Sometimes the smartest business move is a clean cut. This week’s edition of Your M&A and Corporate Partner focuses on online craft goods marketplace Etsy’s recent deal to sell fashion resale company Depop to eBay, and discusses how a well-crafted transaction can help buyers and sellers both achieve new goals for their businesses.
Founded in 2005, Etsy began as a niche online marketplace connecting artisans and their handmade goods with individual buyers seeking unique, custom items. Over the next decade, it grew into a massive e-commerce platform with millions of users and went public on the NYSE in 2015. Following its initial success, shareholder demands and growing competition added new pressure, and Etsy soon felt the need to break its pattern and expand into new markets to compete with larger brands like Amazon and cheap alternatives like SHEIN and Temu.
Etsy originally purchased Depop in 2021 for $1.625 billion as part of a new “house of brands” growth strategy, which also included acquiring Reverb, an e-commerce platform to buy and sell musical instruments and equipment, and Elo7, a company nicknamed “the Etsy of Brazil.” The goal of acquiring Depop was to expand Etsy’s reach into the fashion resale sector, particularly with Gen Z audiences, which reportedly make up approximately 90% of Depop’s users. At the time, Depop was also facing its own growing competition from other online clothing resellers such as Vinted.
However, Etsy’s attempt to establish resale dominance through acquisitions failed to materialize, and the company began unwinding its acquisitions just a few years after bringing them in-house. Elo7 was sold to Brazilian online marketplace Enjoie in 2023, and Reverb was sold to a duo of Fender investors in 2025. Depop is the most recent divestiture, with the February 2026 announcement that eBay will acquire the company in a sale expected to close in Q2 2026.
In a joint press release announcing the deal, eBay announced it plans to leverage Depop to “[deepen] its reach with younger, fashion-forward consumers and [expand] its presence in one of the most dynamic areas of resale” by connecting the younger company with its vast network of tools and support capabilities. Etsy, in turn, shared that it plans to use the transaction fees for “investment in its core marketplace,” signaling a return to the company’s initial goal of connecting artisans to buyers.
With the deal expected to wrap up any loose threads and close in the next few months, and a recent leadership change already announced, it will be interesting to see what steps Etsy takes to reinvigorate the company and engage with its audience after this series of sales.
What Can Businesses Learn From This?
Transactions can be springboards for business transformations for both buyers and sellers. Etsy’s initial plan to bring a variety of C2C brands under one roof did not net the results it was hoping for. Rather than continue to carry those losses and spread the company’s resources too thin, it streamlined and removed the components that did not align with its core business offerings.
Under this deal, every party walks away with something to carry it forward into its next phase of growth:
- Etsy receives $1.2 billion in cash and sheds the final acquisition from its unsuccessful “house of brands” strategy, freeing it up to refocus on its more niche core offering of connecting buyers and sellers for handmade, vintage, and craft goods.
- Depop acquires access to eBay’s users and digital support toolbox to enhance its offerings.
- eBay obtains a popular reselling platform with a highly engaged audience in a previously untapped age demographic that they can now sell to and cross-list with their existing products.
Have questions about how a transaction can help your business enter its next phase? Contact M&A and Corporate lead Connie Phelps at cphelps@berenzweiglaw.com.