Manish Chandra, CEO, Poshmark
Max Rhodes, CEO, Faire 
Additional speakers to be announced
Moderator: Phil Wahba, FORTUNE


Brainstorm Tech 2022: Retail Reimagined (Again)

Conferences

Brainstorm Tech 2022: Retail Reimagined (Again)


well, good afternoon everyone and maximum welcome. So why don't we start with before we get into the details of your business models and all that? Let's talk about, uh, the retail environment at the moment, both of you of course, look at it from a different lens, but tell us how inflation, you know, pessimism around, pessimism around the economy is reflected in how businesses going on. Your maybe we can start with you, maybe just in a sentence, explain to people what fair is. Yeah, So there is a wholesale market place, we connect independent brands with independent retailers, kind of like an online trade show or wholesale version of amazon and the, the impact that inflation is having on our business. I mean, we can, we can see it in our data, we can see that Brands are raising prices. I think prices are up about 6% year over year. So it's not like it's not happening, but in terms of the impact that it's actually having our retailers, we haven't seen it yet, their sales are actually up year over year and they were up year over year over the prior year. Um, I think one of the things that's interesting about independent retail is that The retailers that have survived over the course of the last 50 years aren't doing so by competing on price. They're doing so by competing on curation on experience on community and, you know, they've figured out how to live in a world where they don't have the lowest prices and as a result, I think they're proving to be more resilient in a time when, you know, some retailers that I think their consumer is much much more price conscious is struggling. I think independent retail at least continues to surprise, you know, me in terms of how resilient it is through the through the pandemic, through this inflationary cycle, um it just continues to impress me how resilient these these businesses are and how creative they are in ways of of of continuing to survive and thrive. Does that apply to outside the U. S. As well? You guys are in some international markets as well? Right. Yeah, we, the data that we have on how our stores are doing outside of the U. S. And we have, you know, tens of thousands of retailers in europe at this point, it's not as robust um but nothing in the data that we have suggests that that there are the stories any different overseas Manisha body, what are you saying? You know, if you think of cash, Mark, you know, we really enable everyone to take their closet and put it online for sale. So in inflation at a fundamental level, everything if it becomes more expensive, then the asset you have, which is your clothing also becomes more expensive, so suddenly everything you own is actually more valuable. So in a way our consumers can tap into the closet really recirculate so without getting into specifics were not quite as, you know Phil uh just the broader thing I would say is that inflation combined with sustainability, are actually two high dimension forces which are propelling resale into the center of retail as we are seeing broadly brands retailers, everyone adopting resale as a core paradigm. And I think inflation is going to only accelerate it further, sorry for the digression, but I can't help notice your amazing shoes, what's the story behind them? Your shoes, everything, everything is from bosch marks, I I you know, I'm 100% Mark customer. Okay, well, they're fabulous. I have not seen another cool pair of shoes like that in this whole conference. So, um, so let's talk a little bit about supply chain, it might be a little bit different from you since your resale site, but you know, does that have any impact on posh mark? Right, Two things, I think every time that there is disruption in the economy, it does affect the business in the entire retail ecosystem, whether it's posh Mark or others. So, supply chain disruptions initially were an accelerator of our growth because what you see in supply chain disruptions is people have to tap into supply that's already available today. What's happening is that supply chain is actually creating price arbitrage opportunities. And so so many of our resellers are tapping into that to offer that inventory at a discounted price, into the marketplace. So that's sort of, I think in a, in a way, supply chain, the flip side of supply chain, is that what you see in terms of fashion and, and and it's changing a little bit as we are sort of coming into, I don't know whether it's post covid or whatever transitionary covid world, but people were forced to restyle stuff because it was not a whole lot of new fashion coming out as you look into the future, people still mixing and matching. And so this whole world of evolving fashion is accelerating in a very different way, tapping into pieces you have and tapping into pieces you're buying and when you start to think of supply chain disruptions, that also gives an opportunity for recycling and reuse, combined with new stuff to create new means for fashion. And then we look at a platform like Tiktok where each of these fashion trends can get viral and suddenly you can run out of small lot inventory. Then posh mark as a platform offers alternatives for either getting that same item or similar items that people can use for their styling. How about you max? What do you think? Yeah, we're hearing about it, some from our retailers, you know, particularly in the apparel segment. Um, but I think the story that you're hearing from big box stores and from larger retailers, I think the situation there is much more dire because they're buying so much more of their product from china where, you know, the supply chain issues are really starting and they're having to buy so far in advance in such large quantities. Independent retailers are just much more nimble and you know, I talked about the fact that they figured out how to survive in a world where they don't have the lowest price is part of the way that they do. That is by sourcing products that are