Depop

Last updated

Depop Limited
Depop logo.svg
Type of business Subsidiary
Available inEnglish, Italian
Founded2011;13 years ago (2011) in Roncade, Italy
Headquarters
London
,
United Kingdom
No. of locations
  • London
  • Manchester
  • Milan
  • Los Angeles
  • New York City
Area servedWorldwide
Founder(s) Simon Beckerman
CEOKruti Patel Goyal
Industry Online shopping
Employees400 (2021) [1]
Parent Etsy
URL depop.com
Users Increase2.svg 35 million (2024) [2]

Depop Limited is a social e-commerce company based in London, with additional offices in Manchester, Milan and New York City. The company has an expanding global presence and has been popularized in countries such as the United States, United Kingdom, Australia, New Zealand, and Italy. It allows users to buy and sell items, which are mostly used and vintage pieces of clothing.

Contents

History

How It Started

Depop was founded in 2011 by entrepreneur Simon Beckerman at an Italian technological incubator and business start-up centre H-Farm. [3] Beckerman came up with the original outline of the application during his time working on PIG, a fashion magazine based in Italy that he co-founded. [4] [5] The idea was to create a platform where products shown in the magazine could be purchased by users online. [4] This idea turned into a concept similar to a flea market but on the internet, where people could sell their items while also being in control of advertising, public relations, and the creative process behind their accounts. [5] While being financially supported by H-Farm, Beckerman worked within a team to create and lay out the Depop application while exposing it to numerous investors. [5]

In 2013, Beckerman became a member of the company's board to help improve the application and business while concurrently ceding his role of CEO. [6] Maria Raga, Depop's co-founder and former CEO, took on the role of vice president of operations in 2014, and in 2016, she became chief executive. [6] According to Raga, the main goal while developing Depop was to become the next Airbnb or Spotify, but to make an impact on fashion. [6]

Key Milestones / Expansions

Paolo Barberis and Nana Bianca were two of the first investors in the platform in 2012 with a seed investment. [7] Its headquarters were moved to London in 2012. [8] Depop expanded and opened additional offices in Milan and New York City. [9] Beckerman raised €1 million in funding in October 2013 from Red Circle Investment and brought on Faroese Runar Reistrup as new CEO. [8] In 2015, Depop secured another investment of $8 million from Balderton Capital and HV Capital. [9]

In March 2016, former CEO, Runar Reistrup, stated that Depop's growth was achieved through word of mouth. [10] During his time as CEO, this growth involved taking Depop as a startup and working to raise funds to eventually amass a significant user base within the United States. [11]

In June 2019, Depop raised $62 million in Series C from General Atlantic to fund its expansion. Previous investors HV Capital, Balderton Capital, Creandum, Octopus Ventures, TempoCap and Sebastian Siemiatkowski also participated. [12] During this time, Depop held workshops and conversations as part of their Depop Live NY events, [6] and the company also opened a London store through their partnership with Selfridges. [13]

In 2020, Depop's gross merchandise sales and revenue both more than doubled to $650 million and $70 million respectively. [14] This may be attributed to Depop's responsiveness to user trends, its lack of issues regarding inventory management, and the increase in users looking to resell. [13]

As of 2024, Depop has over 35 million users, according to their website. [15] It is the 10th most-visited shopping platform for Gen Z consumers in the US, [16] and, in a poll conducted by The Strategist in 2019, Depop was voted by teenagers as their favorite resale website. [17] [18] According to Taylor Lorenz of The Atlantic , Depop draws in Gen Z users through being easily accessible and having affordable prices, and much of its user base uses it to track trends in fashion. Popular sellers on the platform often go on to become social media influencers. [19]

Etsy's Acquisition of Depop

In June 2021, Depop was acquired by Etsy for $1.6 billion in cash, making it Etsy's most expensive acquisition; however, Depop continues to operate as a standalone brand independent from Etsy. [15] [20] This means that in addition to Depop keeping its current team, the company retained its London location. [21] At the time of acquisition, Etsy CEO Josh Silverman’s goal was to counteract the influx of buyers starting to go back to physical shops for their purchases. [22] He saw Depop for its potential as a platform supporting a variety of products and creating a greater community of users. [21] According to Silverman, Depop may expand and improve its services for its significant Gen Z user base. [22]

