🎯 Depop's playbook for 'fun' products

Bring the old back to life

Read time: 4 minutes 6 seconds

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Depop's playbook for 'fun' products

Chess Move

The what: A TLDR explanation of the strategy

Throughout the entirety of the dotcom bubble, there was a single peer-to-peer retail marketplace with national brand recognition: 

eBay. 

Even with Amazon eating into eBay’s sales for new products, eBay had cornered the market for used goods. 

In 2011, Italian entrepreneur Simon Beckerman was looking for a way to build a community around his lifestyle publication PIG (People In Groove) Magazine. 

He observed Instagram’s rising popularity, and imagined a product that afforded readers the same UX as the beloved camera-app, but instead allowed them to buy clothes worn by the creators in the magazine.

Somewhere community members could “discover” products organically, rather than searching for them on eBay. 

Depop was born, with a defining philosophy:

💡

Strategy Playbook: Find something that’s boring, but working. Make it cool. Make it fun. Bring it to life.

Breakdown

The how: The strategic playbook boiled down to 3x key takeaways

1. Old game, new look

Despite their decade-plus first-mover advantage, eBay could never shapeshift into a brand that is coveted by Millenials and Gen Z:

 → eBay: always saddled with consumer trust issues, which was amplified by their minority acquisition of Craigslist in 2008

 → Depop: created a space that felt like home for under-40 consumers by allowing them to create profiles as brands, and enabling them to be both buyers and sellers 

The user experiences are also highly representative of their respective ages: 

 → eBay: primarily relies on search-based selling, requiring users to come with intent to purchase a specific item

 → Depop: leverages feed-based UX, which is more familiar to younger consumers, and facilitates the social and community aspects of the platform

And though one is very cash-rich, the other significantly more adaptable:

 → eBay: highly complex source code that is still built atop their legacy architecture, making large-scale UX changes challenging

 → Depop: simple modern design allowed them to quickly double-down on vintage clothing resale as streetwear took off in the mid 2010’s 

2. Build a marketplace for humans, not transactions

Depop has always been obsessed with developing a mobile-first experience that:

  • Is optimised for both buyers and sellers

  • Specifically caters for apparel sales (since 95% of their Gross Marketplace Volume is apparel)

  • Has a vibrant underlying community

Their feed works similarly to other social apps, designed to algorithmically rank and surface various products for users to consider, which:

  • Gives it the effect of social entertainment, rather than traditional e-commerce 

  • Makes the marketplace highly tailored, differentiating them from competitors like eBay and Mercari

  • Drives sales via intuitive, emotional, community-powered social tactics (ie. ‘impulse buying’) that gained traction in the mid 2010’s

Part of the appeal of Depop for Gen Z is the focus they’ve put on sustainability; these consumers are highly conscious of overconsumption habits.  

According to Depop’s 2023 10-K

“Depop’s circular ecosystem extends the life of millions of garments every year, providing a more sustainable way to enjoy fashion.”

Introducing humanity to selling is ultimately what created their market wedge.

Depop reportedly achieved around $650 million of Gross Merchandise Sales (GMS) in 2020, leading to their acquisition by Etsy in the same year for $1.6 billion. 

3. Exercise strategic restraint

Vinted, founded in 2008, was the first major “next-gen” competitor to eBay. Over a 4 year period between 2011 - 2015, a slew of resale companies that specialised in vintage, exclusive, or resale apparel were born, including: 

  • StockX

  • Poshmark

  • Grailed

  • Mercari

  • GOAT

Global competition for apparel resale exploded.

The clothing resale market is set to exceed $350 billion globally by 2027:

$70 billion will happen in the US. $38 billion will happen online.

Resale growth outpaced standard retail by 5x in 2023.

But the apparel figures are only a small fraction of the overall resale market – which is still dominated by eBay and TikTok Shop.  

“Social” retail platforms like Whatnot, NTWRK, and TikTok Live, which came to prominence between 2015 - 2019, further accelerated resale growth.  

These platforms focus on selling through livestream, a rapidly growing format in other markets: 

By comparison:

While Whatnot, NTWRK, and TikTok Live compete in an arms race to win a prize that might not ever come to fruition (bringing livestream shopping to the US), Depop has doubled-down on building a social product that is specifically tailored to Western Gen Z.

And the livestream space could become even more competitive, as Meta and Amazon have both largely held out of this space so far. 

Depop’s bet: Ignore the exciting but unproven - stay with what’s working.

Rabbit Hole

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— Written by Alex McClelland. Edited by Tom Alder.

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