Tips for Success on Poshmark: Economics 101
Updated: Jan 13, 2021
A few months ago I posted a video on ITV that got a lot of questions so I am going to answer some of those questions and review what I said. In order to be successful on Poshmark you have got to recognize you’re in a marketplace designed for bargaining. When I posted the video I was just getting started. I now have a dozen pairs of designer shoes I bought selling old stuff I no longer wanted for over $1,500. Here are the basic economic principles I think you need to get by.
1. What’s the economic value of my item? Only what someone is willing and able to pay for it. In a larger market we consider production costs, distribution costs, etc etc. In a second hand market place, the only thing that matters is what it’s worth to the buyer. It doesn’t matter what you paid for it. If the customer was willing and able, they would buy it new. Don’t be offended by “low ball” offers. This is a market place and bargaining is part of the deal. These may have been your favorite shoes but you’re selling them and they may be a whim for the buyer and have less value. If you want to sell, you have to let go of what your value is on the item. No one cares what retail value is, because this isn’t the mall.
2. What’s perceived value? When you go to JC Penny or Kohl’s everything appears to be on sale. But that’s not actually the case. They took a $75 pair of shoes, told you they were worth $100, discounted them 25% and you feel as though you got a deal only paying $75. That’s perceived value. When I list an item, I list it for more than what it’s worth (economic value not retail), and slowly lower the price. At some point someone will deem this item worth their economic value + the perceived value of the discount from my original listing price. When something doesn’t sell I raise the price before I start dropping it further. Generally speaking this is very effective. People love a “deal” even when it's only perceived.
Shipping falls into the perceived value cost in a world of Amazon Prime free shipping. If I have a $20 item (economic value), I can only sell it for $13, because shipping is $7. I have to eat that cost. I have to offer $13, because the buyer knows they’re paying $7 in shipping. The number of straight sales I have had that didn’t take shipping into account are very small. You have to be selling Telfars to get away with that.
3. How does bargaining really work? The mall is full of items that have fixed prices. You can’t negotiate with Nordstrom. But that’s not Poshmark. It’s a marketplace where people are on the hunt for the best price. Sellers and buyers lie about value to get the best deal. When people post “price is fixed” I always follow the item because it’s never true. This is a huge indicator I can get a great deal on this item because they will hold fast to their economic value and not to the buyer's. Eventually, they can no longer sit on the item and will drop the price drastically to get it out of their inventory. I just majorly discounted some Stella McCartney pumps because I am tired of them taking up space even if I think they're worth more to the right buyer. Remember economic value. It’s only worth what someone is willing to pay for it. Under most circumstances people don’t want to sit on inventory indefinitely or eventually need the money. Items are usually on Poshmark because someone wants to get rid of them. Yes, there are “professional” sellers, but it’s not the majority and prices shouldn’t be, and usually aren’t, fixed.
As a buyer this presents you with two strategies. You can either lie about what you’re actually willing, "low ball", hoping you can meet in the middle. Or you straight up say this is my top price. I do the latter on most occasions. The former requires skills I can’t teach in one blog post. I sell other people’s stuff and most of them don’t want the cash they want my negotiating power. They keep their funds with me in Poshmark and ask me to work sellers for them.
4. How can I leverage economies of scale? Earlier, I discussed economic value for the buyer but let’s talk about the seller. If you’re not a professional store then the value of an item you want to get rid of is generally speaking the cost of going to the post office and packaging the item. Great news, Amazon provides me with 95% of my shipping materials. I buy thank you stickers, tissue paper and thank you cards for people who buy in bulk. Were you going to donate that item to goodwill? Then It’s worth no more than the gas money it takes to get to USPS. That said, the more you sell the less each item costs you to sell. Now most people don’t have dozens of shoes they want to get rid of sitting around, but if you have 10 items and can sell 5 of them the same week, your cost goes down if you can do only one trip to the post office. You can make this happen by pricing below the competition with a good hope you’re getting it all done at once.
So that’s what I covered on ITV. What follow up questions have I gotten? One, what sells quickly and for the price I expect? I have no idea. I am constantly surprised. I can tell you if there are a dozen Tory Burch Serafinos on the market and you price 25% below you’ll do well. That tells me people aren’t willing to pay what people are trying to charge. I can also tell you brand popularity changes by the day. At one point j.crew was selling like hot cakes and now I can’t move it. Kate Spade doesn’t have the value you want it to. I know you saved for that bag and loved it, but you're not going to get what you want so be willing to part with it for $30 or keep it. You will always be disappointed with something you loved that won’t sell for the price you think it will. I almost won't even take Kate Spade from other people to sell because they're constantly disappointed.
Jeans of all brands sell eventually if you drop the price low enough. It’s rare people are looking for high end denim for close to at cost, but a bundle of three pairs of cheap old navy denim shorts will always sell for $10-15. American Eagle sells for more than Citizens of Humanity jeans that cost 2-3X more. I honestly have no idea how people use Poshmark if they’re buying and reselling. I did an experiment with a huge discount on Thread Up and nothing I thought would sell did and the crap I bought to get me to free shipping did. Brand new Bagley Mishka? Still sitting in my closet. Cheap Nasty Girl boots? Gone. It’s not what it’s how much. It’s all economic value. Occasionally, I have sat on really nice shoes I got hugely discounted but didn't fit. I have never turned a profit on those.
Size matters. Plus sized does better than 6-12. 2-6 does better too. I have theories that it has to do with women knowing when they’re in flux and needing a temporary change in wardrobe, I can’t prove this. Size 8/9 shoes do best in my experience. It’s the average size for American women. Unfortunately I am a 7. My personal shoes take longer to sell. That brings up the next topic that I didn’t originally cover: disclosures.
You absolutely must be 100% upfront with everything surrounding your item. If its a 7 but fits like a 6 or 8 and you don’t disclose that, you’ll get screwed. As a buyer I have one of those cases open. If the seller had posted the EU size and didn’t interpret it into a US size they would have been fine, but she said it was definitely an 8 and as a 7 I could tell you it was definitely a 6. If you're not sure, say so, but don't lie, ever. If a sweater has a small almost unnoticeable pull but you don’t disclose it, you’re screwed. I have had a few hiccups. I post half a dozen pictures at every angle so I can always tell Poshmark if there is a problem it was in the photos. That said people can and will rate you however they want when they didn’t inspect the photos. Poshmark has always sided with me though because of my track record. I am an ambassador with a 4.9/5 rating. They’ve got good customer service and more times than not they actually try to appease the buyer and the seller. If they can’t, they will side with the person with the better track record.
Bundles are key. I can’t explain that any more than I can explain bargaining power in a single blog post. The long and short of it is, when someone likes an item, create a bundle and you have more options on changing price and shipping. You can also encourage them to add other items from your Poshmark closet and if you group them together which cuts your costs go down, though watch the shipping weight. I have sold over $1,500 in the last two months this way and supported my bad shoe habit this way. We can talk another time about what you should buy retail and what you shouldn’t. I had an expensive problem to fix with an LV Speedy 35. I didn’t pay enough attention to the condition when I bought it but the handles broke just after my reporting time expired. If you have any more questions or advice for me or other please drop them! Here's the link to my Poshmark closet. I am wearing this pullover, these leggings, and these slippers.