E-commerce firm Etsy made an important announcement on Wednesday. It announced that it is buying the second-hand fashion marketplace app Depop for $1.62 billion as part of an effort to reach a younger audience.
Fashion resale app Depop claims to have approximately 30 million registered users across 150 countries. Depop gives people the ability to sell their used clothes and other items in a similar way to apps like Gumtree and Shpock. In 2020, its gross merchandise sales (GMS) and revenue were $650 million and $70 million, respectively.
The transaction, funded mostly with cash, is expected to complete during the third quarter of the year. The second-hand fashion marketplace app Depop will continue to have their headquarters in London. It will continue to operate as a standalone marketplace run by its existing leadership team.
E-commerce Firm Etsy and new opportunities
Young people are increasingly turning away from fast fashion as they switch to second-hand clothing, which is more sustainable and cheaper. In the case of Depop, the vast majority of its users are quite young. The market is projected to grow at 39% annually from 2019 to 2024 in the U.S. alone, reaching $64 billion.
So, after taking into account all factors, it is not surprising that e-commerce firm Etsy is willing to pay a lot to buy Depop.
Etsy CEO Josh Silverman made it clear that he is proud of that deal. His company is adding what it believes to be the resale home for Gen Z consumers to Etsy. In a statement, Silvermann mentioned that Depop is a vibrant, two-sided marketplace with a passionate community. Also, it offers unique items and it has the chance to reach even better results.
The fashion resale app’s management team, as well as employees, worked hard over the years to drive authentic growth in a way that aligns well with Etsy’s DNA. Etsy sees significant opportunities for shared expertise and growth synergies across a tremendous ‘house of brands’ portfolio.
Depop’s CEO Maria Raga also revealed interesting details in a statement. She noted that Depop is where the next generation comes to explore unique fashion. Depop’s community consists of people who are creating a new fashion system by establishing new trends.