made in the United States, that are more unique, um you know, that are less likely to be made in china and therefore, I think they they've been a little bit more resilient to the supply chain challenges. I think we've also seen, you know, our retailers turning to fair um as a way to help solve some of the supply chain issues that they're running into because we have, you know, 70,000 brands on our platform, some of them manufacture in china, some of them are having supply chain issues, but we allow retailers to get visibility into the availability of the products and to source from products and brands that don't manufacture in china that aren't having supply chain issues and enable them to be a lot more nimble and respond, you know, in real time to the challenges to make sure that they have the products in stock that their customers want. I'm glad you talked about big box retailers because I'm gonna skip a couple of questions go back to them, but what can big box retail retailers learn from each of your companies, Do you think they will start with you max since you brought them up? Yeah, I think that the big challenge that big box retailers have is their core value proposition is assortment and price. And the truth is that the internet just does that better. Uh And on top of that, the internet has, you know, the ability to deliver things directly to your house. It has the ability to recommend products to you based on your prior search history. And I think that puts big box retailers in in a pretty difficult position. Um I think the reason why independent retailers Have proven to be resilient over the course of the last 10 years over the course, really, the last 20 years, but especially the last 10 years, the number of independent bookstores in the United States is actually more than doubled over the course of the last decade, which always shocks a lot of people, but I think we're seeing it across almost every category. Independent retail is really thriving despite the rise of e commerce. And the reason for that is because independent retailers have figured out how to compete on experience curation. You know, they build a presence in their community and to be totally honest, I think it's a lot harder for big box retailers to to reinvent themselves and to do that. It's harder for them to change course, it's harder for them to offer some of the things that independent retailers offer, but to the degree to which, you know, they're trying, I think it's figuring out how to, you know, tap into the power of the internet. Um, it's figuring out how to offer better experiences. You're not gonna be able to rely on just having low prices, large assortments. You really have to figure out, you know, how to how to offer a compelling experience in store. And, you know, I think the big box retailers that are doing better are, you know, the folks like Best buy or Home Depot that have really figured out compelling reasons why, you know, people need to come into store, whether it's the expert advice for the experience. Um, and I think that that's something that they can learn from the independent retailers that buy unfair. What do you think? I think um when you think of any, any large big box retailer, they are aggregating audiences as well, so they have a massive audience of shoppers and I think when you start to match the audience of shoppers into the different kinds of supply that are available, the thing that can learn from posh mark is really the power of community and sort of nation. If you look at the online presence, almost every big box retailer is becoming a marketplace, Right? So there's hardly any big box retailer that's not a marketplace. The marketplace is the new retail architecture is, in a sense, we're running different forms of retail out there. Uh, if you can start to map it into physical retail and really empower the local community is very powerful, You know, I I used to often talk about the fact that you go into a big fashion store day when you go, it's a little overwhelming. There's so much selection Day three, you go, nothing has changed. It's the same thing, right? It is when you look at Posh mark, you go in, you open up the app, you go an hour later, it's a small facet personalized to you. You see something new, something new pop up. So how can use the power of community and community merchandizing to completely create a retail experience without having to disrupt anything except the facade of these stores. So I think some people are trying to do that. There's some, some innovation stuff happening. But I see that that partnership with the local, with the global and then aggregating audiences and supply can be quite powerful as people transform, especially when you start to connect it back to digital haven't followed. I will open it up for questions. So in in a moment, so start put your thinking caps on. And then if you have a question, we'll we'll take it. I'm glad you talked about community and that's actually one of posh Mark secret sauce is right like you because otherwise, you know, it's just a site with a lot of product, um how has that evolved? You know, this, this, you know, creating communities online and how do you keep fresh and how do you make sure that the approach still works? Yeah. So you know, community is something which was definitely a thesis we had when we started the company but the formation the scale and the passion of it organically happened over time but there's a few artifacts that we created. So one of the things that bash mark has a social sharing where you can curate products, you can curate products from your own store and closet. You can also curate product from other people that creates what I would call. We were using this term in the previous panel agency which gives people power and empowerment to engage. Probably the only few platforms where sellers and participants have enough power without having to spend direct money, no advertising, nothing is needed. So that creates a level of flow and connection. Then we mapped it into physical events. So we have tons of physical events and again in the early days we did it by necessity because there was no