Etsy has bought British fashion Depop in a $ 1.6 billion push for the “Gen Z”

Etsy is getting it Depop, a second-hand fashion app for $ 1.6 billion as the market for handmade products expands its portfolio to younger consumers.

The tendency By trading antique or recycled clothing online, Depop, a pioneer a decade ago, has now set up several billion-dollar e-commerce companies as a regular fashion retailer handle with increasing consumer demand for more ethical and sustainable production practices.

More than 90 percent of Depop’s millions of active users are under the age of 26. “Generation Z”, Giving Etsyri access to a younger demographic than the main consumer base. Etsy users are usually millennials or older, the age of the sellers being around 39 years old.

“Overall, the resale market is a massive market that is well positioned for future growth,” said Josh Silverman, CEO of Etsy. “We think Gen Z is the most exciting resale community.”

Founded in 2011, Depop London’s revenue doubled from $ 70 billion last year, mainly due to sales commissions. The active network of 4 million buyers and 2 million sellers was valued at about $ 650 million in 2020.

Depop has also partnered with brands such as Adidas, Benetton and Ralph Lauren as fashion retailers want to improve their sustainability credentials.

“We share the same mission and we share the same values,” Silverman said. “We’re both in the business of keeping people human. We’re both in helping creative entrepreneurs.”

The purchase comes at the time of Nvidia proposed The $ 40 billion acquisition of Arm-based designers by the UK has reopened the debate over British and European tech companies by larger US rivals. The UK Competition and Markets Authority has also stepped up its analysis of technology trading over the past year.

Silverman said New York’s Etsy was “aligned where all regulatory authorities want it to be” because its technology helps individuals and small businesses compete with the likes of Amazon.

“We offer a community and a brand for Davids to compete on a more equal footing with Goliath,” he said.

Depop hopes to use Etsy’s experience to strengthen community security and scale internationally, while Etsy hopes to learn from Depop’s mobile expertise and social media expertise.

“A lot of the challenges we’re experiencing as a company are things that Etsy has been through before,” said Maria Raga, CEO of Depop. “Etsy has made great improvements in terms of search and discovery, and that’s something we can definitely learn.”

Etsy will pay about $ 1.6 billion for Depop, mostly in cash. Silverman said the price is “a multiple that matches what you’re seeing in a growth-adjusted market with gross profit, which means most investors now see the resale e-commerce space.”

Depop increased sales faster than rivals Poshmark and ThredUp last year. Its price is below its closest competitor in Europe Vinted, which was valued at $ 3.5 billion in private financing last month, while Poshmark is trading with a market capitalization of $ 3.5 billion.

The Vestiaire Collective, which focuses on second-hand luxury clothing and accessories, was valued at more than $ 1 billion this year when the Kering fashion group took a 5 percent stake.

Depop, which will maintain its existing offices and management team, has raised about $ 100 million from venture capital sponsors including General Atlantic, Balderton Capital, Creandum and Octopus Ventures. According to the latest annual report from the UK Companies House registration, Depop’s revenue grew 55% year-on-year to 21.4 million euros in 2019, but pre-tax losses tripled to 15.5 million euros.

Shares of Etsy have fallen more than 10 percent in the past month, warning that they are “reopening some headwinds” that will lead to a “potential slowdown in e-commerce growth” this year.