Etsy to buy Depop for $1.6bn+, will keep it as a standalone
Big news on the acquisition front — Etsy, the online marketplace, is acquiring secondhand fashion specialist Depop. It’s paying $1.625 billion (mainly in cash) for the London-based, privately-held firm with the transaction set to complete in Q3.
After the deal goes through, Depop will continue to be run as a standalone operation with its existing leadership team under CEO Maria Raga staying in place.
The 10-year-old company has been growing fast in recent periods with its business model as a “community-powered marketplace to buy and sell unique fashion” resonating particularly with young consumer groups. Around 90% of its active users are under the age of 26 and it said young consumers are adopting secondhand fashion faster than any other audience.
Launching first in the UK and then moving into the US and Australia, Depop now has a community of around 30 million registered users across nearly 150 countries. With 4 million active buyers and 2 million active sellers in 2020, some 75% of gross merchandise sales (GMS) was from existing cohorts, while the same percentage of sellers were also buyers. Depop will significantly grow Etsy's GMS in the apparel sector, which were around $1 billion in 2020.
Depop's own 2020 GMS and revenue were around $650 million and $70 million, respectively, each more than doubling year-on-year. Its GMS grew at a compound annual growth rate of nearly 80% between 2017 and 2020 and Etsy said it “believes Depop has a highly differentiated position in the fast-growing resale space”.
Etsy also said that Depop’s monthly brand awareness surveys show it has high prompted awareness for Gen Z within the resale sector and it’s the 10th most visited shopping site among these consumers in the US.
CEO Josh Silverman said the group sees Depop as “the resale home for Gen Z consumer” and that it has a “world-class management team” and employees who “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”.
He added that he sees “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, e-commerce brands”.
There’s certainly plenty of potential for the brand with the secondhand market projected to grow at a 39% CAGR from 2019-2024 in the US, reaching $64 billion, and to grow to twice the size of fast fashion on a global basis.
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