Brooklyn, New York-based ecommerce company Etsy, on Wednesday, announced that it has signed a definitive agreement to acquire UK-based Depop, a privately-held, community-led, and purpose-driven marketplace for unique fashion for $1.625B (nearly €1.33b), consisting primarily of cash.
According to Etsy, this transaction is subject to certain adjustments for Depop’s working capital, transaction expenses, cash and indebtedness, and certain deferred and unvested equity for Depop management and employees.
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Upon completion of this deal, currently anticipated to occur during the third quarter of 2021, Depop will continue to be headquartered in London, England and operate as a standalone marketplace run by its existing leadership team.
Making Gen Z pop
Depop is a community-powered marketplace to buy and sell unique fashion. Founded by Simon Beckerman in 2011, Depop has approximately 400 employees working from its offices in Manchester, New York, Los Angeles, Sydney, and HQ in London.
It claims to have more than 30 million registered users in more than 150 countries. According to the press release, young consumers are adopting second-hand fashion faster than any other audience, and therefore, approximately 90 per cent of Depop’s active users are under the age of 26.
According to Depop’s monthly brand awareness surveys, it has high prompted awareness for the Gen Z demographic within the resale sector. It is also the 10th most visited shopping site among Gen Z consumers in the US.
Talking about the company’s financials, Depop recorded gross merchandise sales (GMS) and revenue in 2020 were approximately $650M and $70M, respectively, each increasing over 100 per cent year-over-year. Notably, Depop’s GMS grew at a compounded annual growth rate of nearly 80 per cent from 2017-2020.
Depop believes, with the support of Etsy, “it will be well-placed to grow and develop its global community, enhance its product and marketplace, and accelerate its mission to build the world’s most diverse and progressive home of fashion.”
Etsy wants a piece of the fast-growing resale space
Founded in 2005, Etsy, Inc. operates two-sided online marketplaces that connect “millions of passionate and creative buyers and sellers around the world.” It’s primary marketplace is Etsy.com, where users can shop for unique and creative goods. For sellers, Etsy offers a range of tools and services that address key business needs. In addition, Etsy, Inc. owns Reverb, a leading global online marketplace dedicated to buying and selling new, used, and vintage musical instruments.
Etsy believes Depop has a highly differentiated position in the fast-growing resale space. According to Etsy, the second-hand market is projected to grow at a 39 per cent CAGR from 2019-2024 in the United States, reaching $64B, and to grow to twice the size of fast fashion on a global basis.
Josh Silverman, Etsy, Inc. CEO, commented, “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.”
“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,” he further adds.
Rachel Glaser, Etsy’s CFO, says, “We’ve admired Depop for a while, and are excited to have now reached an agreement to purchase this fantastic business – a company we believe is still in the early innings of its growth opportunity.”
According to Etsy, following the close of this transaction, Etsy Inc. will operate three highly differentiated, non-commoditised and loved ecommerce brands: Etsy, Reverb, and Depop. “The marketplaces will operate independently, while benefiting from shared expertise in areas such as product, marketing, technology, and customer support,” says the company.
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