Online marketplace Etsy on Wednesday announced its $1.625 billion (£1.2 billion) acquisition of UK-based fashion resale app Depop, as it looks to expand its customer base among younger shoppers. Depop is especially popular with people in their teens and early twenties, who use the app to buy and sell clothes. It follows a two-sided online marketplace model similar to that of Etsy, which is primarily used to buy and sell handmade goods.
Around 90% of Depop's active users are under the age of 26, and Etsy will be hoping its acquisition of the company will help it cash in on the spending power of this demographic, which is on the rise. While Depop has been around for 10 years, it saw accelerated growth in 2020, with its gross merchandise sales and revenue both increasing 100% year over year.
Younger shoppers are a major force in driving the growth of the secondhand fashion market, which has helped boost Depop to become the 10th most-visited shopping site among Gen Z consumers in the US.
"We are simply thrilled to be adding Depop -- what we believe to be the resale home for Gen Z consumers -- to the Etsy family," said Etsy CEO Josh Silverman in a statement. "Depop is a vibrant, two-sided marketplace with a passionate community, a highly-differentiated offering of unique items, and we believe significant potential to further scale."
Depop will continue to be based in London, where it is headquartered, and will operate as a standalone marketplace run by its existing leadership team.
"We're on an incredible journey building Depop into a place where the next generation comes to explore unique fashion and be part of a community that's changing the way we shop," said Depop CEO Maria Raga in a statement. "Our community is made up of people who are creating a new fashion system by establishing new trends and making new from old."
Etsy said it's hoping to close the sale in the third quarter of 2021, although the deal will first have to be scrutinized by UK regulator the Competition Markets Authority. Followinglast September, the CMA has escalated its scrutiny of US takeovers of UK tech companies, so the acquisition will likely be subject to examination with a fine-toothed comb before getting the green light.