The Poshmark Side Hustle

A 6-Figure Side Hustle for Bargain Shoppers…

Houston husband & wife team claim up to $9,000 per week…

With the likelihood of a recession on the horizon, I thought I’d dedicate this newsletter to an income opportunity that should thrive during this kind of economic situation.?Looking back at the last recession in 2008, I don’t think you’d be surprised to know that some of the top-performing companies during that period were companies like Walmart, Ross Dress for Less, and other discount retailers.?The reason is the shift in behavior that occurs during this time.

As money tightens and job cuts start to occur, people look towards lower-priced alternatives to satisfy their needs.?In fact, some pretty great companies were founded during recessions: Netflix (1997), Trader Joe’s (1958), Airbnb (2008), and many other big brands.?What these few that I mentioned have in common is that they’re alternatives when money is tight.?People still want to see movies, eat well, and occasionally head out on vacation.

So, what does this have to do with Poshmark?

Poshmark is an online marketplace where people can buy and sell new and used clothes, shoes, accessories, and household goods.?It was founded in 2011 and has grown to over 70 million users as of the end of the pandemic, which makes it one of the most popular online marketplaces in the US.

Poshmark started as a small company primarily focused on selling second-hand women’s clothing, shoes, and accessories. But over the years, it has expanded to allow men’s and children’s items, pet items, beauty products, home goods, and select other items.

Poshmark now operates in the United States, Canada, Australia, and India. Poshmark has made clear that it intends to expand its offerings and expand even further internationally so that one day a person in Italy can buy something from Canada and someone in Australia can shop from Poshmark India.

Advantages to Buyers

The number one reason people shop here is that you can buy items at lower than retail price, and sometimes even lower than any other place on the internet, making this a go to place during a recession.?It’s also becoming a place where you can find rare or unique, one-of-a-kind items.?As you spend more time on the site, you’ll find people with unique listings for unique one-off jewelry pieces, vintage dresses, and even antique dishware.?

But those are the exceptions.?The real reason people shop here is to find bargains.?The site allows you to negotiate prices and make ‘bundles’ if you see more than one item you’d like to get from a particular buyer.?And chances are that you’re not going to pay extra for the shipping because Poshmark’s flat-rate shipping charge of $7.67 covers up to 5 lbs.?

They even have an authentication service for luxury goods that are purchased for $500 or more.?Those items are sent to Poshmark’s headquarters where a team checks the items for authenticity.?It’s an added layer of protection against monetary loss and receiving counterfeit goods.

The only downside is that the quality and descriptions of items are a gamble when it comes to second-hand items.?What someone considers ‘excellent’ might be someone else’s ‘good.’ ?But if the item wasn’t received as described, you can return it, otherwise, all sales are final.

Advantages to Sellers

Making money is the number one reason why people sell on the platform.?It doesn’t matter if it’s cleaning out their home closet or they are full-time sellers with thousands of listings, the sellers are on the platform to make money.?And Poshmark is very good at helping them do that.

There are no listing fees, even if you have a thousand items, and there’s no limit to the amount of money you can make on Poshmark.?The site was originally built as a mobile app, which made it easy to snap a picture, write a description, add a few other details with button controls, and price the item.?Compared to eBay, it’s like addition versus calculus in difficulty. Basically, Poshmark wants you to make sales because that’s how they make money.?

They even make shipping easy.?Everything is shipped through USPS Priority Mail.?You are sent the shipping label, or you can download it, so there’s no need to calculate shipping weights like other eCommerce sites.?There are no returns.?This is great for the seller because once an item is accepted by the buyer and the 3-day acceptance window passes, the sales proceeds are transferred to you immediately.?

But probably the nicest feature is that they collect all the applicable sales taxes on behalf of the seller and sends them to the states on behalf of the sellers. That eliminates a huge headache for the sellers.

And if you consistently do a good job, you can achieve the Poshmark Ambassador status which lets everyone know that you’re a top-rated seller.

The commission rates are a bit higher than other sites, but when you consider how painless they make if for the sellers, it seems like a bargain.?For anything that sells for less than $15, they have a flat-rate fee of $2.95.?For anything $15 and over, the fee is 20%.?For our purposes, that just means that I’m going to advise you against selling anything for less than $10 if possible.

A Few of the Negatives for Sellers

In searching some of the complaints from sellers, the most notable ones I found were around shipping for lightweight items under 1 pound and buyer scams.?One has a workaround – the shipping.?You can offer free shipping on some items.?That would work well if your item is around the $15 mark, under a pound, and the buyer is going to get charged the $7.67 USPS Priority Shipping fee.?You can find first-class shipping at considerably less and add an offsetting amount to your price.?Check the rates out before you decide to do that.

The second item is more difficult.?Buyer scams are just a fact of selling online.?Buyers will claim that they received a different item than they ordered, or it was more damaged than described – or even that they received an empty box.?The only thing I can tell you here is that scammers are on every site – and that can include the sellers as well.

So How Do You Make Money?

