eBay has just bought Depop from Etsy A $1.2 billion investment that expands the American e-commerce portfolio
Yesterday the online resale platform eBay announced the acquisition of the London-based fashion app and marketplace Depop from Etsy. For nearly 1.2 billion dollars, the transaction boosted the stock by more than 7%, with the American company explaining to investors that this is a strategic move to reach younger consumers.
In an interview with Reuters, CEO Jamie Iannone explained that pre-loved clothing is the most popular among new generations, who prefer «to promote sustainability and recycle the items they already have in their wardrobes. This gives us the opportunity to strongly push a dedicated experience thanks to the acquisition of Depop». According to sources, the deal is expected to close in eBay’s second fiscal quarter, contributing 2% to the company’s annual gross merchandise value.
Why Depop?
Depop, founded in 2011 by Simon Beckerman, initially allowed users to purchase online products featured in fashion magazines, but over time it evolved into a true online marketplace dedicated to vintage and second-hand items. After opening offices in London, Milan, and New York, Depop received further investments, expanding its popularity and primarily attracting Gen Z consumers and young Millennials: today, nearly 90% of the app’s 7 million active users are under 34 years old. The company was acquired by Etsy for 1.6 billion dollars in 2021, while continuing to operate as an independent brand.
For eBay, the acquisition of Depop represents a major turning point. Although eBay is present on all major app stores, the platform, founded in 1995, is not as widespread among younger generations due to the endless range of products available on the platform. Gen Z consumers and younger users, who often have limited purchasing power when it comes to clothing shopping, seem to prefer fashion-focused platforms for buying second-hand items. Depop, like Vinted, represents the perfect space for a younger consumer base compared to eBay.
The future of Depop and eBay
Following the acquisition of Depop, eBay now needs to work on an expansion plan within the fashion category. The company has already launched authentication programs for luxury items, but it must now understand how best to convince even the youngest users to choose Depop for their purchases. The app will continue to operate as an independent brand, eBay explained, while benefiting from the new investor’s support in logistics and financial services.
In addition to expanding its experience in the fashion category, eBay faces another challenge in managing Depop. With the growth of Vinted, another rapidly expanding second-hand fashion marketplace mainly appreciated by Gen Z users and young Millennials, if eBay wants to expand the Depop platform in Europe, it will need to implement a strategy capable of overtaking the Lithuanian competitor. In short, after this investment, the American e-commerce giant now needs to roll up its sleeves.
