Going second-hand shopping with Gen Z: Etsy to buy Depop for $1.6bn
UK-based fashion app Depop has 30m users in 150 countries - 90% of them under 26
Etsy has been on a major shopping spree - and spent $1.62bn (£1.14bn) on a single purchase. That’s the amount the American ecommerce company will pay for Depop, the UK-based second-hand fashion app.
Announcing the news yesterday, Etsy CEO Josh Silverman said the acquisition of Depop “aligns well with Etsy’s DNA” and there is “significant potential” to further scale the global fashion reseller.
The transaction is expected to be completed in the third quarter of 2021 and Depop will continue to be headquartered in London as a standalone marketplace run by its existing leadership team.
Here we take a look at what the deal means for the retail and fashion brands.
What is Depop?
Founded in London in 2011 before moving into the US and Australian markets, the Depop app “lets users buy and sell used clothes through its online marketplace”, the BBC says.
Primarily known for its vintage, streetwear, one-of-a-kind and Y2K (late 1990s/early 2000s) fashion, Depop has grown to approximately 30m registered users across nearly 150 countries and in 2020 it had 4m active buyers and 2m active sellers.
Approximately 90% of its active users are under the age of 26 and it is the tenth most visited shopping site among generation Z (Gen Z) consumers in the US.
Gen Z: the ‘trendsetter’ demographic
It’s estimated that the US second-hand clothing market alone will be worth $64bn (£45bn) by 2024. And with the buyout of Depop, Etsy is “seeking to attract younger shoppers and bolster its position in a booming market in vintage or used clothing”, Reuters says.
Etsy is tapping into the fast-growing trend of young people reselling clothes online and Silverman expects the resale craze would continue long after the recovery from the pandemic, The Guardian reports. Describing Depop as the “resale home for Gen Z consumers”, Silverman says this “enormous” demographic is the “trendsetter” demographic.
Etsy shares were up about 3% in early trading and the deal should give the firm a new growth avenue as it comes down from a pandemic-led high, GlobalData managing director Neil Saunders told Reuters.
While this is a “volume game” for Etsy, it’s “not necessarily an initially profitable one”, TechCrunch says. Last year Depop saw gross merchandise sales of $650m (£457.8m) but revenues of only $70m (£49.3m), both up 100% on the year before.
However, in terms of how Etsy might see itself growing, Depop’s ethos is a promising one - particularly as a kind of “anti-Amazon in the world of clothes, home goods and consumer goods shopping”, TechCrunch adds.
“We’re on an incredible journey building Depop into a place where the next generation comes to explore unique fashion and be part of a community that’s changing the way we shop,” said Depop CEO Maria Raga. “Our community is made up of people who are creating a new fashion system by establishing new trends and making new from old. They come to Depop for the clothes, but stay for the culture. We’ll now take an exciting leap forward as part of the Etsy family.”