Tips for Poshmark Success: Economics 102


A few months ago I doled out some advice for Poshmark success. I used some basic economics to explain how marketplaces work and how you can use that to your advantage as both a buyer and a seller. I got a lot of feedback from my friends on how useful this was and I was selling like crazy. Then I took some bad advice and my sales took a nosedive. I forgot another principle of economics: specialization and comparative advantage.


The advice I got was to have a huge Poshmark store. Think about it, who does more business, Nordstrom or a small boutique. Seems straight forward. The more inventory you have the more choices your buyers have and this will boost your sales. You know what else Nordstrom has over a small boutique, multiple sales persons. I am my salesperson, me myself and I. Keeping up with sharing every item, share-backs (when someone shares your item and then you share one of their items) and making bundle offers to every liker on my whole inventory was just not possible with everything else I had going on. I started selling other people’s stuff and even used a discount code at Thread Up to buy more stuff, in an attempt to turn a profit on it. My guest bedroom is now a mountain of boxes of clothes, shoes, accessories and then a mountain of boxes to ship them in. The picture is only a fraction of what I have.

Everyone knows if you go to a small restaurant and they have a 10 page menu, you should be skeptical. Thanks Gordon Ramsey. They can’t possibly make all those things well. They can’t specialize. Like the small restaurant, my customers dwindled and my merchandise piled up. Specialization is something you’re probably familiar with. Being really good at one thing over being ok at a bunch of things. This is a useful concept to understand. But it’s not like I am just going to only sell shoes and dump the rest of my inventory at Goodwill. This is where comparative advantage comes in.


So here is the classic economic example. Pat and I are stuck on a deserted island. We need to eat and build a raft. I can cut down 10 trees or collect 20 berries. Pat can cut down 25 trees or 75 berries. That all tracks, but what do we do? Pat clearly has the absolute advantage in both trees and berries. That means he can do more then I can in both categories. But what’s the opportunity cost? Mine is 2, 20 berries is worth 10 trees (20/10=2). Pat’s opportunity cost is 3 (75/25=3). So who should collect the berries? Me. Yes he can collect more berries but it’s costing him more trees. I collect the berries even though I collect less and he cuts the trees. That explanation had a lot of numbers in it and Leanne has quit reading. But if you ignore the numbers it still makes sense. Pat should cut trees, and in general I can just do less.


So how the heck does that apply to Poshmark? I have been trying to cut trees and collect berries despite the fact that my advantage is clearly in berries. In other words I took away my advantage of my specialties by having too many items to sell. This isn’t most people’s problem, but I thought my solution was interesting so I am sharing it. I stopped cutting trees. For the time being I am only selling shoes. I am only sharing and making complex deals involving shoes. It costs me shoe sales every time I try to sell shoes, shirts, and pants, so I am focused on shoes. My opportunity cost is too high to try to do everything. I was spreading myself thin.


So here are a few tips on how to sell with comparative advantage in mind:

  1. Pick the things you most want to get rid of (shoes take up the most room to store for me).

  2. Pick seasonal items. Don't try to sell coats in March.

  3. 2-3 times a day share every item your focused on. This should be easily done by either filtering your closet or simply re-sharing what's at the top.

  4. Every 1-2 days try to make a deal with every person who likes an item.

  5. Don't use the "make an offer to all likers" unless you have over 5 likes. This will limit your options and hold you back from making future offers if no one buys it.

  6. Instead share with individual likers creating a bundle. Then make them an offer on that bundle.

  7. You might get lucky and they've liked a few items. My bread and butter is big bundles that remove a lot of merchandise from my stock.

Hopefully this was helpful. You can always ask me questions if you want more info. Or if you'd like to debate the economics of comparative advantage you know how to contact me. Anyone taking me up on that? Anyone???

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