How Does Depop Make Money? The Depop Business Model In A Nutshell

Depop is a peer-to-peer shopping app founded by Simon Beckerman in 2011 at the Italian technological incubator and start-up center H-FARM. Depop experienced tremendous growth in the following years, thanks largely to word-of-mouth advertising and social sharing. The platform now boasts more than 21 million users. Marketplace giant Etsy has plans to acquire Depop in the third quarter of 2021 for a cash deal worth $1.625 billion.

Business Model Element	Analysis	Implications	Examples
Value Proposition	Depop’s value proposition is built around unique and sustainable fashion shopping. For Sellers, Depop offers: – A Platform for Selling: An easy-to-use platform for listing and selling fashion items. – Community Engagement: Access to a community of fashion enthusiasts and potential buyers. For Buyers, Depop provides: – Unique Fashion Finds: A marketplace for discovering one-of-a-kind, vintage, and sustainable fashion. – Social Shopping: An interactive and social shopping experience. Depop empowers sellers to monetize their fashion items and offers buyers a unique shopping experience.	Provides a platform for sellers to easily list and sell fashion items. Cultivates a community of fashion enthusiasts and potential buyers. Offers buyers a curated selection of unique, vintage, and sustainable fashion. Creates an interactive and social shopping experience. Attracts sellers looking to monetize their fashion items and buyers seeking unique and sustainable fashion. Encourages sustainability in fashion through secondhand shopping.	– Platform simplifies the selling process for users. – Community engagement fosters connections and sales. – Offers unique and sustainable fashion options. – Social shopping enhances the buying experience. – Appeals to sellers and buyers in the fashion industry. – Promotes sustainability in fashion.
Customer Segments	Depop serves multiple customer segments, including: 1. Sellers: Individuals and small businesses looking to sell fashion items. 2. Buyers: Fashion enthusiasts seeking unique and sustainable fashion items. 3. Collectors: Individuals interested in vintage or rare fashion pieces. 4. Sustainable Shoppers: Consumers committed to eco-friendly fashion choices. Depop caters to a diverse range of fashion-oriented users.	Focuses on diverse customer segments within the fashion market. Customizes user experiences based on individual preferences and interests. Provides a platform for various user types with a common passion for fashion. Promotes sustainable shopping practices, aligning with eco-conscious consumers.	– Serving diverse customer segments broadens the user base. – Customized experiences cater to individual preferences. – Provides a platform for various fashion enthusiasts. – Encourages sustainable fashion choices.
Distribution Strategy	Depop’s distribution strategy primarily relies on its mobile app and website, where users can list, browse, and purchase fashion items. The app offers an intuitive and user-friendly interface for shopping and selling. Additionally, Depop uses social media and influencer marketing to promote the platform and engage with its community.	Utilizes its mobile app and website for user accessibility and engagement. Offers an intuitive platform for both shopping and selling. Leverages social media and influencer marketing to reach a wider audience and engage with the fashion community. Focuses on user-friendly interfaces to enhance the shopping and selling experience.	– Mobile app and website align with user preferences. – Social media and influencer marketing expand reach. – User-friendly interfaces enhance the overall experience. – Promotes community engagement through marketing efforts.
Revenue Streams	Depop generates revenue through two primary streams: 1. Transaction Fees: Depop charges sellers a fee when they successfully sell an item on the platform. 2. Promoted Listings: Sellers can pay to promote their listings, increasing their visibility. Transaction fees are the primary source of revenue.	Relies on transaction fees as a primary source of income, charging sellers when they make a successful sale. Offers promoted listings as an additional revenue stream to enhance visibility for sellers. Prioritizes transaction fees to sustain operations and maintain a user-friendly platform. Provides promoted listings to boost visibility for sellers seeking enhanced exposure.	– Transaction fees provide a consistent revenue source. – Promoted listings offer additional income opportunities. – Prioritizes transaction fees for sustainability. – Promoted listings enhance visibility for sellers.
Marketing Strategy	Depop’s marketing strategy focuses on community engagement, influencer partnerships, and social media presence. It encourages users to create content, share their fashion finds, and engage with the community. Depop collaborates with influencers to promote the platform and showcase unique items. The company maintains an active social media presence to connect with its target audience.	Emphasizes community engagement as a central marketing tool, encouraging users to actively participate and create content. Collaborates with influencers to leverage their reach and promote unique fashion items on the platform. Maintains a strong social media presence to connect with the fashion-focused audience and showcase user-generated content. Fosters a sense of belonging and encourages user participation.	– Community engagement drives user involvement. – Influencer partnerships extend the platform’s reach. – Active social media presence connects with the target audience. – Fosters a sense of belonging among users. – Showcases user-generated content for authenticity.
Organization Structure	Depop’s organizational structure includes teams dedicated to software development, community management, influencer partnerships, marketing, and customer support. Software development teams focus on platform improvement. Community management teams assist users and foster engagement. Influencer partnership teams collaborate with influencers. Marketing teams handle promotional efforts. Customer support teams assist users with inquiries. This structure supports platform excellence, user satisfaction, and influencer engagement.	Employs specialized teams for software development, community management, influencer partnerships, marketing, and customer support. Prioritizes platform improvement through development teams. Fosters user engagement and satisfaction through community management teams. Collaborates with influencers effectively through partnership teams. Manages promotional efforts through marketing teams. Assists users with inquiries through customer support teams. Ensures platform excellence, user involvement, and influencer engagement.	– Specialized teams drive platform improvement and development. – Community management fosters engagement and satisfaction. – Influencer partnerships extend the platform’s reach. – Marketing efforts promote the platform effectively. – Customer support assists users with inquiries. – Maintains platform excellence and user trust.
Competitive Advantage	Depop’s competitive advantage lies in its unique fashion marketplace, engaged community, mobile-first approach, and sustainability focus. Unique Fashion Marketplace: Offers one-of-a-kind fashion items. Engaged Community: Cultivates an active and passionate user base. Mobile-First Approach: Prioritizes mobile app accessibility and user experience. Sustainability Focus: Attracts eco-conscious consumers through secondhand shopping. Depop stands out as a platform for discovering unique fashion and engaging with like-minded fashion enthusiasts.	Derives a competitive advantage from: – A marketplace filled with unique fashion items. – An engaged and passionate user community. – A mobile-first approach for user accessibility. – A focus on sustainability, appealing to eco-conscious consumers. Stands out as a platform for one-of-a-kind fashion discoveries and connects users who share a passion for unique, sustainable fashion.	– Unique fashion items cater to diverse tastes. – Engaged community fosters loyalty and participation. – Mobile-first approach aligns with user preferences. – Sustainability focus appeals to eco-conscious consumers.

