Tech

What is Depop, and why has Etsy spent $ 1.6 billion on this?

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Wednesday, the Etsy business site announced which bought Depop for $ 1.625 billion in a mainly cash deal. Depop, a second-hand shopping platform that was designed for the age of influencers who sell clothes on social media, will continue to operate as its own autonomous marketplace. Meanwhile, Etsy says that acquiring the added platform ”u consumer retailer Gen Z ”to its list.

Perhaps best known for kitschy home decor, vintage clothing and handcrafted products, Etsy makes its claim on a much younger generation of sellers and buyers with the purchase of Depop, instead of trying to reach those buyers on to their platform. The purchase also has some commercial meaning, as these two companies have a similar model: they connect independent sellers of goods to buyers. However, Etsy is best known for its homemade products and items, while Depop is most famous for selling clothes.

But these two platforms have also cultivated buyers and sellers with profoundly different approaches to social media and online shopping, so merging their styles could be a struggle. The Depop deal comes as Etsy says it wants to become home to several e-commerce brands that respond to the new audience (Etsy bought Reverb, a marketplace for used musical instruments and equipment, back in 2019). At the same time, the company could have a lot to gain from Depop’s influencer-based approach to selling clothes online.

Founded in 2011, Depop has become the second-hand market built for a new generation of social media users. Some 90 percent of Depop users are younger than 26, and the platform is supposed to be the 10th most visited shopping site among Gen Z-ers in the country. Like Poshmark or Mercari, Depop includes a social component to the buying and selling experience. Vendors manage their own profiles and accounts, and many model their clothes. Some vendors have even made the vintage dress, adding a handcrafted component to certain products. At Depop, for example, a buyer could be found a pair of deconstructed sneakers pictured at the top or bags made of woven bundles of candy. This kind of thing could align with the crafting tradition on Etsy.

But part of what makes Depop different – and valuable for Etsy – is that it encourages a very specific strategy for sellers, encouraging an extremely online, highly social and younger aesthetic. The fact that Depop looks more like a social network than Etsy matters for this approach. Depop sellers are encouraged to promote their sales profiles, especially in Instagram, which Depop says is “one of the best ways to build your brand and your customer base.” Sellers and buyers often turn to other platforms, such as TikTok and YouTube, where there is a wider community of teens and 20-somethings. focused on second-hand fashion.

Depop says his mission is to build a “fashion ecosystem fueled by the community that is kinder on the planet and more pleasing to people.” The platform has given priority to the sale of used clothing, which can reduce the environmental damage of fashion fast. And Depop has also benefited not only from the growth of social media communities interested in second-hand fashion but also those focused on climate change. The approach seems to work: By 2020, Depop had earned $ 70 million in revenue, and the company had 4 million active buyers and 2 million active sellers.

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The split between the Depop and Etsy brands, however, highlights the differences in the types of buyers and sellers the two platforms attract and how they spend their time online.. In TikTok, Etsy has about 16,000 followers, meanwhile Depop has more than 140,000 followers. (Snapchat, meanwhile, boasted of his work with Depop as well advertising success story.) Compare those metrics to social media platforms that users are getting a little older about: Etsy has 2 million followers on Twitter and more than 4 million “Likes” on Facebook, meanwhile Depop he has just over 150,000 followers on Twitter and right under 70,000 “Likes” on Facebook.

Etsy, which was founded in 2005, has had growing pains in recent years. While focusing on a homemade aesthetic of arts and crafts, the company has struggled to unite its wellness mission with corporate realities. In 2017, two years after the company went public, 15 percent of Etsy’s workforce has been dismissed, and a new CEO, Josh Silverman, has taken over with the goal of raises profits. Silverman is still the CEO and seems to be focused on building a set of e-commerce brands that do similar things but that come with their personalities.

Lately, there is also a growing debate about the consequences of Depop’s growth. The platform has contributed to a phenomenon of sellers looking for second-hand businesses to find articles that can be marketed for much more than what they have purchased, and that sometimes transmit their findings on platforms such as YouTube. It fuels criticism that Depop, among other sites, has helped establish another cycle of waste in reusable clothing markets while raising prices in second-hand stores, such as Terry Nguyen of Vox explained earlier this year. The platform has also been criticized for lack of body diversity and contributes to grandeur.

However, Etsy’s leadership seems to think that e-commerce platforms will serve as complements.

“Depop is a vibrant, bilateral market with a passionate community, a highly differentiated offering of unique items, and we believe in significant potential for further scaling,” Silverman said announcing the acquisition. “We see significant opportunities for shared skills and growth synergies in everything that will now be a tremendous portfolio of ‘branded’ e-commerce brands individually distinguished, and very special.”

While buying Depop is an easy way for Etsy to find a new generation of buyers and buyers and keep Etsy current, it is not clear how the community of sellers or buyers of Depop reacts to the sale. However, it is a reminder that when shoppers continue to acidify on fast fashion, there is also money to be made for used clothes.




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