Etsy is buying Depop, the British second-hand fashion resale app, for $1.6bn (£1.1bn) to tap into the fast-growing trend of generation Z young people reselling clothes online.
Announcing the deal on Wednesday, Josh Silverman, the chief executive of Brooklyn-based Etsy said he expected the resale craze would continue long after the recovery from the pandemic, and that it would be led by Depop’s “passionate community” of fashion-conscious young people. “This [gen Z] is an enormous demographic and it’s the trendsetter demographic,” he told analysts on a call to discuss the deal.
More than 90% of Depop’s 30 million users are under the age of 26, putting them in the highly sought-after smartphone addicted generation Z – the age bracket below millennials. Etsy said Depop was the 10th most visited shopping site among gen Z consumers in the US.
Etsy, which was founded in 2005 and floated in 2015, has been seeking to expand its influence among a younger generation as its users’ average age is 39 and the app focuses on craft and handmade items as well as second-hand clothing.
The sale will result in a roughly £45m windfall for the English-Italian entrepreneur Simon Beckerman who founded Depop when he made the app “for fun” in 2011 while working at Italian fashion magazine PIG. He owns about 4% of the shares.
Depop now has registered users in almost 150 countries and its 2 million active sellers sold $650m worth of second clothes and other fashion items last year, with Depop taking a $70m cut. The business now has offices in London, Manchester, New York, Los Angeles and Sydney and about 400 employees.
Beckerman had previously said he would “love to sell the company for £1bn, ” at a time when he still owned between10% and 20% of the firm. .
Beckerman, who has his own store on Depop, said the idea for the app came from an early realisation that “there was going to be a new generation of people who were most acquainted with using mobile” and there was no app designed for selling clothes.
He has personally sold 26 items, mostly trainers. He most recently sold a navy pair of Converse All Star trainers (without a box) for £30. On a listing for a £130 pair of black/silver Nike Air Max 97s, Beckerman said: “Back in the early days of the internet I used to hunt these on Japanese classified websites and resell them in Europe to collectors. Nike subsequently released them in this colour around 10 years ago, and now again recently for the second time. This pair is brand new deadstock and I’m selling them because they’re not my size.”
Beckerman, who was born in Milan, told Artefact magazine in 2015 that the original idea for the business was linked to the magazine where he worked. “The concept for the app was initially a shop for the PIG magazine I worked for in Italy and we would sell everything featured in the magazine,” he said.
“When we started Depop, apps were [in their] very early stages and apart from the three or four main ones that everybody was starting to use heavily – such as Instagram, Facebook or Twitter – it wasn’t very clear how we were going to use them fully. We didn’t realise how integrated with our lives they would be.”
For many sellers on the app the money generated is a “side-hustle”, but one of Depop’s most dedicated sellers claims to have made more than £1m reselling clothes on the app.
Bella McFadden, 24, who sells via a Depop store called “@internetgirl”, said last year she hit the £1m milestone last summer. McFadden, who lives in Los Angeles, told Fast Company that she dropped out of college in 2016 to work on her Depop store full-time and now employs four people full time to work with her. To date, she has sold 61,491 items – mostly sourced from thrift stores and deadstock suppliers but also with some of her own designs.
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Etsy is to allow Depop to continue to operate as a standalone business run by the existing leadership team from its London headquarters.
The global second-hand clothes market is estimated by Boston Consulting Group to be worth up to $40bn a year, about 2% of the total apparel market. The pre-worn segment is expected to grow 15-20%-a-year for the next five years.
Depop is not alone in tapping into the fast-growing trend. Vinted, a site created by two Lithuanian women in 2008, was valued at €3.5bn in a fundraising last month. Poshmark, a US resale site, floated on the US stock market in January and is valued at $3.5bn.
