Source: depop.com
What will Etsy do with Depop?
In a seemingly unusual pairing, Etsy, the online crafts marketplace, last week reached an agreement to acquire Depop, a go-to fashion resale marketplace for Gen-Z, for $1.6 billion.
London-based Depop will significantly grow Etsy’s exposure to apparel, a billion dollar business already for Etsy, as well as extend its reach with younger consumers. About 90 percent of Depop’s active users are younger than 26, and Depop is the 10th-most-visited shopping site among Gen-Z consumers in the U.S., according to Etsy, whose users tend to be older.
Known for its vintage clothes and streetwear, Depop resonates with younger generations due to its environmental and ethical shopping principles, reasonable pricing and an interface that feels like a social networking platform.
“Users can follow specific shops on their main feed, then interact with other users by commenting and liking their posts,” wrote Fast Company in a recent profile. “The direct connection between buyer and seller creates an instant feedback, which increases the speed of a transaction and also allows sellers to customize products for their buyers.”
Etsy foremost gains a strong foothold in the large and fast-growing second-hand market. Etsy, which is publicly-held, cited findings from ThredUP’s 2020 Resale report projecting growth at a 39 percent CAGR from 2019 to 2024 in the U.S. Investors are also strongly valuing the resale market with ThredUP and Poshmark able to go public this year.
Etsy entered the resale space with its July 2019 acquisition of Reverb, a site selling used musical gear, for $275 million. Younger consumers are adopting second-hand fashion faster than any other group.
Etsy cited synergies that support the acquisition, including the two operating two-sided online marketplaces connecting “passionate and creative buyers and sellers around the world.” It also plans to further scale the Depop platform, which is currently about a tenth the size of its own.
“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,” Josh Silverman, Etsy’s CEO, said in a statement.
Depop will operate as a standalone marketplace run by its existing leadership team.
- Etsy to acquire global fashion resale marketplace Depop – Etsy
- Etsy to acquire depop Investor Presentation – Etsy
- Etsy is buying the fashion resale app Depop for $1.6 billion. – The New York Times
- Etsy is buying Gen Z-focused fashion resale app Depop for $1.62 billion – CNBC
- Etsy acquires resale apparel marketplace Depop – DigitalCommerce360
- The 10 most innovative retail companies of 2021 – Fast Company
Discussion Questions
DISCUSSION QUESTIONS: What does Depop offer to Etsy and vice versa? Where do you see the potential, synergies and challenges in the combination?
Poll
BrainTrust
Michael La Kier
Vice President, Brand Development - IGA, Inc.
James Tenser
Retail Tech Marketing Strategist | B2B Expert Storytelling™ Guru | President, VSN Media LLC
It certainly shifts the focus of Etsy to acquire Depop. But it also brings a new marketplace to second-hand fashion which is good for shoppers and good for the environment.
Depop complements Etsy. On the surface level, they both look similar in the marketplace category. But Depop is more like eBay in terms of getting buyers/sellers together, while Etsy is more like Amazon Marketplace – they have a more conventional e-commerce feel. They can cross-sell and take the best features and capabilities of each of the platforms.
What both don’t have is ThredUP’s kind of market maker approach. That is, you cannot sell to Etsy or Depop. ThredUP brings different competence in terms of cataloging and pricing the items. Maybe acquiring such capabilities would be the next logical step for Etsy.
I believe the younger generations’ environmental shopping principles relating to apparel are quite incidental. They care for their social image more than anything which drives them to acquire a variety of apparel that sets them apart from the crowd. With access to limited financial resources, they resort to DIY and second-hand clothes. Given that macro-trend, it’s really not surprising that Etsy and Depop are coming together.
Etsy is quietly building a very interesting marketplace that differs from the competition in important ways that will attract younger demographics. The Depop acquisition is very complementary to the existing marketplace and puts increased value on sustainability and environmental friendliness – perceptions that matter to Gen Z shoppers. Etsy has traditionally been more weighted to Millennial shoppers, but these values are a common thread to both groups that should work in Etsy’s favor. I expect this may be the beginnings of something bigger for Etsy that we should all pay attention to as they have become a clear winner coming out of the pandemic.
Gotta like how the existing demographics of Depop customers will augment the Etsy audience. More subtle question is how much behavioral change will follow: Will Etsy crafts-shopping Millennials gain interest in second-hand streetwear? Will Depop Gen-Z loyalists develop a yen for hand-crafted and artisan goods?
I have to think that Etsy, for all its success so far, is confronting the limits of its core “maker-seller” business model and realizes a broadening is needed. Now comes the challenge: Will the two businesses create synergy or advance with separate customer strategies?