Depop has joined Reverb and Etsy's own brand to add to Etsy's collection of online buying and selling platforms. [21] For Etsy, this acquisition maintains the company's foothold in the clothing industry and allows the company to expand its customer base to a younger demographic; at the same time, Depop is now able to make use of Etsy's company operations. [13]

When Maria Raga relinquished her position as Depop's CEO in 2022, Etsy assigned the role to Kruti Patel Goyal, who was Etsy's former chief product officer and a leader there for eleven years. [23] To explain the motivation behind transitioning from Etsy to Depop in an interview, Goyal emphasized her belief in circular fashion and using her experience at Etsy to supplement Depop's growth and development. [24] Her three priorities are to increase the application's efficiency, promote the user experience Depop offers beyond the transactions, and to expand the company's audience. [24]

Business Model

Selling

Depop operates as a marketplace and social platform, where users can follow friends and other influencers to view their buying and selling activities. Through the platform, users are able to sell branded and designer items, as well as vintage pieces. [25] Depop users are also encouraged by the platform to use other social networking services such as Instagram to promote their shop profiles. [26] Celebrities have resold their own items on Depop, with some donating proceeds to charitable causes. [27]

Depop's user interface is modeled after that of Instagram. According to Depop, users who list and sell items provide their own photos with item descriptions. Users also note their designer items' authenticity and if they include any labels, tags, and receipts. [28] These listings will appear in users' feeds. The platform's "Explore" page features items picked out by Depop staff.

According to Depop, purchases are made via Apple Pay, Google Pay, credit and debit cards, and Klarna. Depop payments stay in-app, allowing for the company to mediate disputes and process refunds. Depop payments allow sellers to directly receive their payments in their bank account. [29] To get paid by Depop, a seller has to add a bank account and verify their identification by uploading an ID.

On July 18, 2024, Depop CEO Kruti Patel Goyal announced the removal of selling fees for US sellers, while maintaining a payment processing fee. This policy adjustment aimed to enhance seller revenue and support the growth of the second-hand market. [30]

Buying

A Depop transaction includes the agreed sale price of the item, shipping fees, VAT or other applicable taxes and duties, and the marketplace fee for buyers in the U.S. or U.K. [31] For international deliveries, packages may be subject to import taxes, customs duties, or fees, payable upon arrival or at checkout if Depop collects the tax on behalf of the buyer. For domestic purchases, relevant taxes may be collected by the seller or charged by the platform at checkout, ensuring no additional taxes are due upon delivery. [32]

According to Depop, the app enforces Depop Protection, which is available in the UK, US, and Australia. Depop Protection allows users to receive a full refund if their item does not arrive, arrives damaged, or is considerably different from the original when the issue is reported within 30 days. [32]

Competitors

As of June 2021, Depop's competitors include Vinted, a platform founded by Milda Mitkute and Justas Janauskas in 2008 and valued at €3.5 billion, as well as the U.S. resale site Poshmark, valued at $3.5 billion. [4]

Additional competitors include Grailed, a peer-to-peer e-commerce site founded in 2014 that is recognized for its high-end second-hand menswear and streetwear, and Vestiaire Collection, a European resale app established in 2009 which specializes in authenticated pre-owned luxury items. [25]

The popularity of Depop has negatively impacted traditional second-hand stores, which can struggle to compete due to high labor costs and quality demands. [33] There is an oversupply of clothes with the rise of fast fashion; this has taken a toll on the revenue aspect of the second-hand clothing industry.

Sustainability Initiatives

Depop's CEO Kruti Patel Goyal asserts that the business model purports to balance profitability with environmental consciousness. [24] Since its founding in 2011, Depop has built a user base primarily consisting of millennials and Gen Z who value eco-friendly practices. [24] Within the workplace, the company prints merchandise on recycled Fruit of the Loom sweaters, and Depop employees can bring in their own unwanted items to participate in a clothes swap at work. [24]

According to Depop's 2021-2022 Sustainability Plan, Depop  is measuring its GHG emissions, offsetting their shipping emissions, became a certified climate neutral company, set a new target to run zero-waste operations by 2025, made sustainability a key criteria in the selection of their London headquarters, and joined Tech Zero, a group officially partnered with the United Nations comprising tech companies that are committed to tackling climate change. [34]

