Field Notes: Resale Social Marketplaces with Tracy Sun

Episode Transcript

Connie Chan: What was the problem initially that you wanted to solve, and what gave you that conviction that there was a big problem in fashion?

Tracy Sun: That’s a question I get a lot as an entrepreneur. There’s the very personal story and then there’s the more industry story,

Connie: Let’s do the personal story.

Tracy: The personal story is that I had just moved from New York City to San Francisco and I think I only moved with 13 boxes. My whole life’s possessions were 13 boxes. That meant I had shed so much of the fashion that I had collected from living in New York for 13 years, in and around the fashion industry. And I had all of these gems that all had stories. For example, I had a Theory suit—which was the first designer suit I ever bought—but I could only afford to pay 40 bucks for it and I found it at a sample sale. I didn’t want to give it away. This was such a find. I had to pass that along to somebody else, but I had nobody my size, my style, in my network that I could give it to.

So I ended up just dumping it at a thrift store and got zero dollars for everything. I felt really terrible. I moved out to San Francisco and started really thinking about what problem I wanted to solve—this was fresh in my mind. 

At the beginning of Poshmark I met my cofounders, who came at it from their own [perspective], which was witnessing that consumers were willing to spend real dollars to buy resale inventory. As we put these two together, we realized that this was the need we were solving: Bringing both the buyer need and the seller need together to form a marketplace.

Connie: Switching over to marketplaces then, because you run the entire seller experience. In many ways the Poshmark sellers are like creators, right? They have to create content, they have to style the pieces. They’re creating images or writing really descriptive texts. How has seller behavior changed over the 10 years that you’ve built Poshmark?

Tracy: That’s such a good question. I would say at the end of the day, the core seller-need or experience hasn’t really changed. It’s this idea that: I have something in my closet, it’s worth something, and the ultimate human desire to feel empowered. Poshmark is just a platform that gives you the tools to convert the clothes in your closet to whatever you want. You can pay your rent, you can buy more clothes, you decide. So that part hasn’t changed. Throughout the course of selling and shopping, that part has been there for many, many years.

I would say the part that has changed pretty drastically over the years is what tools people are willing to employ in order to do that selling. So at first, the innovation was, wow, I can do this on the phone—I can take photos, I can shop on my phone. You know, you know, for those of you watching, there was a time when you did not shop on your phone. That was a novelty. And so our sellers were very early adopters and very mobile-centered.

Fast forward to today, and we have had to continue to innovate over the 11 years that we’ve been in business. For example, we have really invested in video products, which we never would have been able to do back in the day. Short-form video and live video are areas that are very exciting and our sellers are really embracing those technologies.

Connie: Yeah, that actually leads me to the next thing I wanted to chat about. How do you make sure you stay relevant for all generations? A lot of social media companies suffer from: I don’t wanna be on the same app that my mom is on. That’s what a lot of younger people are thinking about, if they consider going on Facebook, for example. How do you make sure that Poshmark stays relevant throughout generations?

Tracy: We formed trend councils.

Connie: Are these employees or people outside the company?

Tracy: They’re employees who represent the gen Z voice. We give them a platform to be able to share their ideas and feedback, and we invite many people in the company to come learn from some of these employees. We formed councils around different types of customers.

So four or five years ago, we launched Poshmark to the men’s demographic. That was quite controversial at the time because Poshmark was all about deep female communities and relationships. So there was a bit of confusion over, “Wait, men don’t shop this way, we can’t do this.” 

Connie: What is the same and what is different for the men’s and the women’s category for resale?

Tracy: When you go to Poshmark, we are extremely discovery-focused. You can infinitely scroll and browse, and you don’t even have to go to that search bar. And search is fantastic too, but we hit you with discovery. We’re also very community-centric, so it’s all about following people and “liking” things.

Before we launched our men’s product, there were a lot of people who said that men don’t want to do that type of shopping. They only want to search, they don’t want to discover, meandering pathways are going to block them from conversion…which is true, to some extent.

