Looking For A Come-Up

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What's going on?

Folksy ecommerce company Etsy said on Wednesday it would Depop some tags and try out a more youthful look by buying the cool kids’ favorite clothing resale platform for $1.6 billion.

What does this mean?

With sustainability high on shoppers’ lists of priorities, secondhand fashion firms are enjoying a season in the sun. The likes of ThredUp and Poshmark made hugely successful US stock market debuts earlier this year, while UK-headquartered Depop has proved particularly popular with Generation Z on both sides of the Atlantic: 90% of its 30 million active users are under 26.

Publicly listed online marketplace Etsy now appears keen for a bigger – and younger – slice of the preowned action. While its largest deal ever will leave Depop operating independently, the takeover gives Etsy access to a growing customer base across 150 countries – and one likely to spend ever more money in the years to come.

Why should I care?

For markets: Long in the leg.
The global preowned clothing market is expected to expand 20% annually for the next five years (tweet this). The fact Etsy was willing to fork out 23x the value of Depop’s 2020 revenue reflects that optimism – and may also encourage investors in ThredUp and Poshmark, where shares currently change hands for only around 12x last year’s sales. Of course, Etsy may also be feeling flush: its own share price has more than doubled over the past year.

The bigger picture: Does my nose look big in this?
Ecommerce in general has done well out of a year in which many physical stores have been forced to shut. And even with restrictions now lifting across large parts of the planet, working (and shopping) from home could well be here to stay. So said teleconferencing provider Zoom this week as it reported better-than-expected quarterly results and raised its forecasts for 2021.

Originally posted as part of the Finimize daily email.

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