The simplest explanation is that you need to shop clearance sales, once your closet is empty.?And you’ll find them everywhere.?As an example, if you’re near outlet stores, you’ll find some terrific deals on brands from Saks Off 5th Avenue.?They advertise “up to” 70% off sales on every item, every day, and then take another 20% off when holidays like Labor Day roll around.?

Basically, a $100 purchase can get discounted to $30, and then another 20% comes off the $30 to make your final purchase $24.?That’s enough to give you a pretty decent margin.

But just for drill, I talked my wife into going to Macy’s which was advertising a big Labor Day sale.?There were items marked down 80%, and we found several $20 dollar tops at $1.97.?Then if you open a Macy’s card, they take 20% off your entire purchase, so your first sale could be with that infamous entrepreneur’s favorite phrase, “other people’s money.”

Where can you find items to sell?

Beyond your initial private seeding of money, better known as selling all of that stuff you never wear or use in the closet, here are some places that you can check out:

• Thrift stores & outlets – Think Goodwill and Goodwill's outlets called “the bins” where clothing is sold by the pound. But be careful you don’t label your closet (read: brand) with this as your primary source.
• Curated second-hand shops – These are in a lot of cities and towns.?Some names are Crossroads, Buffalo Exchange, Plato’s Closet, and Once Upon A Child.?But these are going to be a little higher in most cases.?If you use these stores, see if you can copy the list of brand names that Poshmark shows you when you first sign up on the sight.?There are over 10,000 names on that list. (Right-click in the left-hand margin and select print.)
• Consignment Shops – Similar to the curated second-hand shops, these stores display the item for a certain length of time like 1-3 months.?If the item sells during that period, the shop takes 50% of the sale price as their commission.?They may lower the price or return it to the owner if it doesn't sell.?If you get to know the shop, you’ll find that most owners won’t pick up the pieces that didn’t sell and usually donate them to Goodwill or thrift shops.?You might be able to work out a deal.?The good news about these shops is that the items they take in are highly scrutinized by the owners.?The bad news is that they are usually quite high in the price range.
• More Ways – Order wholesale lots of either branded or unbranded clothing; discount retail stores like Nordstrom Rack, TJ Max, Ross, and Marshalls; liquidation companies like Quicklots, Jomar, Bulq, and Boutique by the box; you can buy “mystery boxes” on Poshmark from other sellers where you might pay $25 for 5 items; use tredUP rescue boxes is another source of mystery boxes that packs in goods that haven’t sold; estate sales, garage sales, yard sales, church sales, and school sales; sample sales like CHICMI ; pawn shops; online community groups and websites like Nextdoor, Craigslist, Facebook Marketplace, and Letgo; clothing swap parties; and unpaid storage unit sales on sites like storageauctions.com and storagetreasures.com .

Expanding This Side Hustle into a Large Business

Create your own consignment service – This is kind of a side hustle within a side hustle.?Basically, you let it be known through message boards, Facebook, friends, or local websites like Craigslist or Nextdoor that you’re providing a service to sell unwanted or unused articles on consignment.?

Maybe you focus on the higher-end items that sell for several hundred dollars each and split the profits with the people providing you with the goods.?If it’s clothing, perhaps insist that they get them dry cleaned first, or change the split if you must in order to provide that service.

Remember, even though the split on a consignment item might be 50/50, and that item sells for $200, you make $100 with no inventory investment cost.?When I lived in California, I remember seeing small storefronts that took in items for resale on eBay.?They professionally photographed the items, wrote well-thought-out marketing descriptions, posted the items, negotiated the deal, and then packaged and shipped the items to the customer.?

The difference here is that you can create that exact same service on Poshmark to create a ‘closet’ that would attract many millions of followers on Poshmark, thus maximizing the draw you would have for your customers.

Getting started – Family, friends, and local websites like Nextdoor are excellent ways to get started.?There’s even an application that you can download called Flyp that allows you to search through collections of people who want to partner with a top seller on Poshmark.?

You might even work out a deal with a local boutique to partner with them to sell items that haven’t been sold for a long time at their shop.?That helps them free up cash to buy more inventory that would sell better.?Usually, the split will cover their initial costs plus a small profit for them, depending on their buying power.

Summary and Recommendations

What I like about this side hustle is that you can start with next to nothing, build a following, expand by sourcing from some of the sites and companies mentioned above, and eventually build an entire business around making it easy for people to bring their stuff to you for resale.?Your followers on Poshmark create a valuable selling asset that others will have trouble duplicating quickly.?Being an early mover on this might just be that great passive income opportunity after your initial investment.?Once you have a store, you can hire photographers and marketers to help you expand your business, or simply leap into it yourself.?

The only downside I can see is if another pandemic hits, forcing people to stay in their homes and having stores close.?At that point, you’re going to dry up your inventory unless you can figure out inventive ways to get around that problem, like a pick-up service or a ship-to-me function that keeps you in operation.

My overall recommendation is that this is a strong opportunity to pursue.?And using some of my suggestions above, I think you could build this into quick a large endeavor.

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? Copyright Joe DiDonato, Side Hustles Newsletter #15