Why Poshmark is launching its own wholesale program

October 28, 2015, 4:12 PM UTC
Courtesy of Poshmark

Fashion idols and gurus have long been the fashion industry’s secret weapon to sell everything from sun dresses to suede hand bags to those trendsetters’ loyal followings.

Poshmark, an online peer-to-peer marketplace for second-hand fashion items that has raised $40.5 million to date, is adding this tactic to help fashion labels sell more and its top sellers stand out from the pack. The company has partnered with several fashion labels and will let some of its best sellers buy merchandise from them at wholesale prices that they can then sell via Poshmark, it said on Wednesday.

According to co-founder and CEO Manish Chandra, although most items sold through Poshmark are still second-hand clothing and accessories, the startup estimates that between 10% and 20% of items sold were originally purchased wholesale. That organic activity alone was convincing enough for Poshmark to set up its own wholesaling program.

Directly connecting Poshmark’s most successful sellers and fashion brands will ideally be a win-win situation for everyone. As Chandra remarks, the brands signing up as wholesalers aren’t looking to sell directly to shoppers, something that’s fairly resource intensive for each individual sale. Instead, wholesaling lets them move larger quantities of merchandise and faster since they’re selling several items to each buyer and don’t have to worry about the marketing costs of luring in shoppers.

MORE: Amazon thinking about launching its own clothing line

Right now, the company is working with about a dozen smaller brands, but hopes to expand to 30 or 40 by the end of the year, Chandra says. He added that the plan is to also work with bigger and more well-known brands as well, and to span across all price points, from affordable fashions to high-end luxury brands. It’s also leaving each brand to decide its own terms and recommended retail prices and minimum purchase quantities for the wholesale program.

Poshmark’s sellers, on the other hand, get to buy brand-new items at discounted prices, which in turn helps them differentiate their offerings and command higher retail prices—and profits. They can also skip the trade shows and other channels they would normally have to go through to buy items at wholesale.

As for Poshmark, this means potentially taking a cut from two sales instead of just one. It normally earns a 20% commission from sales through its marketplace, and will take a small cut from these wholesales as well. (Poshmark declined to share how big that cut will be, but it’s waiving it for right now.)

Of course, spending cash up front to purchase items at wholesale can be expensive. So to help some of its sellers, Poshmark says it will give out $500 grants to 50 lucky qualified sellers. The company will open up applications for the grants and will select the winners based on their personal style, background stories, and so on. Chandra says this won’t be a one-time deal and Poshmark will give out grants and other financing options again in the future.

In a competitive industry that includes others like ThreadUp and eBay-owned (EBAY) Twice, this is only the latest way Poshmark is looking to differentiate itself. Last year, it launched an authentication service for luxury items to help buyers avoid fake items.

Subscribe to Data Sheet, Fortune’s daily newsletter on the business of technology.

For more on the new startups shaping shopping for clothes, watch this Fortune video:

Read More

Artificial IntelligenceCryptocurrencyMetaverseCybersecurityTech Forward