Etsy buys Depop for $2 billion to lure Gen Z shoppers

Global online marketplace Etsy is tapping into the desire for sustainability and preloved fashion, with a massive focus on culture.

Etsy is making a play for younger shoppers, particularly from Gen Z, as it snapped up the second-hand fashion app Depop for $US1.6 billion ($A2 billion).

Depop allows people to buy and sell used fashion through its online marketplace and boasts about 30 million registered users across 150 countries, including Australia.

Yet 90 per cent of Depop’s active users are under the age of 26, with the social shopping platform a combination of Ebay and Instagram.

Sellers have profile pages that function as mini storefronts where they can post pictures of what they have for sale along with the price and description, while users can follow their favourite sellers or also dip into an explore feed.

Most users sell old clothes and vintage garments, with the sustainability aspect appealing to the younger generation.

Etsy’s chief executive Josh Silverman described Depop as “the resale home for Gen-Z consumers”, offering a passionate community and unique items, reported the BBC.

He said the deal, which would be completed later this year, would allow the marketplace to further expand.

“We’re on an incredible journey building Depop into a place where the next generation comes to explore unique fashion and be part of a community that’s changing the way we shop,” added Depop chief executive Maria Raga. “They come to Depop for the clothes, but stay for the culture.”

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It's not just second hand clothes but hand made goods as well like this one. Picture: Instagram @depop

Consumer expert Associate Professor Jana Bowden from Macquarie University said Gen Z values are significantly different to that of older generations like Gen X and boomers.

Gen Z are interested in why a company does things, rather than just what it sells, and are looking for brands with “authentic purpose”, she explained.

“Depop is focused on creating a sense of connected community,” she told news.com.au.

“It also focuses on social responsibility, social fabric and also sustainability and the circular economy and all of those value sets are exactly what Gen Z are looking for in their consumption.

“This particular group they are very conscious with their consumption and ... they have tapped into the impact of fast fashion in particular on society and they are interested in countering that through their consumption activity. So the fashion industry creates 92 million tonnes of landfill a year and account for 10 per cent of global emissions and Gen Z is interested in sustainable ecosystems and counteracting negative impacts of fast fashion.”

The sale gives Etsy an opportunity to expand its e-commerce profile and add a huge consumer base, particularly in the future, she added.

“The Gen Z segment is going to be worth 40 per cent by 2035 of the luxury market and they have an interest in fashion, but slow fashion and sustainability,” she said.

“This opportunity allows Etsy to tap into a growth area, which is not just ready made products, but preloved products which has seen a huge growth trend and particularly during covid it has boomed."

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Etsy’s purchase could bring 30 million new customers to its platform. Picture: AP Photo/Mark Lennihan

Associate Prof Bowden remarked that the Etsy platform has also been “quite limited” in its ability to engage via sellers.

“In my view its been a functional transaction platform that allowed sellers to exhibit products but hasn’t created interactive engagement and dynamic relationships,” she explained.

“The key advantage is Depop’s user base is based strongly on community and community driven design. The advantage is the brand has relationships built into the platform between buyers and sellers that add value beyond transactions, so for that reason it’s a dynamic offering and adds value to Etsy’s portfolio.”

It's not about fast fashion on Depop. Picture: Instagram @depop

Retail expert Dr Jason Pallant from Swinburne University added Depop was a win for sustainability and reducing waste, but that young people were also generally less brand sensitive and instead looking for unique products.

“If you think about Etsy a lot of people think of it as crafty handmade product ideas, but being able to then offer a second hand marketplace is a really good addition and fits well with the core brand, while also exposing a new set of customers to what Etsy do,” he said.

“So having both is good for them to be under the same umbrella and offer an interesting marketplace for different kinds of consumers, but they will also hoping that some of them will cross over between the two or graduate from one to the other as tastes and preferences change.”

The resale clothing market is expected to be worth $US64 billion in the next five years, according to analytics firm GlobalData.