U.S. fashion resale platform Poshmark Inc was recently acquired for USD 1.2 billion by Naver Corp.. The purchase has raised doubts among investors who have questioned the timing of the deal amid a slowing economy. As part of its foray into the U.S. e-commerce market, Naver, which is also South Korea’s top search engine, will pay USD 17.90 per Poshmark share in cash.
Naver executives said in a conference call on Tuesday that Poshmark is the largest fashion consumer-to-consumer platform in North America, with 80 million registered users primarily among millennials and Gen Z.
As part of the deal, Poshmark’s shopping platform will combine with Naver’s technology, starting with live-streaming, a key driver of e-commerce in South Korea, followed by technologies like image recognition and artificial intelligence.
It is expected that Naver and Poshmark will be at the forefront of retail’s next global trend “re-commerce” or consumer-driven resale. This is the third biggest driver of the industry after e-commerce and fast fashion.
Naver Corp. is well-acquainted with its customers. In a statement to Reuters, CEO Choi Soo-Yeon said that “as Millennials and Gen Zers generally tend toward value-driven consumption, such as environmental protection, and inflation-squeezing wallets.”
By 2025, the USD 80 billion U.S. market for online fashion “re-commerce” is expected to grow to USD 130 billion. According to a Naver spokesperson, Poshmark’s enterprise value is about USD 1.2 billion. In after-hours trading on Monday, Poshmark shares rose 14 percent to USD 17.8. Despite a 2.3 percent market rise, Naver shares fell 7.5 percent as of 0335 GMT.
Analyst Sung Jong-hwa questions, “Why Now? The market is skeptical about whether this is the best timing. Since COVID-19 became endemic, many platform companies have seriously lost their lustre. And the plunging won doesn’t help.”
SEE ALSO: Korean retail sales surge in August
So far this year, the KRW has fallen by 17 percent against the U.S. dollar to its lowest level since 2009.
“The online market changes so quickly, not doing anything can mean losing long-term value,” Naver’s CEO Choi said. “We will do everything to carry out what we have promised investors two years, five years from now.”