Gen-Z's favorite shopping app Depop has just been purchased by its crafty aunt Etsy for upwards of $1.6 billion. The deal (which will close later this year) is yet another testament that the global fashion resale market — expected to hit $51 billion in 2023, according to market research firm Globaldata — is far from dead. In the US alone, the secondary market is projected to grow 39 percent yearly until 2021, with the market growing to twice the size of fashion fashion on a global basis. As if those in the sneaker space didn't see that coming for years.
At Depop, approximately 90 percent of active users are under the age of 26, and young consumers are adopting second-hand fashion faster than any other audience. The company's gross merchandise sales (the total monetary value of goods sold) hit $650 million in 2020. Revenue that year was $70 million with each increasing over 100 percent year-on-year.
If those numbers weren't enough to justify the staggering $1.6 billion number, Etsy explains that not only does Depop share Etsy's DNA — a parallel growth strategy that drives human connections, and builds marketplace trust — it also deepens Etsy's reach into the Gen Z consumer.
"Depop is a vibrant, two-sided marketplace with a passionate community, a highly-differentiated offering of unique items, and we believe significant potential to further scale," says Josh Silverman, CEO of Etsy. "We see significant opportunities for shared expertise and growth synergies."
"Our community is made up of people who are creating a new fashion system by establishing new trends and making new from old. They come to Depop for the clothes, but stay for the culture," adds Depop's CEO Maria Raga, who together with her team will continue to operate from their London headquarters.
The acquisition is far from an isolated investment. Earlier this year, resale companies Poshmark and ThredUp IPO'd. Meanwhile in April, following another round of investment, StockX's valuation jumped to $3.8 billion. It's said to go public later this year. Just last month, Vinted — Europe's largest secondhand fashion platform — raised nearly $300 million, valuing the company upwards of $4 billion.
And all of a sudden, brands are getting involved. Gucci last year announced a major partnership with US luxury consignment marketplace The RealReal, selling pre-loved Gucci items with the aim of "supporting circularity." With that same messaging, Alexander McQueen announced its own collaboration with secondhand platform Vestiaire Collective. Burberry, Stella McCartney, and Mulberry have similar programmes in place with various players.
In May, in a bid to connect better with young Chinese consumers, Coach announced it would be partnering with Poizon, the Chinese leading resale streetwear and sneaker social-commerce platform, where it will sell handbags, leather goods, and accessories. Levi's has even gone as far as creating its own buy-back and resale platform. Dubbed, Levi's SecondHand "allows consumers to know that they’re getting something that’s still in great shape and uses a fraction of the natural resources a new pair would require."
What's really happening here is that brands and investors alike have finally realised that this change in the way we shop isn't a fad. For as much as fashion prides itself on innovation and disrupting itself, fashion loves keeping the status quo in tact. So when the first wave of brands do sign on, it's a clear indicator of a shift in the industry where a second, third, fourth wave of players will rapidly follow the risk-taking pioneers.
A smart move at last. At a time when consumers are humanizing once faceless brands who we now expect to share our values, offer inclusivity and exclusivity at the same time, and constantly be up for a dialogue, we seemingly have little time left for those brands refusing to become more human-like. One can argue that the process of buying and selling pre-loved clothing puts back the meaning in meaningless stuff.
Following this morning's sale, Depop's founder Simon Beckerman said, "It’s all about the power of genuine human connection. And it's the people themselves that make being part of the business such a great experience." A possible return to meaningful dialogue at last.