But what we saw when we invited men to join the Poshmark community and looked at the cohort stats was that they were spending just as much as females. They were spending more in their early weeks because they were pulling the trigger faster. But they loved the discovery experience, and they loved to follow people and all that stuff. And so that’s when we started to shed these preconceived notions that social behavior is just a female thing or that intense discovery is just a female thing. 

Connie: I want to touch a bit on video. You mentioned earlier that you’re excited about it, and we also talk a lot about video. I agree that it’s great for discovery. It’s also great for conveying lots of information. What parts of video are you most excited about? What are you seeing in the data on how video’s being used?

Tracy: I’m so excited about video—and live video in particular—so I could talk to you about this forever. What I’m most excited about in the context of Poshmark is that video gives our sellers another tool to connect authentically with their customers.

I see Poshers who have a listing that says “meet your Posher,” because they want to share their story and introduce themselves. And a video does that in an even more alive, authentic way. 

Remember when we first started using Zoom all the time and there would be kids crashing meetings and dogs barking…? You would just hear all these interruptions that you wouldn’t have heard if you were in the office. And at first [many people] thought that was a distraction, but I thought it was so lovely. I loved seeing my colleagues being interrupted by their kids. I was like, “Let me meet your kids! And what kind of dog do you have?” So just the ability to have these more informal and authentic connection points, whether it’s asynchronous or live, is even more interesting.

Connie: From a behavior perspective, do you think that affinity to the seller results in better conversion or more follows? There’s obviously a business case for it, too.

Tracy: Yes. My suspicion and my very strong thesis is that video is an amazing tool for retention and deepening relationships, which then leads to sales.

Connie: When I watch some live-selling shows, I can watch for 20 minutes and it doesn’t even feel like 20 minutes. Time just goes by, like you’re watching TV.

Tracy: It’s an occupational hazard of mine.

Connie: Another type of technology we’re excited about is AI. What is AI’s role in fashion, whether it’s in styling or figuring out makeup or knowing what shirt goes with what pants or discovery? What do you think about when you think about AI’s potential for fashion?

Tracy: So there’s AI that’s more proven that you don’t have to speculate too much about, which I’m excited about. So, for example, we made an acquisition of a company called Suede One last year that uses AI and ML to authenticate products. 

Connie: It can look at a photo of a purse and tell you if it’s authentic? Is that how it works?

Tracy: Yes. So we’re working on that to build trust on the platform and to increase our authentication services.

Where AI gets a bit more speculative and really, really exciting, I think, is some of the things that you talked about. So, being able to use AI to really deliver on styling is something that we’ve been thinking about. We tried a styling feature four or five years ago and the technology just wasn’t ready for it. 

Connie: Talking about styling: I know some of the Poshmark sellers think of themselves as curators or stylists, right? When someone wants to buy one of their items, they might recommend other pieces to it. Can you talk a little bit about all these different hats that the sellers wear and how they interact?

I think people who don’t use Poshmark don’t realize the communication, the back and forth, and the engagement that the sellers have [with buyers]. It’s so much greater than, say, listing it on a traditional, normal marketplace where it just gets bought. Describe that seller experience and how social it is. 

Tracy: What we’ve done at Poshmark is we have connected all of these social interactions with tools that help you market your items or convert your items. So an example of that is we have a feature on all listings at Poshmark and our community is trained to “like” any item they might possibly be interested in. It’s like a global wishlist across all sellers of things you like. That’s a social behavior. Once a potential buyer likes your item, we give sellers three or four tools to target those “likers” to convert them to make a sale. And we’ll introduce those tools to you over time. And so what you find is that as you engage and build up your followers, you can then use those tools to target those folks.

Connie: What are those tools? Can you go in detail on them?

Tracy: A simple example is that once shoppers have liked your items, we now give you the ability to send push notifications to all of them, to notify them of any change in price or a sale that you’re running on an item you mentioned earlier. We launched mobile-first, and so we’ve built almost all of our major communications off of push notifications. And so if you have 15 likes on your item and you drop your price, that’s 15 notifications that are going out. And there’s such high value in notifications because if I’ve liked your item, I already know the item, I’ve been eyeing it.

