etsy is acquiring uk-based social selling site depop for $1.625b in a mostly cash deal

Etsy Announces Acquisition of Depop for $1.625 Billion

Significant developments have emerged in the European e-commerce landscape today. Etsy, the New York-based online marketplace connecting creators with buyers, has announced the acquisition of Depop, a London-based platform focused on social shopping for millennial and Generation Z consumers.

A Landmark Deal for Etsy and the E-commerce Sector

The acquisition, valued at $1.625 billion and primarily funded through cash, represents Etsy’s largest deal to date. Previously, Etsy had completed seven other acquisitions, all for amounts under $1 billion. This move signifies a substantial investment in the European e-commerce market and validates business models geared towards younger, creatively-inclined demographics.

Approximately 90% of Depop’s user base is under 26 years old. This presents Etsy with a valuable opportunity to engage this demographic and leverage Depop’s community. It is also anticipated to serve as a conduit for attracting younger shoppers to the core Etsy platform, which currently caters to a broader age range.

Depop’s Growth and Market Position

Depop’s user numbers have experienced considerable growth, increasing from 13 million in 2019 to over 21 million currently. The platform boasts a strong presence in both the United States – Etsy’s largest market – and its home country, the United Kingdom, which is also a key market for Etsy.

The platform’s user base includes stylists, designers, artists, collectors, and vintage sellers. Depop’s success is driven by its unique approach to online commerce and its appeal to a generation prioritizing individuality and self-expression.

Financial Performance and Strategic Alignment

While Depop generated $650 million in gross merchandise sales in 2020, its revenue stood at $70 million. Both figures represent a 100% year-over-year increase. This indicates a high-volume business with potential for increased profitability.

Depop’s core values align with a growing consumer preference for alternatives to large-scale retailers like Amazon, particularly in the areas of clothing, home goods, and general consumer products. The platform also capitalizes on current trends, such as the rise of e-commerce, support for small businesses, and the demand for used goods.

Statements from Leadership

Josh Silverman, CEO of Etsy, Inc., expressed enthusiasm about the acquisition, stating that Depop is “the resale home for Gen Z consumers.” He highlighted Depop’s vibrant community, unique product offerings, and potential for further expansion.

Silverman also emphasized the synergy between Etsy and Depop, noting their shared DNA and mission of “Keeping Commerce Human.” He anticipates leveraging shared expertise and fostering growth within a diversified portfolio of e-commerce brands.

Maria Raga, CEO of Depop, added that the company is building a platform where the next generation can explore unique fashion and connect with a community that is reshaping the shopping experience. She believes joining the Etsy family will provide access to valuable resources and expertise.

Transaction Details and Future Outlook

The transaction is slated to be finalized in the third quarter of 2021, contingent upon regulatory approvals in the U.S. and U.K., as well as the fulfillment of other closing conditions.

Following the acquisition, Etsy intends to operate Depop as a distinct brand alongside Etsy and Reverb, a marketplace for musical instruments acquired in 2019. This strategy reflects Etsy’s commitment to nurturing a diverse portfolio of specialized e-commerce platforms.

Key Takeaways:

• Etsy is acquiring Depop for $1.625 billion.
• The deal targets younger consumers and the resale market.
• Depop has over 21 million users, with a strong presence in the US and UK.
• Etsy will operate Depop as a separate brand.