Table of Contents

Background

Depop is a peer-to-peer shopping app.

The platform was founded by Simon Beckerman in 2011 at the Italian technological incubator and start-up center H-FARM.

Depop was initially a social network where readers of People In Groove (PIG) – which Beckerman founded in 1998 – could buy items from creatives featured in the magazine.

With a background in technology and entrepreneurship, Beckerman quickly realized that print media would be superseded by digital media at some point in the near future. His magazine already had a website, but it did not have a shop enabling users to purchase items they saw advertised.

As a result, Beckerman envisioned an app serving as a mobile marketplace where readers could see what their friends and the people they were inspired by were purchasing and selling.

After presenting his concept to H-FARM, he received €1 million in seed funding to bring the vision to life. A soft launch occurred in late 2012 on iOS and Depop was made available to the general public eight months later. Additional funding facilitated the development of an Android app and expansion with offices established in Manchester, New York City, Los Angeles, and Sydney.

Depop experienced tremendous growth in the following years, thanks largely to word-of-mouth advertising and social sharing. The platform now boasts more than 21 million users.

Marketplace giant Etsy has plans to acquire Depop in the third quarter of 2021 for a cash deal worth $1.625 billion.

Value Proposition

Unique and Eclectic Fashion: Depop offers a diverse and curated selection of fashion items, including vintage clothing, streetwear, designer pieces, and handmade goods, allowing users to discover and express their individual style through unique and unconventional fashion finds.
Community and Social Interaction: Depop fosters a vibrant and inclusive community of buyers, sellers, and fashion enthusiasts who connect, interact, and engage with each other through likes, comments, follows, and direct messaging, creating a sense of belonging and community among like-minded individuals.
Sustainability and Ethical Shopping: Depop promotes sustainability and ethical shopping practices by encouraging the reuse, recycling, and upcycling of clothing and accessories, reducing waste and environmental impact associated with fast fashion, and supporting independent sellers and small businesses committed to ethical and eco-friendly fashion.
Creativity and Self-Expression: Depop celebrates creativity and self-expression by empowering users to showcase their personal style, creativity, and individuality through curated profiles, product listings, and visual storytelling, enabling users to express themselves authentically and creatively through fashion.
Entrepreneurship and Economic Empowerment: Depop enables individuals to become entrepreneurs and small business owners by providing a platform to sell their fashion creations, thrifted finds, and curated collections, offering opportunities for economic empowerment, financial independence, and creative entrepreneurship.

Depop revenue generation

As an online marketplace, Depop makes money by charging a couple of different fees.

Let’s explore these fees in more detail.

Depop fee

The so-called Depop fee is applied to every successful sale on the platform and is charged to the seller.

The Depop fee is 10% of the total sale price inclusive of shipping costs. This fee helps the company offset expenses relating to employee wages, up-keep costs, and general app maintenance.

Depop claims users can offset the transaction fee by simply raising their prices. It should also be noted that there are no listing fees and products can be listed on the platform indefinitely.

Transaction fee

A transaction fee is also charged to cover the cost of facilitating payment.