And so that’s one, one tool we give our sellers. We also recently launched the beginnings of a client selling tool, as well. For example, when you walk into a physical store and you’re greeted by a sales associate, having a conversation with them will likely increase the chances that you stay in there a little bit longer. So we built that greeter function into a tool. So if someone comes to your Poshmark page, you can send them a message to say, “hi, thanks for stopping by, by the way, I’m going to run a sale tomorrow.” Or: “By the way, price is negotiable.” Or: “If you need help with anything…,” or whatever a greeter might say. We now give you the tools to talk to people.

If a person has bought an item, we give our sellers a tool to message them and say, “Hey, let me upsell you. You’ve bought that shirt, but here’s a pair of earrings or a  pair of shoes that would go with that, and I can ship it all at once so you don’t have to pay twice.” 

And I think the coolest thing is that we’re not inventing anything new. These are all buying and selling behaviors that have happened for centuries. Like you’re in a dressing room and you need another size, someone gets you another size. Or a boutique owner might bring you a necklace to try on the whole outfit. These are all things we do offline. What we’re really focused on is taking those natural human behaviors and translating them into tools so we can serve our shoppers the same way online. 

Connie: As I think about the future of resale, one thing that really struck me about some of the Poshmark sellers is I don’t think people realize that a lot of the stuff sold on Poshmark is new with tags. And there are also a lot of sellers who treat this like their full-time job. They will purposely go to other places, buy new items, and sell those items on Poshmark. Can you talk about how you see the future of resale changing, especially as that portion of the seller base is growing?

Tracy: Yes, it is. When you first are introduced to resale, you’re probably thinking about just reselling something from your closet—probably because it doesn’t fit anymore or you’re not wearing it. And it’s probably just one or two items. Usually, people start with their high-ticket items. So you might have a Tory Burch bag, or something like that.

Connie: Oh, interesting that the first items listed are usually more expensive. That makes sense.

Tracy: People want to put their best effort in because they don’t know yet what’s going to sell. They don’t understand the value that’s sitting in their closet. Once you make a sale, you’re like, “oh, what else can I sell?” And what we see, anecdotally, is that people start to go around their house or their closets, like: “Will this sell? Will that sell?” They start to really enter into the world of resale. But what’s fascinating is you can watch them develop over time.

A lot of people will only stay in this world, which is a resale as a hobby or an enabler of extra cash to buy into next season’s trends. And that’s fine. What’s been so fascinating to watch is what you’re mentioning: those folks who continue to evolve and really create journeys in resale I’m not sure any of us thought was possible at these numbers before. 

Connie: And when did this start happening?

Tracy: From the beginning. So a few years into the launch of Poshmark, we saw our sellers grow. And what’s been cool, Connie, is that it’s not like only the early adopters became big after a few years. As we grow, we’ve seen this pattern continue. Some portion of people will continue their journey. We see that in the numbers. When we go to our Posh Party events and see our sellers live, we hear from them. So these are the human stories behind the data, which is: I did it as a hobby, but then I realized I was making just as much money as my job, but I loved it so much more. So why am I doing my job? This is my job. 

Connie: Very cool. What do you think are the problems still left to be solved in resale? What are some things that you notice can still be built? Are there opportunities for other new founders who are wanting to start things in the circular economy?

Tracy: When I think about the problems in resale, the first thing that comes to mind is some of the larger problems of the fashion industry overall, which is the overconsumption of certain types of fashion. The toll that it takes on the environment comes to mind, especially because the next generation of shoppers has shown us that they care a lot about being more responsible with their choices.

In terms of resale overall, I think that discovery is still something we could do better. When you buy first-sale, or you buy non-resale, your assortment and choices are very limited by what’s in-season and what’s in the store at that time.

Connie: Most companies or commerce sites won’t have enough SKUs to really pull off product discovery. It requires lots and lots of SKUs, because you can’t [keep showing] me the same thing.

