Earlier this month (October 4th), Naver, the South Korean internet search giant, announced its plans to acquire Poshmark, sending the shares of the internet company tumbling after the initial investor spook over the size of the deal. Naver will pay $17.90 cash for each Poshmark share, valuing the shopping marketplace for less than half of its IPO (Initial Public Offering) price, but at a 15% premium to its closing price on October 3rd before the announcement. It also makes it Naver’s largest acquisition to date.
Through the deal, Naver aims to establish a global player in online fashion, using the target company’s growing social shopping platform, where users buy and sell used apparel, and its image recognition technology and established online forums. Particularly, the acquisition is a large bet on the growth of “re-commerce” and consumers’ appetite for secondhand clothing.
On the same day, Goodwill, a charity that operates a chain of thrift shops, announced its big move online with GoodwillFinds, which aims to compete with the likes of Poshmark, RealReal (and Depop if you’re in the UK), capitalising on its inventory with 3,300 stores across US and Canada.
The two are not the first nor the last to jump on the online resale bandwagon. Labels from Patagonia to Oscar de la Renta and Lululemon have launched their own trade-in platforms, and numerous brands, including the latest Hot Topic, are signing up to ThredUp’s Retail as a Service (RaaS) for reselling options. In an environment of increasing demand for sustainable clothing from Millenials and Gen Zs, but also scrutiny from regulators for “greenwashing” when it comes to sustainably-made new fashion, branching out into the secondhand market may prove to be a more sound option for retailers and e-commerce platforms.
While it may be irksome to get the evasive thrift shop response when asking for the brand of someone’s coat, there are increasing signs that the rise of secondhand clothing is here to stay. According to ThredUp’s 2022 resale report, the global resale apparel market is expected to reach $218 billion by 2026, growing three times faster than the overall apparel market. In the US alone, the $80 billion market in “re-commerce” is expected to grow by 20% annually to $130 billion by 2025, according to Activate Consulting. Apart from obvious environmental considerations, new catalysts to the movement could come from the increasing inflationary pressures squeezing consumers’ wallets when it comes to brand new clothes, especially if they can get high-end finds online and for a third of their initial price.
Whether Naver’s bet pays off may remain to be seen, as the company makes its foray into the Silicon Valley at the time of economic slowdown in the US and a weakening won, but picking off a previously expensive company for a much cheaper price, while riding the potential tailwinds of the re-commerce revolution, could prove to bring attractive returns.
Analyst: Malika Abdulhamidova
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