Etsy to buy resale fashion apparel app Depop in a $1.6 billion transaction

E-commerce company Etsy Inc. has signed an agreement to acquire privately-held, Gen-Z fashion app Depop for $1.625 billion. Depop is popular in over 147 countries, with more than 26 million users, for its vintage and streetwear collections.

The transaction is expected to be closed in Q3 2021 with most of it taking place in cash. Etsy reported total liquidity of $2 billion, as of March 31, 2021, of which $1.8 billion existed in cash, cash equivalents, and short and long term investments on its balance sheet and an undrawn $200 million revolving credit facility.

Etsy Inc. will operate three e-commerce brands: Etsy, Reverb, and Depop. All of them will operate independently with shared resources in areas such as product, marketing, technology, and customer support.

With the pandemic driving a surge in the usage of e-commerce platforms and younger consumers being more aware of the apparel industry’s impact on the environment, Depop has emerged as the 10th most visited shopping site among Gen-Z consumers in the U.S., as per Etsy.

Founded in 2011, Depop is a resale fashion company that allows users, 90% of them being under the age of 26, to sell unwanted fashion apparel for money. Its gross merchandise sales (GMS) and revenue were approximately $650 million and $70 million, respectively, in 2020. 

Etsy believes that Depop has a highly differentiated position in the fast-growing resale space and plans to capitalize on it. It stated that the second-hand market will grow at a 39% CAGR from 2019-2024 in the U.S., reaching $64 billion. 

Etsy’s CEO, Josh Silverman, Etsy, exclaimed his pleasure at the announcement adding that Depop’s highly differentiated offering of unique items has a significant potential to be further scaled. 

“We see significant opportunities for shared expertise and growth synergies across what will now be a tremendous 'house of brands' portfolio of individually distinct, and very special, e-commerce brands," he said.

Goldman Sachs & Co. LLC, Deloitte, Fenwick & West LLP, and Allen & Overy LLP served as advisors to Etsy. Credit Suisse and Gotshal & Manges LLP served as advisors to Depop.

Picture Credits: The Guardian