Etsy will acquire Depop for $1.625 billion in a primarily cash deal. Etsy described the company in its press release as a “privately-held, community-led, and purpose-driven marketplace for unique fashion” that was founded in 2011.
Depop boasted 4 million active buyers and 2 million active sellers in 2020, which is a surprising ratio, and it has 30 million registered users across nearly 150 countries. Etsy believes it can grow the number of active buyers – “Depop is an early-stage business that we believe can leverage our proven value creation roadmap to drive further growth and profitability,” it said.
It’s also likely Etsy is salivating over the type of users it attracts, pointing out: “Approximately 90% of Depop’s active users are under the age of 26; and young consumers are adopting second-hand fashion faster than any other audience.”
“Depop is expected to extend Etsy’s market opportunity in the high frequency apparel sector, specifically in the fast-growing resale space,” according to Etsy. That may be a reference to what’s known as “fast fashion,” which according to Investopedia includes the following pro and con:
- “Affordable prices and instant gratification for consumers, more profits for companies, and the democratization of stylish clothing are among fast fashion’s benefits.”
- “On the downside, fast fashion is also associated with pollution, waste, the promulgation of a “disposable” mentality, low wages, and unsafe workplaces.”
Etsy sellers reacted, with one posting concern about what the acquisition might mean for handmade goods for which Etsy is best known: “I may be wrong but it feels like another nail in the coffin for handmade.” Another replied, “I guess it depends on whether Etsy invites all those sellers to join the Etsy website or if they just keep it as a separate venue and push all the resellers from Etsy over there.” Some sellers may also be concerned about the impact on Etsy’s vintage clothing category.
Depop reported $650 million in gross merchandise sales in 2020 and saw GMS grow nearly 80% from 2017-2020 on a compounded annual basis. Last year, it earned $70 million in revenue.
Etsy CEO Josh Silverman said, “We are simply thrilled to be adding Depop—what we believe to be the resale home for Gen Z consumers—to the Etsy family. Depop is a vibrant, two-sided marketplace with a passionate community, a highly-differentiated offering of unique items, and we believe significant potential to further scale.
“Depop’s world-class management team and employees have done a fantastic job nurturing this community and driving organic, authentic growth in a way that aligns well with Etsy’s DNA and mission of Keeping Commerce Human. We see significant opportunities for shared expertise and growth synergies across what will now be a tremendous ‘house of brands’ portfolio of individually distinct, and very special, ecommerce brands.”
Depop is headquartered in London, with offices in Manchester, New York, Los Angeles and Sydney, and has approximately 400 employees. You can find the announcement on the Etsy Investor Relations page, and Depop’s announcement can be found on the Depop website.