According to reports, the American e-commerce company Etsy is buying Depop, a British second-hand fashion app popular among younger users, with Etsy CEO Josh Silverman describing Depop as “the resale home for Gen-Z consumers.”
“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,” Silverman added.
The two companies announced on Wednesday that Etsy will be purchasing Depop for $1.6 billion.
“The cash deal, which is expected to close by the third quarter of this year, underscores the growing influence of clothing resale platforms,” noted The New York Times. “More shoppers are turning to the secondhand market for something cheaper and — potentially — greener as the overproduction of clothing increasingly adds to landfills.” The Times also pointed out that this trend seems to have been “accelerated by the pandemic.”
Depop allows users to buy and sell second-hand clothes, while permitting users to negotiate on prices and postage. According to the BBC, Depop has 30 million registered users across 150 countries, while about 90% of the app’s users are 25-years-old or under. According to Depop, it is also the 10th most visited shopping site in this age group.
“This [Gen-Z] is an enormous demographic and it’s the trendsetter demographic,” Silverman said, according to Reuters.
Depop’s CEO, Maria Raga, described the app’s “incredible journey.”
“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,” Raga said. “They come to Depop for the clothes, but stay for the culture.”
“We are simply thrilled to be adding Depop — what we believe to be the resale home for Gen Z consumers — to the Etsy family,” Silverman said in a company statement.
“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,” he added later.
According to Etsy’s CFO, Rachel Glaser, the company had “admired” Depop for some time.
“We’ve admired Depop for a while, and are excited to have now reached an agreement to purchase this fantastic business – a company we believe is still in the early innings of its growth opportunity,” said Glaser. “We love Depop’s rapidly growing GMS and loyal and engaged customer base, excellent user engagement and unit economics, opportunities to expand value added seller services, clear path for geographic expansion, and highly scalable, ‘capital light’ operating model. We’re excited to build a ‘house of brands’ where the whole is greater than the sum of its parts.”
The news caused Etsy stock to rise by over 6 percent to a high of $174.70 as of Wednesday afternoon.