Purchasing seasonal secondhand clothing from Depop has a substantially lower environmental impact compared to buying new items. [35] For instance, opting for a secondhand leather jacket on Depop instead of a new one can conserve significant resources, potentially saving over 12,000 glasses of water and reducing carbon emissions by more than 140 pounds of CO₂. [35]

In 2024, Depop partnered with the British startup Kelp Technologies to leverage artificial intelligence in analyzing market trends and second-hand clothing prices for its marketplace listings, which has resulted in significant time and cost savings. [36] The integration of AI-driven analytics has boosted the growth of the digital thrifting market by enhancing Depop's user experience and promoting environmental sustainability. Additionally, this collaboration has contributed to environmental benefits by reducing waste and greenhouse gas emissions associated with the production of new clothing. [36]

Criticism

In November 2019, Business of Fashion reported that users within the Depop app were receiving sexually suggestive messages. [37]

In February 2020, Jessica Hamilton, a Depop buyer, reported that she found many scammers on the platform. [24] She noticed this issue after she attempted to purchase a Nintendo Switch from a seller who would suspiciously only accept payment through a direct bank transfer without buyer protection. [24] Hamilton blamed the company for its lack of action and relaxed security measures compared to other e-commerce sites, which made the platform especially susceptible to hackers. [24] Without a clear strategy for managing scams, Depop lost some users’ trust because of its negligence. [24]

In October 2020, some Depop buyers were tricked into paying sellers directly to bypass Depop's buyer protections, and the Depop sellers then sold those users’ information on the dark web. [35] In response, Depop claimed that it would improve security through mandatory password updates and multi-factor authentication. [35] Users have criticized Depop for belatedly taking action against this issue. [35]

In April 2021, the platform was also criticized by its users for picking predominantly thin models wearing straight size clothing to showcase on its explore page, which some have described as sizeist.

Depop has garnered criticism from users and critics due to a number of its sellers buying clothes from thrift shops and reselling them for higher prices than they were purchased for. In May 2024, a reseller listed a pair of Forever 21 shorts on Depop for an overvaluation of almost $300 under the guise of it being vintage, which sparked backlash after a critical viral TikTok was posted by the user @kaym0neyyy.

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References

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  3. ↑ Morrison, Emma. "Artefact – In conversation with | Depop founder Simon Beckerman". Artefact. Archived from the original on 16 July 2015. Retrieved 21 June 2016.
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  21. 1 2 3 "Etsy snaps up Gen-Z focussed shopping app Depop for $1.6bn". 2 June 2021. Retrieved 13 November 2024.
  22. 1 2 "Etsy courts Gen-Z with $1.6 bln deal for fashion reseller Depop". Reuters. 2 June 2021.
  23. ↑ Shoaib, Maliha (15 June 2022). "Depop CEO Maria Raga steps down, replaced by Etsy's chief product officer". Vogue Business. Retrieved 13 November 2024.
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  27. ↑ "9 Celebrities With Depop Shops To Start Frequenting Immidiately". Bustle. 13 July 2016. Retrieved 13 November 2024.
  28. ↑ Depop (13 November 2024). "Depop Seller Guide".
  29. ↑ Depop (4 November 2024). "Depop Payments".
  30. ↑ Safaya, Shemona (18 July 2024). "In data: Depop removes US seller fees in bid to grow secondhand market". yahoo!finance. Retrieved 13 November 2024.
  31. ↑ Depop, Depop (13 November 2024). "Marketplace fee for buyers" . Retrieved 13 November 2024.
  32. 1 2 Depop (13 November 2024). "Will I have to pay for tax or customs on my order?" . Retrieved 13 November 2024.
  33. ↑ "The trendy second-hand clothing market is huge and still growing – yet nobody is turning a profit". www.bbc.com. Retrieved 13 November 2024.
  34. ↑ "Year One: 2021-2022 Sustainability Plan". news.depop.com. Retrieved 16 November 2024.
  35. 1 2 3 4 5 "Depop reveals the environmental impact of seasonal secondhand switches". news.depop.com. Retrieved 13 November 2024.
  36. 1 2 Macaulay, Thomas (7 August 2024). "Depop and Selfridges are stitching AI into second-hand fashion". TNW | Deep-Tech. Retrieved 13 November 2024.
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