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04 June 2021

From Hand-made to Second-hand

Lockdown confinement over the last year saw Etsy, the online marketplace for hand-made consumer goods, capitalise on the increased demand for e-commerce. Its stores offer a diverse range of products, including art and collectibles, home decor, jewellery and other accessories and hand-made toys.  As restrictions continue to ease, the question arises as to whether Etsy will experience the same levels of demand seen over the last year? Its latest venture suggests the company are positioning themselves in case of such a scenario.

On Wednesday 3rd June, Etsy announced a £1.14bn deal to acquire UK-based second-hand fashion app Depop. Depop is an online marketplace for second-hand clothing, where buyers and sellers can negotiate on pricing and postage through direct messaging. The app has been a hit with younger consumers, and Etsy boss Josh Silverman described Depop as "the resale home for Gen-Z consumers". Out of 30 million registered users across 150 countries, roughly 90% are under the age of 26. Etsy, on the other hand, tends to attract older consumers. The acquisition of Depop, therefore, compliments the Etsy brand exceptionally well. As the younger generation return to pubs, bars and nightclubs, there is a resurgence in the need for fancy clothing - which for university students on a tight budget, second-hand items from Depop are a perfect fit.

Revenues at London-based Depop more than doubled last year to £49.6m, while its active network of four million buyers and two million sellers traded goods worth about £460m in 2020. It is hoped that the deal with Etsy will help grow the brand further, since Etsy have been through many of the challenges Depop are currently facing, such as scaling internationally. This would work both ways, however, as Depop’s strengths come from its social-media presence and mobile-app proficiency, which Etsy has not quite yet mastered. 

Investors reacted positively to the acquisition, with Etsy’s share price rising 7.34% on Wednesday.

Please note that investments and income arising from them can fall as well as rise in value. This communication is for information only and does not constitute a recommendation to buy or sell the shares of the investments mentioned.
 
From Hand-made to Second-hand
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