how-does-depop-make-money

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.

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With a background in technology and entrepreneurship, Beckerman quickly realized that print media would be superseded by digital media at some point in the near future.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.

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.

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.

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how-does-depop-make-money
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.
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