How do you do, fellow kids? Etsy marketplace acquires Depop, the app for Generation Z

Marketplace Etsy announced earlier this week that it is acquiring Depop, a clothing resale app, for $1.6B. In a press release, Etsy outlined the rationale behind the purchase of Depop: it will help the company reach a younger audience because 90% of Depop’s users are younger than 26 years old. In other words, this takeover will allow to capture generation Z while the main audience of the marketplace is millennials.

The deal with Depop is the most expensive for Etsy at the moment: the company had previously taken over Reverb for $275M. This comes after a year in which Etsy got many new customers, who mostly first came to its site for buying masks. Etsy said that between 2019 and 2020, its revenue rose 111% to $1.7B and net profit rose 264.2% to $349M.

“As a result of the pandemic, [Etsy] has many new customers, so the challenge now is to maximize the customer lifecycle,” said Jason Goldberg, CCO of Publicis. “The acquisition of Depop gives them more sellers and more products for sale to all the new Etsy customers.”

Experts say that the resale apps are having some difficulty now and are struggling to attract sellers to their platform. This is happening with subsidized delivery services on the one hand and paid marketing on the other. A deal between Etsy and Depop would allow both parties to close the difficult issues for large resale venues: there would be a seamless exchange between sellers and customers. The deal is awaiting regulatory approval, with plans to close in the third quarter of this year.