For the Latest E-Commerce Companies, Success Means Thinking Outside the Box

We are currently witnessing one of the biggest technology-enabled market disruptions in history. U.S. physical retail sales—an enormous $5 trillion annual market—is gradually being eroded away by the shift of consumer spending online, a trend some have called the “retail apocalypse.”

And no surprise, the biggest beneficiary of that tsunami has been Amazon, whose stock price has climbed a stunning 350% over the past five years, just as physical retailers have been driven in droves into bankruptcy. In fact, while overall e-commerce sales grew 15% last year, Amazon’s North American retail sales increased by 25%! In other words, the 800-pound gorilla is growing ever more dominant.

This is not surprising, as retail is an industry where scale is a fundamental advantage. With its enormous investment in warehousing and logistics, it’s hard to see how smaller companies can pick, pack, and ship a box to the consumer’s door more efficiently than Amazon.

Thinking Outside the Box

Yet a handful of innovative companies have managed not only to survive, but thrive, in Amazon’s shadow. One example is StitchFix, which recently crossed a $1 billion revenue run rate and filed for its IPO. Another is Poshmark, which today announced $87.5 million in new funding led by Temasek.

For these companies, it’s what’s outside the box that creates the magic. Poshmark is a mobile shopping app used by millions of users connected by a shared love of fashion. Part marketplace and part social network, Poshmark has created a highly engaging experience, with the average user spending 25 minutes per day in the app.

What keeps the Poshmark magic alive? It’s the delightful and serendipitous experience of finding that hidden gem in your feed, recommended by a friend you made on Poshmark three days ago. It’s the moment that brightens your day when someone likes, shares, comments on, or buys something from your closet. And it’s the ability to connect with people just like you that are looking to bring fun and entertainment to their online shopping.

Experiences Money Can’t Buy

Few companies, let alone venture-backed startups, can compete with Amazon’s logistics. While predictably efficient, the shopping experience on Amazon can be sterile and dry:

While the Poshmark experience is social and intimately personal:

Free two-day shipping with your Prime membership? Sure, that’s worth $99. Being told you look sexy in a black dress and seen by all your followers on Poshmark? Priceless!

The Road Ahead

At just 9% of total U.S. retail sales, e-commerce still has a long road ahead to become an ever-increasing part of the economy.  While industry giants such as Amazon will certainly claim a large part of that growth, innovative companies like Poshmark that can create uniquely social and personal experiences will continue to prosper as well.

Congratulations to the entire Poshmark team on their recent funding round, for enriching the lives of so many users, and for thinking outside the box!