mobile marketing dollars, there was no way to market. And um so we had to go out and do physical events. But over time they became their physical events fed into virtual events. Virtual events fed into physical events. And that created a sense of hyper local communities where you could sort of have these local communities and then people could throw hyper local events where you have events happening in small towns etcetera and that form other communities. And then communities were initially very seller centric, then they became seller in style centric. And the power of it is manifested in many different ways. So for example, you know, you hear amazing human stories where people are getting supported, so you have people pulling money together, pulling inventory together when somebody has gone through a divorce and shipping them inventory so they can make a living. You have people funding cancer treatment with in a pool sort of process. You have people taking trips together, road ships together, uh, physical trips together. So the power of community then starts to become very much a fabric. That's part of the platform. And ultimately what it does is it creates enormous loyalty to the brand without actually being about the brand because you have loyalty to each other on the platform. Do you do in person events? You just started, we just started. So we had them. The funny story is that in 2020 when pandemic just first started, we were about to launch 400 simultaneous events across the country, physically in coffee houses, we have to put that on a hold and now we're just starting. I think people are feeling their way to attend larger physical events. You know, it's fun to see everyone here, we have our passports coming up, we'll see how many people attend. But, you know, I think it'll take another year or so to kind of get that machinery going now, your your company sort of, you know, is a compliment or replacement for trade shows. I mean, can you do it? Do you do anything in the physical world for two to match your, the people in your marketplace? Can you? Yeah, we, it's actually around trade shows. Uh, we we tend to do, um, you know, get together and meet up. So it's something that we've we've explored doing um, in, in cities, not around trade shows, there definitely is a strong sense of community among the brands and retailers that are on fair. I think one of the things that's interesting about our platform is it's not like your typical consumer marketplace and it sounds like posh mark may be different, but a lot of consumer marketplaces, it's just super transactional where I'm buying from the brand. I have no relationship with the brand. I don't even want to necessarily have a relationship with the brand. And on our marketplace, there's a much, much stronger sense of connection between the brands and retailers. They really view each other as partners um, in, you know, trying to help each other be successful. We have small businesses on both sides of, of our marketplace and they really, I think empathize with one another and recognize that they're both out there trying to do the best that they can. And I think that really lends itself to, to building a sense of community and we have started to explore different ways of trying to create that um, online as well as offline. So I want to ask you both about technology since this is a tech conference and not a retail one. Um, you know, what's the technology you use to know what's trending, know what you should be promoting or making the users of your respective sites aware of and how has that changed for us. Our philosophy has been to experiment with technology and then see what really starts to hit the click in terms of actual product market fit. So for example, in the very early days when Apple Watch was coming out, Apple Watch apps were there, we created an Apple Watch app and you know, sort of experimented with that. We were the first to go to market. So we do that in some cases, you know, we haven't been able to be as aggressive and we are catching up like streaming, etcetera. But the goal is to make the technology work for the customer as opposed to customers sort of have to work for the technology and, and that requires some experimentation and when it starts to get some sort of a fit, then we scale it up. We started with betting on a technology that was pretty novel when we started the company, which was, we built an end to end marketplace on iphone which was considered sort of crazy at that time, like who would bet their entire future an iphone in 2010, every VC wanted me to do a website. And I said, no, it's just going to be an iphone app which was considered extremely risky in 2010 max. And he thought, yeah, I mean part of our core thesis when starting the company was trade shows, do a really poor job of sorting brands and retailers and matching them. It's basically, you know, you end up buying the products that you walk by um, and you end up seeing the products that you're able to see in a day, you know, depending on how much ground you want to cover and the decisions that retailers are making, particularly independent retailers, they're kind of guessing what's going to sell. Um, and what's not going to sell. And it's really difficult for them to make good decisions. And part of the core thesis was fair was by pulling hundreds of thousands of retailers together, seeing what's being reordered, what's being returned. You know, understanding who's buying, what we would be able to bring. You know, a much more data driven approach to buying for retailers, something that larger retailers have had for a long time. They have teams of buyers poring over data. They have tons of historical data. They can look at what's selling in austin texas and compare that to what's selling in Portland. Um, we bring that power of data and scale to independent retailers and we now have machine learning algorithms, they're looking at hundreds of different signals, determining what we should recommend to every retailer and ultimately helping them be more successful as a result. Well, on that note, I'm going to thank for joining us and check out their site figure.