Depop Acquisition: Key Details, Impact, and What Comes Next

In a significant move within the e-commerce industry, Etsy has acquired Depop, a popular fashion resale marketplace, for $1.625 billion. This acquisition allows Etsy to expand its reach into the fast-growing resale market, particularly among Gen Z consumers. Depop will continue to operate independently, maintaining its unique brand and community-driven approach.

What Is Depop?

Depop, founded in 2011, is an online marketplace that facilitates the buying and selling of fashion items, including clothing, shoes, accessories, and jewelry. It stands out in the market by promoting circular fashion, encouraging users to buy and sell pre-owned items. The platform offers diverse categories and styles, from vintage to trending fashion, and engages its community through initiatives like "Become a Depop Creator." Depop's user-friendly design and global reach further enhance its appeal.

Who Acquired Depop?

Etsy is a global online marketplace that connects buyers and sellers of handmade, vintage, custom, and unique items. It serves as a platform for independent creators and small businesses to reach a broad audience. Key products include handcrafted goods, personalized jewelry, digital prints, and unique home decor. Etsy holds a significant position in the e-commerce industry, known for its community impact, support for small businesses, and commitment to sustainability and renewable energy.

When Was Depop Acquired?

Etsy announced its acquisition of Depop on June 2, 2021, and completed the transaction on July 13, 2021. This acquisition occurred during a period of significant growth in the resale market, driven by Gen Z consumers. The timing aligns with Etsy's strategic goals to expand its market presence in the fast-growing resale sector and build a diverse portfolio of e-commerce brands. Depop's strong performance in 2020 further underscored the acquisition's potential for growth and value creation.

Why Was Depop Acquired?

• Market Expansion: The acquisition of Depop allows Etsy to extend its market opportunity into the rapidly growing resale sector, particularly targeting the Gen Z audience. Depop's community of approximately 30 million registered users across nearly 150 countries significantly grows Etsy's gross merchandise sales (GMS) in the apparel sector.
• Technology Integration: Depop's platform integrates social media elements, encouraging sellers to promote their profiles on Instagram, TikTok, and YouTube. This influencer-based approach to selling is a key technological and strategic asset that Etsy aims to leverage, enhancing both platforms' growth and value creation.
• Competitive Advantage: Depop's unique selling proposition lies in its community-powered fashion ecosystem, which is highly social and appeals to younger consumers. This complements Etsy's existing focus on handmade and vintage goods, potentially creating synergies and enhancing Etsy's competitive position in the e-commerce market.

Acquisition Terms

• Acquisition Price: $1.625 billion
• Payment Method: Primarily cash, subject to certain adjustments
• Key Conditions or Agreements:
  • Depop will continue to operate as a standalone marketplace under its existing leadership team.
  • The transaction is expected to close during the third quarter of 2021, pending regulatory approval in the U.S. and U.K.
  • Depop will remain headquartered in London, England.

Impact on Depop

The acquisition of Depop by Etsy has led to several operational and managerial changes. Depop will continue to operate as a standalone marketplace, maintaining its headquarters in London and its existing leadership team. This operational independence allows Depop to benefit from Etsy's resources and expertise while preserving its unique brand identity. The integration aims to leverage shared expertise in product development, marketing, and customer support, enhancing both platforms' growth potential.

In terms of product offerings and services, the acquisition is expected to enrich Etsy's portfolio by incorporating Depop's unique fashion items, including vintage and streetwear, which appeal to Gen Z consumers. This strategic move aligns with Etsy's mission to support small businesses and promote sustainable commerce. Employee reactions have been generally positive, with Depop's leadership expressing excitement about the merger. While specific customer reactions are not detailed, the strategic fit and growth potential suggest a favorable reception. For founders considering business transitions, tools like Sunset can assist in managing such processes compliantly and efficiently.