Tracy: That’s exactly right. And so we have this amazing opportunity, in that Poshmark has every season available. Everything possibly made at this point is probably on Poshmark and available in every size. And so now one of our opportunities—and also one of our problems—is: how do we take a company that already loves discovery, but continue to evolve it? How can we take all of this data and really start to intelligently serve up our catalog?

Connie: Also, how do you learn more about me as I’m browsing, so you can better guess what to show me next?

Tracy: Yes. And this is where AI-enabled styling gets really interesting.

Connie: How do you think about the importance of product education or fashion education? For example, on YouTube there are so many great fashion vloggers who will teach you styling [or give style tips]. Do you think those things are separate from the core marketplace? Or do you think a combination of social content and marketplaces could live in one place?

Tracy: I absolutely think that they can live together. Marketplace, to me, does not mean that content can’t live on it or that different human perspectives can’t also live on it. And so this is the beginning of what we’ve built Poshmark to become—enabling any person to have a perspective and have a voice.

That’s been the lovely part about working at Poshmark.We’re not going to tell you that there’s one style or there are only five types of styles out there. Our business is the business of giving you tools, so everybody has a voice. Now, I think what you’re talking about is giving voice to content created by creators that are not necessarily about selling a particular item, but could enhance the same experience.

Connie: Right, some of those creators might not want to handle the sale or the customer service themselves, but they just create really relevant fashion content. I also say this because I know a lot of the social media platforms are trying to figure out their ecommerce strategies, too. And so it feels like these worlds of social media and marketplace commerce are going to collide more and more every year.

Tracy: I’m even seeing that with our live-selling beta. It’s really interesting to watch  live streaming evolve in the U.S.

Connie: Still so much slower than China, though.

Tracy: Oh, I know. At least it’s happening.

Connie: Yes, it’s starting. I’m happy about that.

Tracy: But what’s been so fascinating to me is to watch the different types of people thrive. You might expect that someone who’s really good on-camera or who’s an influencer will thrive with live-selling—and they are. But what I’ve been watching, which I’m so fascinated by, are people who are not necessarily that good in front of the camera, but they have a lot to say. So they might have fashion styling ideas. And sometimes they’re not even selling anything! But when they do sell something, they’re adding that content on top of commerce. It’s been very fascinating. I look forward to seeing where the U.S. customer takes live-shopping.

Connie: In China, the idea of “selling without selling” is really trending. You might have someone who is just teaching people about styling or talking about something unrelated to fashion, but you can shop their closet as you listen to them, like as an activity that you do on the side.

Tracy: Yeah. The content and commerce blend is really interesting. We have a twist that we’ve put on it at Poshmark that’s taking off pretty quickly in beta: We have this feature where live-selling beta hosts can also sell [someone else’s] items, as well as their own. There are all of these shows where Poshmark sellers are hosts for shows. And they spend hours curating from across the community, even though they’re not getting paid for those sales.

Connie: They’re not getting paid. And it’s hard work to do a live show! It’s exhausting.

Tracy: Yeah. So that’s not the same content we’ve been talking about, where you have some sort of knowledge that you’re passing along. It’s this community content, which is unique to Poshmark, and curation.

Connie: I really think this idea of social curation is very powerful. It can be done on text, it can be done on video, it can be done in so many ways. It’s kind of like that in-person store sales rep that we used to see when we walked into department stores, in some ways.

It’s still amazing to me that people will spend hours streaming even though they’re not getting a cut of the sale.

Tracy: I think there’s a social feedback that they’re getting. There are many reasons why Poshmark sellers thrive. A lot of it is they’re building a business and they’re making money, and money’s important. But a lot of what we do is because—and I don’t think this is Poshmark-specific—we deeply crave connections to other humans. We want our lives to matter a little bit more. And they do matter more if you feel like you’ve made a difference somewhere.

Connie: And that gets repaid with a follow or a like or something?

