Poshmark's CEO apologized publicly after a pricing change backfired, according to a leadership expert.

A recent memo from Poshmark founder Manish Chandra is particularly noteworthy because not all public apologies from CEOs are equally effective, according to a leadership expert.

Poshmark, which was acquired for approximately $1.2 billion by South Korean internet company Naver Corporation in 2022, is a platform for buying and selling new and secondhand clothing. Prior to October 3, anyone who sold a piece of clothing on the platform for more than $15 paid a 20% fee to the company. However, starting October 3, the company shifted part of the fee from the sellers to the buyers.

Poshmark sellers were left stranded as customers revolted, with the loss of sales being worse than any savings they gained from reduced fees, according to Chandra's apology blog post last week.

"We have decided to revert to our original fee structure effective October 24, 2024, as the outcome of the change did not meet our expectations. I sincerely apologize for the disruption and impact this has had on you. We hope this decision reflects our commitment to listening and evolving based on your feedback."

According to Talia Fox, a leadership strategist, author, and head of KUSI Global, an executive consulting firm, Poshmark CEO Manish Chandra's apology was effective. The Poshmark community seems to agree, with users posting on the company's Reddit forum, expressing their happiness with the apology, saying comments like "This is such good news!" and "Maybe I'll get some sales again."

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Chandra was able to rectify the mistake, modify it, and then confess that it did not meet their expectations, according to Fox.

Chandra outlined specific steps to rectify the situation, such as providing a "rebate of the difference in seller fees on listings created or edited during the fee change period" and eliminating the buyer's fee.

Wordsmithing is no longer enough to convey sincerity," says Fox. "Tangible incentives are necessary to back up apologies and show what's in it for employees and customers.

'Not everyone is going to be happy'

In most cases, a CEO's apology won't satisfy everyone, according to Fox.

"The new Poshmark fees were unreasonable for buyers, but returning to the original fees feels even more frustrating as a seller. How could you not find a balance? You're losing both buyers and sellers."

"Another person on Reddit remarked, 'I'm getting whiplash,' indicating that it's time for Manish to relinquish control."

To ensure your company's long-term success, prioritize the people who have the greatest impact on your profitability, advises Fox. Specifically, the sellers on Poshmark are crucial to your model, and their happiness is essential to your continued profitability.

The three-part formula that Fox advises executives to use when they've made a misstep or are facing a difficult situation is TCT, which stands for timing, culture, and track record.

"Considering the current circumstances, it's important to evaluate whether now is the right time to make a cultural change, says Fox. To do this, reflect on your past experiences with change and determine if any previous attempts were successful or not. This information can help you strategically manage an apology."

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