Poshmark Reinstates Selling Fees After Sellers Report Sales Decline

Shortly after Poshmark, the well-known social marketplace that allows users to buy and sell fashion items, made headlines with its announcement of a new fee structure, it decided to reverse course in response to overwhelming backlash from its seller community. Initially, Poshmark had introduced changes aimed at reducing selling fees for sellers while simultaneously increasing costs for buyers. However, the reaction was swift and overwhelmingly negative, prompting the company to reconsider its approach.

In an email addressed to sellers, Poshmark's founder and CEO, Manish Chandra, issued a heartfelt apology for the fee changes. He explained that the new fee structure resulted in a decrease in customer spending, which in turn left sellers with less money in their pockets despite the reduction in seller fees. Chandra acknowledged that the expected benefits of the changes did not materialize, stating, “The outcome of the change did not meet our expectations, and I sincerely apologize for the disruption and impact that this has had on you.”

The controversial fee structure that Poshmark introduced earlier this month replaced the existing 20% seller fee with a significantly lower 5.99% fee for sellers. Additionally, a “protection fee” of 5.99% was added for buyers. Both buyers and sellers were also subjected to tiered fees based on the total order amount: orders under $15 incurred a $1 fee, those between $15 and $50 had a $2 fee, and orders over $50 were charged a $3 fee. Buyers were still required to pay for shipping costs, which further compounded the dissatisfaction among users.

The backlash from sellers was particularly vocal, with many taking to social media platforms like Reddit to express their frustrations. Numerous sellers reported a drastic decline in their sales following the implementation of the new fee structure. Some indicated that potential customers abandoned their purchases upon realizing the increased costs associated with buying items. One seller lamented that their sales had dwindled from a robust 12-15 transactions per week to fewer than five. This stark contrast highlighted the negative impact the new fees had on seller activity and morale within the Poshmark community.

Poshmark is not the only resale platform to encounter such backlash regarding fee changes. Earlier this year, Mercari also faced criticism after it eliminated seller fees entirely and instead imposed a service fee on buyers for what it termed “hassle-free returns.” This move sparked discontent among Mercari users, leading the company to reverse part of its policy after just two months in an attempt to appease its customer base.

In light of the negative feedback and the apparent decline in sales activity, Poshmark announced that it would be reinstating its original fee structure, effective Thursday, October 24. This decision was likely made in an effort to rebuild trust and demonstrate responsiveness to the needs of its sellers. Moreover, Poshmark indicated that it would issue rebates for the difference in seller fees on listings created or edited during the transition period from October 3 to October 23, with sales occurring from October 24 through October 27. This rebate initiative aims to further compensate sellers who were affected by the fee changes, showcasing Poshmark’s commitment to its seller community and encouraging continued participation on the platform.

Ultimately, the swift decision to revert to the original fee structure highlights the challenges that social marketplaces like Poshmark face in balancing profitability with the satisfaction of their user base. By listening to seller feedback and acting promptly to address their concerns, Poshmark aims to foster a more positive environment for its sellers, which is essential for the platform's long-term success.