Tracy: Sometimes. I think if it is, it’s better. And so we’ll think about how to reward these acts. But right now they’re purely organic. They’re not getting paid, and this behavior is taking off like wildfire. So going back to the beginning of our discussion, as a student of consumer psychology, this has been such a pleasure to witness. We kind of had a bet, so we built the feature thinking, I think this will really work. But then to see the community embrace it and then even evolve, which they’ve done so many times over the course of working at Poshmark… To see them do it in this way has been such a learning opportunity for me about what happens when you truly believe that people are inherently social. If you just give them the tools, they can innovate in ways that can surprise you.

Connie: One of the big takeaways I’m hearing is that you really [think about] user psychology over KPI metrics. You’re more thinking about: what is that human experience that already exists offline, or a natural desire from a human heart standpoint.

Tracy: You know, KPIs matter, too. And all of our target metrics matter, as well. What I’m sharing with you is how we think about the seller business and how we think about Poshmark overall. Metrics matter, but you can’t move the metrics in consumer [tech] without really building value. And if you want to build value, you have to understand what your customer wants and what they’re going to see as valuable. You can’t do that if you don’t deeply understand the customer. I think that’s a starting point for innovation, but we’re also building a business. So it’s really about connecting the two.

Connie: Tracy, what advice do you have for founders who are building businesses where they either feel like they’re hitting a stagnant point—especially in this economy, where a lot of companies aren’t able to spend as much on marketing—or that they’re trying to build a marketplace and they’re having trouble catalyzing the demand side or the supply side? What advice would you have for them?

Tracy: My advice is to take a pause, look at the problem ahead of you, and be really honest with yourself. Do you have product market fit? Do you believe that you’re close?

Connie: Do you have any tips on how to know when you have product market fit?

Tracy: To  me, it’s really talking to your customer and hearing what they have to say. Itt might be that your product is not built in a way where the customer can use it and deliver the metrics that you’re looking for.

Connie: In marketplaces, people often say you need patience. It can take a while, early on, to generate enough supply.

Tracy: I can share with you an experience I had. At Poshmark, we’ve pushed that boulder. There were many times where we were pushing and pushing and pushing, and we also had to be patient. When we talked to the customer, we saw such intense passion for our product. At times, our technology was slightly off and we had to improve it. Some pathways were inefficient and we knew we had to improve them. You can build those things over time, but if you don’t have that customer passion for your product, then there’s no amount of improvements you can make.

Connie: Another thought I had on sellers: How much effort do you put into making all kinds of sellers see some kind of success?

Tracy: That’s a good question, Connie. What we see in our data is that one of the most important milestones that a seller can have in their journey at Poshmark  is making their first sale. At that point, their value to Poshmark and their excitement for resale just skyrockets. And it’s not even the second sale, it’s the first sale.

Connie: Does that mean that they list a bunch of other stuff? How do you know?

Tracy: It doesn’t matter what percentage of their items sells. It doesn’t really matter how long it has been since they listed them. It doesn’t matter how much money they made on that item.

I mean, all of those factors are there, but the  biggest thumb on the scale is “I made a sale,” which translates to: I have value, I can do this. And so, to answer your question, what we often see is after that first sale, engagement goes through the roof. Since we know how important this is we do a lot of things to help sellers get there.

What are some of the things we do? We provide a lot of inspiration targeted to those sellers who have listed, but have not yet achieved their first sale. 

Connie: Like, you’ll send them a message to say: you could change this or reprice this?

Tracy: Yeah, or here are some tools you can use in order to get that first sale. We also give them a boost by putting a banner on their listing that tells everyone at Poshmark, hey, you know what? This seller hasn’t made a sale yet. You can get discounted shipping if you’re the first person to shop from them.

Connie: Wow. And that’s subsidized by you guys?

Tracy: That’s subsidized by us, yes. And then we have some community programs where they can connect with other people, like an apprenticeship-type model. Or they’re put in a group of other sellers to learn from.

