Etsy (NASDAQ:ETSY) made the surprising move last summer of acquiring Depop, a peer-to-peer social e-commerce site, for $1.625 billion, giving it exposure to the resale market.

In this episode of "Upgrade or Topgrade," Millionacres editor Deidre Woollard and Fool contributors Jeremy Bowman and Nick Rossolillo discuss the acquisition and how it fits into Etsy's broader business model. 

Deidre Woollard: Well let's talk about that Depop acquisition because they were purchased in July for $1.625 billion. At the time, it seemed like maybe an interesting move for Etsy. I think it's actually turned out to be, it's a pretty great company. They're a little more international than some of these other brands.

Nicholas Rossolillo: Yeah, I believe Depop is actually based in the U.K. if I'm not mistaken. Big presence here in the US though as well, but definitely more international presence. You get the exposure to the same market, but over in Europe.

Deidre Woollard: I'm not sure if they are as much of a buyer, seller, all-in-one ecosystem. I'm wondering because Etsy itself is much more buyer-seller differentiated, if that's going to impact Depop in any way.

Nicholas Rossolillo: It'll be interesting. Sorry Jeremy, go ahead.

Jeremy Bowman: Go ahead Nick. I was just going to say I think like you were saying with Poshmark, I think Depop positions itself as a social network/social commerce platform, which is cool. There's a social benefit in addition to buying and selling and making some money. I think their interface basically looks like [Meta Platform's] Instagram. That's cool, I think it feels familiar and easy to use to people, which I think is an advantage for them.

Nicholas Rossolillo: Yeah, and it is a good fit for Etsy, because though it has a different dynamic with the buyer-seller ecosystem, it too is a social platform as well. A lot of people use Etsy for that reason exactly: they like being able to interact with who they're buying from, who made the item, and that merchant, that craftsperson that is shipping it to them. This is why I got interested in this whole bigger industry, was when Etsy said we're buying Depop, because at first I raised my eyebrows. Over $1.6 billion, how much revenue is this company doing? $60 million last year? That's a steep price tag. But then you delve deeper into it and it is much more than just the small, tiny niche. It has become a lifestyle among, especially younger generations. Etsy's a little mum at this point on how many people are using Depop, but it would seem like it's a pretty good size platform with a couple of million people buying and selling on it, 90% of which are in that early 20s and younger age range, which obviously says something on perhaps the longevity of the business model.

Deidre Woollard: Nick, you had a note on here about the commission. I know you've been following the commission across all of these different companies. I think it's interesting to think about the aspect of seller doing the work and how much of that is a factor in all of these companies as we think about it going forward. With ThredUp, you just shoved the clothes in the bag and send it off, with The RealReal you have to usually take the item or ship the item somewhere. Do you think that the seller doing all of the work and having to deal with the individual people in an eBay model is a positive or a negative for Depop?

Nicholas Rossolillo: That's a good question. It probably depends on the person and that's why there's probably room for all these different platforms. Etsy has become a haven for people that want to manage their own small business, they want to turn their skill into either a side hustle or a full-blown small business. You can almost do that with Depop as well. It's only a 10 percent commission, that's it. There's no listing fee, they just simply take a 10% commission of whatever the sale price is. But then you the seller are responsible for it. If you're just trying to make a couple of quick bucks here on the side, between the extra work and the lack of authentication process, Depop is probably not the platform to go with. If you want to make a living out of reselling clothing and accessories, I think this is a fantastic platform. For that alone, you get some pretty good support for a pretty low commission, especially when you're comparing it against the other players in the field, 10% is pretty low.

Jeremy Bowman: Yeah, I think Depop, too, it's worth mentioning. They're not strictly resale, I think their scope is a little broader than it might be for some of the other companies they're talking about. I think that also makes them a good fit with Etsy in addition to that direct buyer-seller connection that Nick was talking about. I think that's going to encourage repeat. You're not going to make a Depop account just to sell one thing, you're going to be a repeat user. I think in some ways that's an advantage.

Deidre Woollard: I would agree with that too because I think that's one of the reasons that Etsy bought them, is that Etsy has been trying to increase the amount of habitual buyers that they have: that's always been an issue for them. It's that people go to Etsy to buy a holiday present or something like that. It's not necessarily where they go all the time. Pandemic changed that a little bit for them, because so many people went to go look for masks and then started looking for other things. I think the supply chain issues are something that has been good for Etsy, as well as being good for Depop and other brands like that.

Jeremy Bowman: Yeah, that's a good point. Etsy was another beneficiary of the supply chain thing, if you think of handmade and there's not much of a supply chain for that compared to other larger companies that are global.

This article represents the opinion of the writer, who may disagree with the “official” recommendation position of a Motley Fool premium advisory service. We’re motley! Questioning an investing thesis -- even one of our own -- helps us all think critically about investing and make decisions that help us become smarter, happier, and richer.