Etsy buys British fashion app Depop for $ 1.6bn to push ‘Gen Z’

Etsy got it Depop, the second fashion app, at $ 1.6bn, as the manufactured product market expands its portfolio to young consumers.

the hip for trading vintage or recycled clothing online, which Depop helped pioneer a decade ago, has now spawned many multi-million dollar ecommerce companies, as traditional fashion retailers grapple with the growing consumer demand for more ethical and sustainable manufacturing practices.

More than 90 percent of the millions of active Depop users are under 26 years old, an age group known “Generation Z”, which gives Etsy access to a younger demographic than the core consumer base. Etsy users are typically millennials or older, with the half -age of sellers about 39 years.

“The oversold market is also a multi -market that we think is well positioned for future growth,” said Etsy chief executive Josh Silverman. “We think Gen Z is the most interesting community that has ever sold.”

Revenues at London -based Depop, which was established in 2011, more than doubled last year to $ 70m, mainly from sales commissions. Its active network of 4m buyers and 2m sellers will sell items worth about $ 650m by 2020.

Depop has also acquired partnerships with brands including Adidas, Benetton and Ralph Lauren, as fashion retailers look to improve their sustainability credentials.

“We share the same mission and we share the same values,” Silverman said. “We both look after the commercial person. We both support creative entrepreneurs.”

The seizure comes at Nvidia’s time proposed The $ 40bn acquisition by UK -based chip designer Arm has also opened up the debate about British and European tech companies being comprised of more US rivals. The UK’s Competition and Markets also raised scrutiny over making tech deals last year.

Silverman said New York -based Etsy is “really aligned with where all the management authorities want to go” because its technology helps individuals and small businesses compete with Amazon’s preferences.

“We provide a community and a brand to help the Davids fight to a higher level playing the Goliaths,” he said.

Depop called for an end to Etsy’s expertise in strengthening community safety and international growth, while Etsy hopes to learn from Depop’s mobile savvy and social media savvy.

“A lot of the challenges we go through as a business are things that Etsy has gone through in the past,” said Maria Raga, Depop’s chief executive. “Etsy has made huge improvements in terms of search and discovery, and this is something we can really figure out.”

Etsy will pay about $ 1.6bn for Depop, primarily cash. Silverman says the price “is a lot in line with what you see in the market of reversible growth based on gross profit, which is how most investors view the resold space. in ecommerce today ”.

Depop grew sales faster than rivals Poshmark and ThredUp last year. Its price tag is well below that of its closest competitor in Europe Printed, which cost € 3.5bn in a private financing last month, while Poshmark now sells about $ 3.5bn in market capitalization.

Vestiaire Collective, which focuses on second -hand luxury clothing and accessories, was worth more than $ 1bn when fashion group Kering took a 5 per cent stake earlier this year.

Depop, which will retain its existing offices and management team, collected about $ 100 million from venture-capital supporters including General Atlantic, Balderton Capital, Creandum, and Octopus Ventures. Consistent with the most recent annual report on the House of Commons in the UK enrollment, Depop’s revenue grew 55 per cent year-on-year to £ 21.4m in 2019, but pre-tax losses doubled to £ 15.5m.

Shares of Etsy fell more than 10 percent last month, after it warned of “some openings as well as headwinds”, leading to a “possible decline in ecommerce growth” later this year.

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