We put them in groups where they’re in the same physical environment together. So we host Posh Parties around the country and connect sellers that way, physically, by their communities. We also have a feature within the Poshmark app that connects new sellers with experienced sellers and forms a digital mentorship program. So if you have questions—how do I do this? how do I do that?—it gives you four or five Posh ambassadors to answer questions so you don’t feel so alone.

Connie: I can tell that when sellers get passionate about Poshmark, the way they conduct themselves also brings benefits to the buyers. So, for example, when I buy something on Poshmark, the majority of the time it has a really nice card. There’s a really nice handwritten note and there’s sometimes stickers or other random things.

Tracy: I know. Isn’t that lovely?

Connie: And that doesn’t happen on any other platform that I shop on.

Tracy: That is something we started with our community in the first year.

Connie: How did you start that? How did you change that culture across the platform?

Tracy: For a lot of this, we lead by example. So in the early days, when we had hundreds of orders, a lot of them were sold by us. We were seeding the marketplace, we were selling stuff ourselves. And we were thinking, wow, wouldn’t it be really nice if there was a note and you wrapped it up really nicely as if it were a package from your friend or something? Like a birthday present. And then, oh, if we could put some stickers in there and a thank you card and tie it with a bow…

And we just kept doing it. And what happened is, we led by example. We said, look, the people who received the packages were so delighted by it that they then internalized: when I make a sale, I’m gonna do the same thing. And we sent them tissue paper, we sent them stickers. So we did it by seeding the supplies and then seeding the inspiration.

Connie: I love that story. I also know a lot of employees use the product regularly. I don’t know if that’s something you guys required them to do or if they just do it on their own. But I remember visiting your offices way back when, and every single time the front door is just stacked with boxes of stuff. And I was like, “What is this?” There was a fresh shipment of stuff coming in, because people were buying from other Poshers. Your employees were buying and selling themselves.

Tracy: One thing that I’ve been repeating during our conversation is how important it is to really deeply understand your customer if you’re in a consumer business. And I think what you’re referring to is the values of the founders of Poshmark and how that has translated to our team over time. If you don’t understand the customer, what are you doing here? We’re here to serve the customer. If you don’t understand what they need, or if you’re not out at an event listening to them…

We do this annual conference every year, Posh Fest, where we invite our sellers to join us somewhere in the country. A few thousand will come and we’ll make a weekend out of it. What we’ve done is we take a pretty large group of our product engineering and data team with us. They sit at a booth called App Me Anything, where our engineers field direct questions from our customers. 

And it is mind-blowing how helpful it is for them to do their job. They’ll hear, “I’m over here, but I can’t hit this button. Why is it not working?” And the engineer will look at it and be like, “Oh, I designed it the wrong way. It makes no sense for the customer.” Or: “This is really painful” or “I love this feature.” When you get that energy directly from your customer, it brings more meaning, but it also adds a perspective that helps you remember why we’re here. We’re not here to build products, we’re here to make [the sellers’] lives more empowered and help them thrive. That is our purpose, that’s our values. And so, we had that in the beginning and we’ve carried it through over time.

Connie: It’s interesting how the human element of hearing it directly from the customer—versus seeing it on a data report as a bullet point: “X percentage are not clicking into this”—just hits differently. It lands differently.

Tracy: Yeah. And as more and more things convert to relationships online, we are missing all of that context. We do things online that we would not do if we were dealing with a human in front of us. Maintaining as much of that human connection as possible not only keeps us polite, it also draws out the best parts of us. Whereas I think some of the anonymous internet world can draw out the worst parts of ourselves. And they’re all us, they’re all there. But I do feel like Poshmark tends to bring out some of the more positive aspects, like empowerment.

This touches on why I still love my job after working in this area for so long. We touch people and make their lives slightly better, whether it’s through a thank you card or whether it’s through their first sale. My gosh, how lovely. That gets me up every day to do the work.

Connie: On that note, I want to thank you so much for being here, Tracy. Thank you for sharing your story with us.

Tracy: Thanks for having me, Connie.

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