For users in the United Kingdom, the transaction fee is 2.9% plus £0.30. For users in the United States, the transaction fee is 2.9% plus $0.30.

Transactions fees apply to Depop, Google Pay, Apple Pay, credit card, debit card, and PayPal payments.

Top sellers

With a simple fee structure, Depop has to increase revenue generation by increasing users.

To that end, the company rewards individuals who achieve consistently high sales volumes with Top Seller status. This involves a verified blue tick, a dedicated account manager, and exclusive access to a private forum.

Social signals

Depop is somewhat unique among online fashion retailers in that it offers a social component. Sellers can build a following, like and share content, and engage directly with their audience.

This encourages sellers to placate their followers by only offering high-quality, legitimate products. Depop as a platform also benefits from the legitimacy these social signals create.

Marketing Strategy

Social Media Engagement: Depop leverages social media platforms, including Instagram, TikTok, Twitter, and YouTube, to engage with its target audience, share user-generated content, showcase trending items, and promote seller stories, fostering brand awareness, community engagement, and user acquisition.
Influencer Partnerships: Depop collaborates with influencers, fashion bloggers, content creators, and celebrities to promote its platform, showcase user-generated content, and drive traffic and conversions through sponsored posts, endorsements, and brand partnerships with influential personalities and tastemakers.
Content Marketing: Depop produces and distributes engaging and informative content, including blog posts, articles, videos, and tutorials, covering topics such as fashion trends, styling tips, sustainability, and entrepreneurship, attracting and engaging its target audience with valuable and relevant content.
Email Marketing Campaigns: Depop utilizes email marketing campaigns and newsletters to communicate with its community of users, sellers, and subscribers, delivering personalized recommendations, product updates, and promotional offers directly to their inbox, driving engagement, retention, and repeat purchases.
Event Sponsorships and Collaborations: Depop sponsors and collaborates with fashion events, festivals, pop-up shops, and influencer activations to increase brand visibility, showcase seller collections, and engage with its target audience in real-life experiences, creating memorable brand interactions and driving brand affinity.

Distribution Channels

Depop Mobile App: Depop operates a mobile app available for iOS and Android devices, providing users with a seamless and intuitive shopping and selling experience on the go, allowing them to browse, buy, sell, and interact with the Depop community anytime, anywhere.
Website and Online Marketplace: Depop maintains a website and online marketplace accessible through web browsers on desktop and laptop computers, offering users an alternative platform to browse, shop, and sell fashion items, complementing the mobile app experience for a diverse audience of users.
Social Media Platforms: Depop extends its reach and distribution through various social media platforms, including Instagram, TikTok, Facebook, Twitter, and Pinterest, where it shares user-generated content, showcases trending items, and promotes seller stories, driving traffic and engagement to the Depop platform.
Email Subscriptions and Notifications: Depop utilizes email subscriptions and notifications to communicate with its community of users, sellers, and subscribers, delivering personalized updates, recommendations, and promotional offers directly to their inbox, driving traffic and engagement to the Depop app and website.
Partnerships and Collaborations: Depop forms partnerships and collaborations with brands, retailers, influencers, and fashion events to expand its reach and distribution network, leveraging co-branded campaigns, exclusive collections, and sponsored collaborations to reach new audiences and drive user acquisition.

Key takeaways

Depop is a peer-to-peer marketplace for the buying and selling of fashion items. It was founded in 2012 by Simon Beckerman who recognized that print media would be replaced by digital media and eCommerce.
Depop makes money by charging a so-called Depop fee to sellers. The company also charges a transaction fee for facilitating payments.
With a simple fee structure, increasing Depop revenue generation means increasing the number of users on the platform. This is encouraged by giving top sellers access to a range of perks and incorporating social signals to increase legitimacy and product quality.

Key Highlights

Founding and Growth: Founded in 2011 by Simon Beckerman at H-FARM, Depop is a peer-to-peer shopping app with over 21 million users. Etsy planned to acquire Depop in 2021 for $1.625 billion.
Background and Vision: Originally, Depop was conceived as a mobile marketplace where users could see and buy items featured in Beckerman’s magazine People In Groove (PIG). The app aimed to enable users to purchase items seen in digital media.
Growth Strategy: Depop experienced significant growth through word-of-mouth advertising and social sharing. Expansion included launching on iOS and Android, along with offices in multiple cities.
Revenue Generation:
- Depop Fee: Charged to sellers, a 10% fee is applied to each successful sale, covering expenses related to maintenance, upkeep, and wages.
- Transaction Fee: A fee is charged to facilitate payments, varying by region. It applies to various payment methods, including Depop, Google Pay, Apple Pay, credit/debit cards, and PayPal.
- Top Seller Status: Depop rewards high-sales volume sellers with Top Seller status, offering benefits like a verified badge, account manager, and private forum access.
- Social Signals: Depop’s social component encourages high-quality products and fosters legitimacy through interactions, following, and content sharing.