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Naver aims to improve Poshmark tech amid market jitters

By Lee Yoon-seo

Published : Jan. 15, 2023 - 17:46

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From left: Chief Marketing Officer of Poshmark Steven Young, Poshmark CEO Manish Chandra and Poshmark vice president Tracy Sun sit during a media conference at Poshmark headquarters in San Francisco, Thursday. (Naver) From left: Chief Marketing Officer of Poshmark Steven Young, Poshmark CEO Manish Chandra and Poshmark vice president Tracy Sun sit during a media conference at Poshmark headquarters in San Francisco, Thursday. (Naver)

South Korean internet giant Naver on Friday unveiled a slew of new projects aimed at giving Poshmark, the US reselling platform it acquired early this month, a technological edge and returning it to profit.

Naver took over Poschmark for $1.31 billion on Jan. 6, in its largest-ever deal.

As their first collaboration, called "Posh Lens," Naver will be providing Poshmark with the internet firm's visual search technology to allow users to be able to find products they want by taking pictures of the products.

Naver will also be conducting a project with Poshmark titled "Posh Show," which will serve as the platform's first live commerce service, using Naver's technology to facilitate its streaming functions.

The service will allow users of Poshmark to directly sell their products online through live videos, while shoppers interact with them in real-time. Additional features of Posh Show, which are currently almost exclusively found among live commerce services according to Poshmark, include real-time auctions that can be hosted during live commerce sessions.

"I know that live streaming is very popular in Korea and Asia, but here in the United States, it's a very new experience for us and we are one of the first commerce platforms to fully invest in this area (in North America)," said Tracy Sun, vice president of Poshmark, during the live-streamed press conference.

"We're really excited about adding new features to our platform that our competitors don't have. We believe it's very important to be an innovator and to stay ahead of our competition," Sun added.

The projects follow Naver's bid to establish itself as a leading global e-retailer, by providing an upgraded e-commerce market.

However, market remains skeptical about Naver's acquisition of Poshmark.

Naver's stock price fell by more than 8 percent on the day Naver announced the acquisition of Poshmark.

The stocks hit a year low on Oct. 11, a week after the announcement of Poshmark acquisition, with 158,000 ($127) won per share.

Investors' concerns are based on Poshmark's heavy operating losses. While Poshmark is the largest secondhand marketplace in North America with 8 million users, the company is logging heavy deficits -- with users' average spending on Poshmark decreasing and Poshmark spending increasing amounts on marketing to turn things around.

According to Nomura Securities, while Poshmark's sales in the first half of the year rose by 10 percent compared to last year, its operating loss reached 53.3 billion won 2022, up more than 20 billion won from the year before, when they recorded 32.1 billion won.

"Naver's global expansion is essential to the company because of the saturated domestic market for internet firms and e-commerce business," said a researcher at a local securities firm, under the condition of anonymity.

"However, Naver spent 80 percent of the company's cash and cash equivalents on acquiring Poshmark, and with Poshmark's accumulated operating losses, the acquisition is expected to act as a burden on its performance starting the first quarter of next year," he added.

Naver dismissed market concerns in a separate press conference during the announcement of its Poshmark acquisition, saying that success in the e-commerce business took time.

"It is generally difficult for commerce business to make a profit. Amazon was also in the red last quarter. Also, Coupang has never made a surplus for eight years and has only recently started turning profits," said Kim Nam-sun, Chief Financial Officer of Naver.

"Although Poshmark posted deficits, I believe that Poshmark will be able to regain profitability by utilizing (Naver's) capabilities in the long run," he added.