Etsy (ETSY) is acquiring British second-hand fashion app Depop for $1.6bn (£1.1bn) as it looks to appeal to a younger Gen Z audience.
Etsy, the handmade goods marketplace, announced the deal on Wednesday, saying Depop had a "highly differentiated position in the fast-growing resale space". Etsy shares ticked up roughly 1% in pre-market trading in the US.
Founded in 2011 and headquartered in London, Depop is an app that lets users buy and sell second hand clothing. Approximately 90% of Depop's active users are under the age of 26 and it is the tenth most visited shopping site among Gen Z consumers in the US.
$650m-worth of clothing was sold over the platform last year and Depop had revenues of $70m. Both measures grew over 100% year-over-year. It has approximately 30 million registered users across nearly 150 countries, with 4m active buyers and 2m active sellers.
"We see significant opportunities for shared expertise and growth synergies across what will now be a tremendous 'house of brands' portfolio of individually distinct, and very special, e-commerce brands," Etsy chief executive Josh Silverman said.
Watch:Katie Price selling her clothes on Depop
Silverman said Depop was "the resale home for Gen Z consumers".
Depop CEO Maria Raga said selling the business to Etsy would let the company benefit from "the resources of a much larger company whose values are so aligned with ours."
The startup will continue to be headquartered in London and operate as a standalone marketplace run by its existing leadership team.
Rachel Glaser, Etsy's CFO, said Depop was "still in the early innings of its growth opportunity."
"We love Depop's rapidly growing GMS and loyal and engaged customer base, excellent user engagement and unit economics, opportunities to expand value added seller services, clear path for geographic expansion, and highly scalable, 'capital light' operating model," Glaser said.
The second-hand marketplace is projected to grow at a 39% compound annual growth rate over the next three years in the US, reaching $64bn. Forecast growth will be twice the size of the global fast fashion market, Etsy said.
James Wise, a partner at Balderton Capital, said Depop was an example of "how generational shifts create new opportunities in competitive categories".
Balderton was one of the first seed investors in Depop in 2012 when the app was being tested in the Italian market. It has invested in every subsequent round.
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