Etsy has been on a major shopping spree – and spent $1.62bn (£1.14bn) on a single purchase. The US e-commerce company will pay a similar amount for UK-based second-hand fashion app Depop.
Announcing the news yesterday, Etsy CEO Josh Silverman said The acquisition of Depot “aligns well with Etsy’s DNA” and has “significant potential” to grow to be a 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 driven by its existing leadership team.
Here we take a look at what the deal means for retail and fashion brands.
What is Depop?
Founded in London in 2011 before moving to the US and Australian markets, the Depot app “allows users to buy and sell used clothing through its online marketplace”, BBC it is said.
Primarily known for its vintage, streetwear, one-of-a-kind and Y2K (late 1990s/early 2000s) fashions, Depop has grown to nearly 30m registered users in approximately 150 countries and is expected to launch its first edition in 2020. There were 4m active buyers and 2m active sellers. .
About 90% of its active users are under the age of 26 and it is the tenth most visited shopping site among Generation Z consumers in the US.
Gen Z: the ‘trendsetter’ demographic
It is estimated that the US second-hand clothing market alone will be worth $64bn (£45bn) by 2024. And with the purchase of Depop, Etsy is “trying to attract younger shoppers and solidify its position in the rapidly growing market for vintage or used clothing”, Reuters it is said.
Etsy is tapping into the rapidly growing trend of youth reselling clothing online, and Silverman expects the resale craze to continue long after the pandemic recovers, Guardian Report. Describing Depot as a “resale home for Gen Z consumers,” Silverman says it’s a “huge” demographic is the “trendsetter” demographic.
Globaldata managing director Neil Saunders told Reuters that Etsy shares were up about 3% in early trading and that the deal should give the firm a new growth avenue.
While this is a “volume game” for Etsy, it is “not necessarily profitable in the beginning”, techcrunch it is said. Last year Depop saw gross merchandise sales of $650m (£457.8m), but revenue of only $70m (£49.3m), both up 100% from a year earlier.
However, in terms of how Etsy may see itself growing, Depop’s ethos is a promising one — especially as “the anti-Amazon in the shopping world of clothing, home goods, and consumer goods,” says TechCrunch.
Maria Raga, CEO of Depop, said, “We are taking Depop into a place where the next generation comes together to explore unique fashion and be part of a community that is changing the way we shop. is.” “Our community is made up of people who are creating a new fashion system by setting new trends and creating new from old. They come to the depot for the clothes, but stay for the culture. We are now part of the Etsy family. I will take an exciting leap.”
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