Brandi Collett sells a mix of handmade and upcycled goods in her Depop shop, PanikDoll. Two items that she’s sold on the marketplace are this choker she made and this dress that she’d bought and had rarely worn.
Etsy announced yesterday that it is acquiring resale marketplace, Depop, for $1.6 billion. What’s Depop? Many Etsy sellers I asked had never heard of it. Depop is an online marketplace for buying and selling secondhand clothing, much of it upcycled in creative ways and sold by fashion influencers who have created followings on either Instagram or TikTok. Depop’s user base is young; the average age is under 26. You can think of Depop as Etsy’s cooler, younger sibling.
After the acquisition closes later this year, Depop will remain a separately operated and branded marketplace, similar to the musical instrument marketplace Reverb which Etsy acquired in the summer of 2019.
Why is Etsy buying other marketplaces, and why Depop?
The average age of an Etsy seller is 39, so access to a younger market is one answer. Younger users interact differently with the web. Depop is mobile-first, meaning that almost everything that happens on the app is done on a phone, like Instagram. It’s also social. Users follow and like sellers and their products, both on the app and also on social media. It’s revealing that Depop as a platform has nine times the number of TikTok followers as Etsy.
This acquisition will diversify Etsy’s holdings, extending its market opportunity into apparel resale, a fast-growing sector that Etsy wants a piece of. Other resale marketplaces have performed very well in the past few years. Resale marketplace Poshmark went public earlier this year with a valuation of $3 billion.
A look at Depop
London-based Depop was founded in 2011 and currently has approximately 400 employees in five global offices. The site has approximately 30 million registered users, 4 million active buyers, and 2 million active sellers. Etsy sees the potential to grow it much larger. Right now, for example, all sales on Depop go through PayPal. If the marketplace had its own payment processor and ads function, Depop could add new revenue streams. There’s also work to be done to improve and optimize the customer experience through search and discovery, for example, and Etsy’s got the playbook to do this.
According to yesterday’s investor meeting, Etsy first reached out to get to know the Depop team nearly two years ago. CEO Josh Silverman described its merger and acquisition strategy as “patient and picky” and said Depop has shared values with Etsy. He went on to say that two-sided marketplaces such as Etsy, Reverb, and Depop are “lightning in a bottle,” meaning that they have a flywheel in which marketplace growth feeds profitability.
The pandemic was good to Depop. The marketplace saw over 100% revenue growth in 2020, even more than Etsy’s significant growth during that time, to reach $70 million in revenue and $650 million in gross merchandise sales. More people were looking to make a little cash by decluttering their closet and were interested in setting up a home-based business or side hustle. Buying secondhand appeals to Gen Z, who are willing to buy something thrifted and repurposed and want to get away from the constant cycle of consuming fast fashion.
Some Depop sellers are apprehensive about what this news might mean for the platform that they love. “I actually used to sell on Etsy and had a shop for over seven years,” says Brandi Collett who sells resale clothing and handmade accessories in her Depop shop @pankidoll. “When they implemented the mandatory advertising fees, I had to close my shop. I came here specifically to get away from the endless fees of Etsy. I’m really hoping that this app doesn’t change. Depop is simple, that’s why I like it. The format is also so easy to use. I’m really afraid them buying Depop, it’s going to result in complicating something that doesn’t need it. I really hate the idea.”
Others are more hopeful about what it might mean. Christina Charalyn sells clothing and accessories on both Depop and Etsy and reacted positively to the news of the acquisition. “I just read about it and it seems to be a step in a good direction,” she says. “I think Etsy has a lot to bring to the table when it comes to shop analytics and tools for sellers and buyers. I am excited to see what new things they will bring to Depop.” Charalyn says she would like to see more young people shopping from small businesses on Etsy and is hopeful that maybe that will happen now that Etsy and Depop are owned by the same company.
Abby co-founded Craft Industry Alliance and now serves as its president. She’s a sewing pattern designer, teacher, and journalist. She’s dedicated to creating an outstanding trade association for the crafts industry. Abby lives in Wellesley, Massachusetts.