million active users and an annual gross merchandise volume of $1.8 billion as of 2021. It is listed on the Nasdaq stock market with a market cap of $1.2 billion.
 
Users form their own community and network of followers, similar to other social media services, but through fashion. Korean users could think of it as a mix of local resale platform Danggeun Market and Instagram, where users post pictures and follow others based on their ZIP codes.
 
The company explained its reason for investment as being due to the growing reselling market around the world and said PoshMark, the No. 1 secondhand trading and fashion community in the United States, has the highest potential of creating positive synergy with Naver’s businesses.
 
“We believe that there are three defining factors of successful recommerce businesses,” said Naver CEO Choi Soo-yeon in a conference call on Tuesday, using the industry term recommerce to explain resale services.
 
“Consumers must be able to share their content, create their own community based on the content and easily become sellers through an efficient and convenient tool. This is why we thought PoshMark would be our best bet and also the best place where we could utilize Naver’s existing technologies.”
 

Naver CEO Choi Soo-yeon explains further details of the PoshMark acquisition in an online press conference Tuesday. [SCREEN CAPTURE]

PoshMark, a social marketplace with over 40 million active users in North America [NAVER]

 
During the pandemic, the service experienced a peak of 30 percent annual growth in gross merchandise volume. However, its user engagement and merchandise volume has been backpedaling with the pandemic subsiding and recorded a loss of $98 million in 2021.
 
“The macro environment may seem negative, but we believe that the U.S. retail market remains stable despite geopolitical issues and policies regarding central banks,” said Kim Nam-sun, Naver’s chief finance officer (CFO).
 
“The U.S. retail market is expected to grow by 20 percent annually. In fact, the deal will ensure us a stable retail asset and give us more dollar exposure amid the falling currency rate.”
 
Naver will connect PoshMark with other global content services under its wing, namely Webtoon, Wattpad, Zepeto and Weverse. Detailed strategies have not been formed, but services will span across diverse fields of entertainment including web content and K-pop, CEO Choi said.
 
“In the short term, the global services could be used for marketing events to cut related costs for each,” she said.
 
“We could hold livestreaming events on PoshMark, use Webtoon or Wattpad to invite sellers to PoshMark or hold online events for PoshMark users on Zepeto. Collaborations could take place in all directions.”
 
“This is a highly compelling opportunity for our employees, who will benefit from being part of a larger, global organization with shared values and complementary strengths,” PoshMark CEO Chandra said.
 
“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 lead our presence across Asia to expand our platform, elevate our product and user experiences and enter new and large markets.”

BY YOON SO-YEON [yoon.soyeon@joongang.co.kr]