British fashion resale app has become a cult favorite with Generation Z and will be acquired by Etsy in a $1.6 billion deal.
Dave Benett/Getty Images for DepopEtsy will acquire Depop, a British fashion resale marketplace that has become a cult favorite for Generation Z shoppers, in a $1.6 billion all cash deal. The deal will mark Etsy’s push into fashion resale, a booming market, and a bid to win over younger shoppers, following a turnaround by chief executive Josh Silverman that has seen the tchotchke marketplace become an ecommerce powerhouse over the last 18 months.
The deal for the London-based app, which generated $70 million in revenue from handling $650 million of second hand clothes traded on its platform in 2020, comes amid a boom for clothes resales during the pandemic. Online thrift stores Poshmark and Thredup went public last year in the United States while one of Europe’s biggest resale marketplaces Vinted raised $303 million in funding at a $4.2 billion valuation last month.
Etsy already generated $1 billion in sales from clothing in 2020 but said there were significant opportunities to scale this segment, and build synergies across the two marketplaces. Younger shoppers have been the biggest adopters of thrifting amid a purge of cluttered closets during the pandemic and growing concerns about the environmental impact of fast fashion. At least 90% of Depop’s 30 million users were 26 or younger, according to a statement.
Etsy's acquisition of Depop is it's largest to date and comes amid CEO Josh Silverman's transformation of the handmade and vintage marketplace into a ecommerce powerhouse.
© 2018 Bloomberg Finance LP"We are simply thrilled to be adding Depop—what we believe to be the resale home for Gen Z consumers—to the Etsy family. 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,” said Silverman.
Simon Beckerman and Maria Raga founded the app in 2011 that went onto become a social media phenom thanks to courting young users, influencers, and entrepreneurs. Like Poshmark and Thredup, users can sell thrifted clothes but Depop allows its Gen-Z fans to sift trends with hashtags, and to quickly set up an Etsy-style storefront. That buzz has led Depop to striking deals with established brands like department store Selfridges, Adidas, and Ralph Lauren.
“Our community is made up of people who are creating a new fashion system by establishing new trends and making new from old. They come to Depop for the clothes, but stay for the culture,” said Raga.
The deal also marks another success for Britain’s tech scene but will fuel debate about British and European startups being snapped up by larger American competitors rather than pushing to go public and compete globally.
The deal will mark Esty’s largest acquisition to date and comes amid Silverman, a former American Express executive, transforming the one-time destination for artisan candle-makers into a major ecommerce player. Etsy shares dipped around 10% in the last month over “reopening headwinds” but soared from $44.9 a share at the start of the pandemic to $163 today.
