Social shopping is at the core of Poshmark’s success, says CEO and co-founder Manish Chandra.

Manish Chandra

The online-only, peer-to-peer shopping marketplace in late 2011 launched with an iOS app-only platform and has grown to an iOS and Android app and a transactional website with 25 million SKUs. Poshmark also has millions of monthly active users and hundreds of millions of dollars in annual gross merchandise value, Chandra tells Internet Retailer.

Poshmark allows consumers to sell their own used or new apparel products for whatever price they choose. The marketplace has 3 million sellers. Shoppers pay in the app, and Poshmark takes a 20% cut of all sales, which is the only way the marketplace generates revenue, Chandra says. Poshmark never touches the inventory as sellers ship products directly to buyers, and customers can’t return a product unless it is was unfairly represented on its product listing.

Poshmark also has a boutique and wholesale section of its marketplace where shoppers can buy new products from brands. Roughly 65% of the items on Poshmark are pre-owned and about 35% are new, Chandra says.

Being “social” is ultimately key to Poshmark’s success, Chandra says. “Everything we do is centered on social,” he says.

If you have deep engagement, growth comes.

Here’s how the platform is social: A shopper can “follow” sellers (which Poshmark calls Seller Stylists) that she likes so that when she opens the app, she can view a feed of products from those sellers. Sellers can also recommend products—their own items or another seller’s products—to shoppers that they think the shopper would like. This way, the seller is more of a “stylist” and not just promoting her own products, Chandra says.

When a shopper opens the app, she can scroll through a feed that features products that are tailored to her interests based on her previous purchases, sellers she follows, products other users share with her and items she has viewed. This feed uses an algorithm to curate the content personalized to that user, much like a social media platform’s feed would, Chandra says. Shoppers also can comment on posts and a customer can send a “love note” to a seller when she is really happy with a product she bought.

This social media-like setup seems to be working, as an average Poshmark member spends 20-25 minutes per day in the app and opens the app seven to nine times per day, Chandra says. Plus, the marketplace went from sellers sharing 200,000 products every day in 2013 (their own products or other sellers’ products) to now sellers sharing 7 million products every day.

Shoppers can still search for products in traditional ways, such as via the search bar or by categories. However, the “social way” of sharing and scrolling through the feed drives 90% of sales on Poshmark, he says.

“If you have deep engagement, growth comes,” Chandra says.

At the end of 2012, about a year after Poshmark launched, the marketplace had fewer than 100,000 users. App engagement, however, remains strong, with shoppers on average spending more than 20 minutes a day in the app and opening it frequently.

And user growth followed. Throughout 2013, the company strengthened the back end of the platform and invested in marketing, such as buying ads on Facebook and Instagram. A large component of Poshmark’s growth came via live events that the marketplace calls “Posh Parties,” which are sales centered on a theme such as scarves or leopard prints. The marketplace held successful virtual posh parties, Chandra says, and then decided to travel the country hosting live events and working with local media to promote them.

Poshmark continued this strategy, growing from one Posh Party a week to four parties a day (mostly virtual), Chandra says.

Poshmark continues to add features to its marketplace to help fuel growth.

In April, Poshmark added a “dressing room” feature, which is supposed to mirror a department store experience, in which a shopper has a personal stylist who sets up a virtual dressing room of products that the shopper might like. A shopper can ask a seller on the platform to give her a virtual dressing room of products, and the shopper can give the seller access to all of her previous Poshmark purchases to give the seller a better idea of the shopper’s style. The seller and shopper can work on the products in the dressing room and negotiate a price for the entire package, or a shopper may buy just a few products from that seller.

Such experiences allow for a richer interaction between members, Chandra says. Although this feature launched only five months ago, roughly 6% of purchases made on the platform today are made via dressing room, he says.

Poshmark also is testing a consignment part of the app, in which it connects sellers with boutique goods and budding brands. This gives sellers access to new products without paying up-front costs they would face using a wholesale model. Lesser-known brands get access to millions of users via a seller with a following and can test products to see what is popular. Poshmark has piloted this service since the start of the year with fewer than a dozen brands. So far, it has been successful, Chandra says, declining to give specifics. He also did not detail how much the seller, brand or Poshmark receives on the sale.

To date, Poshmark has raised $70 million from investors including venture capital firms Mayfield Fund, Menlo Ventures, Inventus Capital Partners, GGV Capital and SoftTech VC and celebrities Rachel Zoe and Ashton Kutcher. Poshmark has been profitable at some points in its history but is not currently profitable, Chandra says.