Etsy Acquires Elo7: Expanding Marketplace in Brazil

Etsy Expands Latin American Presence with Elo7 Acquisition

Following a substantial agreement to acquire Depop, aimed at broadening its social selling capabilities and attracting a younger demographic, as well as strengthening its position in Europe, Etsy has revealed another key deal to enhance its global reach. The company announced its intention to purchase Elo7 – frequently called the “Etsy of Brazil” due to its popularity as a marketplace for handmade and unique goods – for a sum of $217 million.

Strengthening Position in a Key Market

While Etsy already operated within Brazil, acquiring Elo7, a prominent e-commerce platform ranking among the top 10 in the region, will significantly amplify its market presence. Elo7 boasts 1.9 million active buyers, 56,000 active sellers, and a catalog of approximately 8 million available items.

Maintaining Brand Identity and Leadership

Similar to the approach taken with Depop and Reverb – a musical instrument marketplace acquired in 2019 – Elo7 will operate as an independent brand. It will continue to be managed by its existing leadership team from its headquarters located in Sao Paulo, Brazil.

A Strategic Playbook Under Josh Silverman

This acquisition reflects a deliberate strategy implemented under Etsy CEO Josh Silverman, who brings extensive experience in the e-commerce sector, including a period with eBay during its active acquisition phase.

“Elo7 mirrors Etsy’s core values and business model,” Silverman stated. “Building on our agreement to acquire Depop, we are pleased to welcome another distinctive marketplace into the Etsy portfolio. This move will establish a strong foothold for us in Latin America, a region with considerable e-commerce potential where Etsy currently lacks a substantial customer base. We anticipate a successful integration with Elo7’s skilled team and leadership.”

A Return to Inorganic Growth

Etsy’s move represents a shift towards more aggressive growth strategies. Early e-commerce development often involved inorganic expansion – acquiring market share through the purchase of comparable businesses in existing or new geographic areas. This was a common tactic employed by companies like eBay, Amazon, and Groupon.

Overcoming Stigma and Embracing Synergies

In recent years, a degree of skepticism has surrounded companies perceived as “clones” of successful models in different regions, particularly as e-commerce has matured. However, Etsy’s acquisition of Elo7 highlights the clear synergies between the two companies’ business models, making integration a straightforward process. Elo7 itself had previously secured approximately $18 million in funding from investors including Accel, Monashes, and Insight Partners.

“Etsy has consistently served as an inspiration and benchmark for us, and we are enthusiastic about continuing our growth trajectory as part of the Etsy family,” commented Carlos Curioni, Elo7’s CEO. “We are eager to leverage Etsy’s expertise in product development and marketing to unlock the full potential of the Elo7 marketplace, community, and team within Brazil.”

Brazil: A Prime Market for Expansion

Brazil presents an ideal market for this inorganic acquisition strategy. The country ranks among the largest e-commerce markets globally, considering its population size, purchasing power, and the widespread adoption of digital devices, especially smartphones.

Rapid Growth Potential

While mature markets are experiencing a slowdown in e-commerce growth – excluding the surge in spending during the COVID-19 pandemic – Brazil is witnessing rapid expansion. E-commerce penetration remains relatively low, but the necessary conditions for growth are firmly in place. Etsy projects a 26% growth rate for the Brazilian market by 2024.

Financial Considerations and Integration Plans

“We are delighted to announce the acquisition of Elo7, following our recent announcement regarding Depop – both acquisitions align with Etsy’s stringent criteria for capital allocation,” stated Rachel Glaser, CFO of Etsy, Inc.

“Our primary focus remains on driving growth within our core Etsy.com marketplace. Simultaneously, we will concentrate on integrating Depop and Elo7 into the Etsy ecosystem. Reverb, Depop, and Elo7 will each maintain their independent management teams, while we will establish connections between key functions across the brands to maximize value creation and achieve synergistic benefits.”