Etsy Inc.’s acquisition of London-based resale site Depop jolts the e-commerce retailer even more deeply into two key markets that will help grow the business — Gen Z shoppers and secondhand sales.
Etsy
ETSY,
announced last Wednesday that it will acquire Depop for $1.625 billion. Etsy had about $2 billion in total liquidity as of March 31, including $1.8 billon in cash. And the company expects Depop to be accretive to Etsy’s topline growth rate.
The deal is expected to close in the third quarter of 2021.
Founded in 2011, Depop generated $650 million in gross merchandise sales and $70 million in revenue in 2020.
But perhaps of equal value are the secondhand and Gen Z shoppers who visit the site.
According to the acquisition announcement, about 90% of Depop’s active users are under the age of 26. It’s the 10th most visited site for U.S. Gen Z consumers.
And a report released by Bain & Co. and Depop last week called “How Gen Z’s empathy, awareness and fluidity are transforming business as usual” reiterates the importance of the secondhand market to young shoppers.
The study found that 60% of Gen Z consumer decision-making is influenced by reducing their environmental footprint, and 45% are influenced by commitments to use eco-friendly materials. Ninety percent said they’ve made their daily lives more sustainable, with fashion practices playing a key role.
“This is a generation leading change at global scale – they are increasingly influencing the consumption behaviours of older generations, and are rapidly gaining spending power,” said Peter Semple, chief brand officer at Depop, when the report was released.
Also: Lululemon launches resale program, limited-edition collection made with eco-friendly dyes
Etsy projects that the resale market will reach $64 billion by 2024.
“This is truly astounding growth compared with traditional fast fashion which generally grows in the single digits,” said Josh Silverman, Etsy’s chief executive, speaking on a call following the acquisition announcement.
“Among the trends often highlighted in driving this phenomenon are younger consumers who favor the concept of sharing over owning, consumers desire to access used goods at a discounted value price, the rise of the digital consumer and environmental consciousness.”
Etsy plans for Depop to continue operating as a standalone business with its existing management team. Etsy also owns Reverb, a marketplace for new, used and vintage musical instruments.
“The Depop acquisition adds another differentiated and well-run platform to Etsy’s expanding portfolio of brands, selectively leveraging M&A to enhance the company’s already strong…
Read More: Etsy taps two big markets with Depop acquisition — Gen Z and resale