Depop acquired by Etsy for $1.6bn

The handmade goods marketplace is set to grow beyond its means in the e-commerce world, targeting millennial and Gen Z consumers with a new take on social shopping. The $1.6bn deal for the acquisition of Depop is described by Etsy as a mostly cash deal expected to close in the third quarter of the year.

Pioneers in second-hand fashion, the London-based marketplace Depop expands its portfolio to the New York based marketplace, Etsy, and its younger consumers with the trend for trading vintage or pre-owned clothing online.

This is not just Etsy’s biggest acquisition to date, following seven other deals, but all well under $1 billion. This is a huge acquisition for e-commerce in Europe, as well as a massive endorsement of companies that are building commerce models specifically targeting younger and more creative users.

The Future:

90% of Depop’s users are under the age of 26 falling comfortably into the ‘Generation Z’ mark. In contrast, Etsy’s users are typically millennials or older and aged around 39. This means Etsy will now have sole access to a younger demographic than its own main consumer base.

Etsy chief executive Josh Silverman declares Gen Z to be the most exciting community within resale.

The resale market, in general, is a massive market that we think is well-positioned for growth far into our future”

Depop’s sales grew faster than their rivals Poshmark and ThredUp in 2020. However, its price tag is below that of the closest European competitor, Vinted which was valued at €3.5bn in private financing last month, while Poshmark currently trades at a $3.5bn market capitalisation.

Last year, Depop saw figures go up by 100% with $650 million in gross sales and $70 million in revenues. This confirms that Depops ethos is a promising one.

As traditional fashion retailers come to grips with growing consumer demand for more ethical and sustainable production practices. Silverman says Etsy’s technology helps individuals and smaller businesses compete with popular eCommerce brands like Amazon. Therefore, building a more level playing field over time.