Online resale marketplace Poshmark has been battling bad reviews from its sellers on recent changes to its seller fee structure, prompting it to reverse course on a decision made earlier this month.
Monday saw the group’s founder and CEO, Manish Chandra, pen an emailed missive to sellers apologizing for a new policy that took effect on Oct. 3 which many found to be confusing and counterproductive.
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The company announced plans to nix its 20-percent seller fee in the U.S., replacing it with a fee of $1, $2 or $3 based on the order value, plus 5.99 percent of the order total (including order price, shipping and taxes). To make up for the reduction in seller fees, Poshmark shoppers were hit with a 5.99-percent “Buyer Protection Fee” on top of the price, shipping and taxes on their orders.
According to Chandra, the change was designed to reserve a greater percentage of earnings for sellers by “balancing fees between sellers and shoppers.”
But within a short span of time, Poshmark sellers found that the shift was having the opposite effect: the increased fees on the shopper side were driving consumers away. The chief executive admitted that “over the past few weeks we have seen that shoppers spent less on purchases as they shifted their spending from orders to fees, leaving our sellers with less cash in their pockets—despite the seller fee reduction.”
“We’ve spoken with many of you and listened closely to your feedback,” he added. “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.”
Within less than a month, Poshmark resolved to return to its original seller fee structure: 20 percent for sales over $15, and a flat fee of $2.95 for sales under $15. It has also dispensed with the Buyer Protection Fee entirely. The reversal will take effect Thursday.
But according to some Poshmark sellers and customers, damage has already been done. The fee structure shakeup took place during peak selling season—just months ahead of the holidays—and even a few weeks of lost sales could dent their earnings for what should have been their most lucrative quarter, users on Reddit said.
“I was selling a lot more with the 20 percent fee as opposed to the new system where I made like two sales in three weeks,” one seller wrote.
“I’d rather live with the 20 percent than face significantly fewer sales because of the buyer fees being astronomical,” said another seller. “I really do think a lot of buyers were shocked when they went to check out and saw how much higher the total price was and backed out, causing the loss of a lot of sales.”