Etsy to Buy Gen Z Retailer Depop

Depop, which originated in 2011, has built a strong customer base among Gen Z, who tend to value diversity and sustainability. Roughly 90% of users on Depop are younger than 26. This demographic is adopting second-hand fashion faster than any other group.

Etsy will acquire Depop for the purchase price of $1.625 billion, consisting mostly of cash. The deal is expected to close during the third quarter of 2021, though it is subject to “certain adjustments for Depop's working capital, transaction expenses, cash and indebtedness, and certain deferred and unvested equity for Depop management and employees,” according to a press release.

Executive Summary

The high-value acquisition reflects the emerging value of Gen Z favored retailers. Companies, brands and services that reflect Gen Z’s desire for sustainability are likely to continue to see growth and rising value.

Among Gen Z consumers, Depop is the 10th most visited shopping site. Depop’s popularity has also helped increase awareness of second-hand and resale clothing, according to Etsy. 

A number of other high-profile brands have recently launched resale, or recommerce, programs that allow customers to sell back their gently used items. The items are either resold at a lower price point for other customers, or, in the case of Nike, recycled into other materials. The programs enable brands to meet sustainability goals, but also recapture some of the resale value of their products. 

In the U.S., the second-hand market is expected to reach $64 billion by 2024. From 2019 to 2024, the resale market will double the size of the fast fashion industry, Etsy stated.