Why Etsy dropped $1.6 billion on Depop


A hand hovering over a smartphone screen displaying the app Depop.
Gabby Jones/Bloomberg by way of Getty Photographs

The positioning well-known for handmade items goes after Gen Z.

On Wednesday, the procuring website Etsy introduced it was shopping for Depop for $1.625 billion in a principally money deal. Depop, a secondhand procuring platform designed for the age of influencers promoting stuff on social media, will proceed to function as its personal standalone market. Etsy, in the meantime, says that by buying the platform, it’s including “the resale house for Gen Z customers” to its roster.

Maybe finest recognized for kitschy house decor, classic garments, and handmade items, Etsy is staking its declare on a a lot youthful technology of sellers and customers with the Depop buy, moderately than making an attempt to succeed in these consumers by itself platform. The acquisition makes some enterprise sense, too, as the 2 corporations have an analogous mannequin: connecting unbiased sellers of products to consumers. Nonetheless, Etsy is best recognized for do-it-yourself items and crafts, whereas Depop is most well-known for promoting garments.

However these two platforms have additionally cultivated consumers and sellers with profoundly totally different approaches to social media and on-line procuring, so merging their kinds might be a wrestle. The Depop deal comes as Etsy says it needs to develop into the house of a number of e-commerce manufacturers that cater to new audiences. (Etsy purchased Reverb, a market for brand spanking new and used musical devices and tools, again in 2019.) On the identical time, the corporate might need quite a bit to realize from Depop’s influencer-based method to promoting clothes on-line.

Based in 2011, Depop has develop into the secondhand market for a brand new technology of social media customers. Some 90 p.c of lively Depop customers are youthful than 26, and the platform is meant to be the 10th most-visited procuring website amongst Gen Z-ers within the US. Like Poshmark or Mercari, Depop features a social part to the shopping for and promoting expertise. Sellers handle their very own profiles and accounts, and lots of mannequin their very own garments. Some sellers additionally repurpose classic clothes, including a home made part to sure merchandise. On Depop, for example, a purchaser may discover a pair of deconstructed sneakers repurposed as a high or purses product of woven-together sweet wrappers. This kind of factor might line up with the crafting custom at Etsy.

However a part of what makes Depop distinct — and beneficial to Etsy — is that it encourages a really particular technique for sellers, encouraging a particularly on-line, extremely social, and youthful aesthetic. The very fact Depop seems to be extra like a social community than Etsy issues for this method. Depop sellers are inspired to advertise their very own store profiles, particularly on Instagram, which Depop says is “probably the greatest methods to construct your model and your buyer base.” Sellers and consumers will typically flip to different platforms, resembling TikTok and YouTube, the place there’s a broader neighborhood of teenagers and 20-somethings centered on secondhand trend.

Depop says its mission is constructing a “community-powered trend ecosystem that’s kinder on the planet and kinder to individuals.” The platform has prioritized the sale of used clothes, which might help curtail the environmental harms of quick trend. And Depop has additionally benefited not solely from the expansion of social media communities concerned about secondhand trend but additionally these centered on local weather change. The method appears to work: In 2020, Depop made $70 million in income, and the corporate had four million lively consumers and a couple of million lively sellers.

The divide between the Depop and Etsy manufacturers, nonetheless, highlights the variations within the varieties of consumers and sellers the 2 platforms appeal to and the way they spend their time on-line. On TikTok, Etsy has about 16,000 followers, whereas Depop has greater than 140,000. (Snapchat, in the meantime, has boasted about its work with Depop as an promoting success story.) Examine these metrics with social media platforms whose customers skew a bit older: Etsy has 2 million followers on Twitter and greater than four million “Likes” on Fb, whereas Depop has simply over 150,000 followers on Twitter and fewer than 70,000 “Likes” on Fb.

Etsy, which was based in 2005, has had rising pains lately. Whereas it’s centered on a homey arts-and-craft aesthetic, the corporate has struggled to merge its do-gooder mission with company realities. In 2017, two years after the corporate went public, Etsy laid off 15 p.c of its workforce, and a brand new CEO, Josh Silverman, took over with the intention to lift earnings. Silverman continues to be the CEO and appears to be centered on constructing a set of e-commerce manufacturers that do related issues however include their very own personalities.

Recently, there’s additionally rising debate concerning the penalties of Depop’s progress. The platform has contributed to a phenomenon of sellers scouring thrift shops to search out objects that may be marketed for way over their authentic buy worth, and typically broadcasting their findings on platforms resembling YouTube. This has fueled criticism that Depop, amongst different websites, has helped established one other cycle of waste inside reused clothes marketplaces whereas driving up costs at thrift shops, as Vox’s Terry Nguyen defined in April. The platform has additionally been criticized for missing physique range and contributing to sizeism.

Nonetheless, Etsy management appears to assume the e-commerce platforms will function enhances.

“Depop is a vibrant, two-sided market with a passionate neighborhood, a highly-differentiated providing of distinctive objects, and we imagine vital potential to additional scale,” Silverman mentioned in saying the acquisition. “We see vital alternatives for shared experience and progress synergies throughout what is going to now be an incredible ‘home of manufacturers’ portfolio of individually distinct, and really particular, e-commerce manufacturers.”

Whereas shopping for Depop is a simple method for Etsy to discover a new technology of customers — and for Etsy to remain present — it’s not clear how Depop’s neighborhood of sellers or consumers will react to the sale. However, it’s a reminder that as customers proceed to bitter on quick trend, there may be nonetheless cash to be made on used garments.

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