How Depop is Tapping Into What Gen Z Wants with its Fashion Resale App
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Most Innovative Companies is presented to you by Invesco QQQ, Invesco Distributors, Inc.

I'm Amy Farley, and this is Most Innovative Companies, where we're talking to business leaders about how they've found creative ways to confront some of today's biggest challenges and point the way forward for their industries and society at large. Today, we're going to talk about social media. While Facebook and Twitter still dominate the space, apps like TikTok and Clubhouse are offering people new ways to express themselves and form communities.

On this episode, I'll be speaking with Maria Raga, the CEO of Depop, the fashion resale app that's become popular with Gen Z. The platform has 30 million active users. 90% of them are under the age of 26. That's not surprising considering that Depop doubles as a commerce platform

and a social media app where sellers and buyers can like items, DM and follow one another, and form connections around their shared style. Depop is tapping into what Gen Z wants today. It's a place where they can freely express themselves while also creating lucrative side hustles.

and its thriving resale community is helping to make fashion less wasteful, which is a priority for a generation that's grown up with the existential threat of global warming looming over them. Depop's unique approach to social commerce and deep connection with younger users caught the attention of Etsy. The e-commerce giant acquired Depop for more than $1.6 billion in June. But before we focus on Depop, let's take a look at the larger world of social media.

FastCoworks contributor Ted Brown spoke with Ryan McCormick, an equity product strategist at Invesco QQQ, to get his take for a special custom segment called Inside the Industry.

I'm Ted Brown. Joining me again is Ryan McCormick. Ryan, thanks so much for being here. It's great to be here as always, Ted. Thanks. So Ryan, just starting off at a high level, what are the big shifts you see in this industry over the next year? And which of the developments are you most excited about? I think we're going to see this continued focus on video. It seemed as though in the past 12 months, there was this concerted effort to look at video-specific content creation. So whether that's streaming, going live, et cetera.

It really was a very major focus over the past year. People are consuming real-time content, and I think the development of video is only going to evolve to include much more AR integration. So whether it be kind of new filters or a way to interact, all of this content creation will be further enhanced and enhanced.

Speaking of enhancement, the ways that people and brands connect with audiences, I think opens up doors to a ton of new opportunity. How do you think that impacts e-commerce? How do you think that impacts retail and sort of the wider economy at large? I think brands, if they haven't jumped on already, they're jumping on right now. You know, an example would be like something like a unique filter.

That's very specific to their company, their product line. Trends that creators and users kind of jump on. It can be a very effective tool in expanding brand awareness. But I think that you're going to see more and more companies utilizing AR to showcase specific products or specific services in the real world. Think like filters that show what clothes look like on consumers. Consumers using a specific product.

product or piece of equipment and then linkages to kind of virtual browsing, right? Where you can zoom in and out 360 degree views, et cetera, all what it would look like in the real world. You know, another example, you're seeing it already. It's something like a furniture company. They're showcasing what their products might look like inside your living room.

So I think with that, you're going to see a lot more brands figuring out ways to implement strategies that can showcase their products in the real world, because I think the way that folks are shopping is changing beyond the just online shopping. COVID obviously accelerated a lot of those trends and strategies from a lot of e-commerce giants, a lot of social media players.

Which of those changes do you think is going to permanently transform the way that we shop and interact with brick and mortar stores? You know, from a brick and mortar standpoint, you've seen brick and mortar go to online shopping. And now, you know, this much more targeted and more specific way of shopping kind of within a social media ecosystem. I think you'll have some people that still have a preference for brick and mortar online.

But, you know, I think these brands have had to jump on the wave of how can we cater to this very specific demographic or group of people that we believe will consume our product. And having that specificity being rooted in data is paramount for brands and companies going forward.

What do you think is the biggest misconception about how social media is used as a marketing business development tool? While it does serve as a form of entertainment, as a way of keeping up with friends and family, and certainly a lot of that became much more relevant and frankly, much more important in 2020. I mean, the fact of the matter is social media is a machine that companies can use to reach consumers.

Beyond creators seeing the opportunity and monetizing their follower bases, I think folks have to realize that those on social media are a very captive audience. Depending on what sort of content you're interested in, what sort of content you consume, brands, companies are able to leverage that to make it a very effective way to put their products that they believe you will be interested in in front of you.

So, you know, at the end of the day, this is a marketing and advertising machine with some content and entertainment sprinkled in on the side. And I'm interested because I do want to talk about that contrast between entertainment and impacting the economy. And I want to hear your thoughts about how emerging platforms, especially

are impacting the wider economy outside of your typical e-commerce brand or direct-to-consumer brand? You're looking at a lot of focus on this notion of one-stop shops. Like businesses are opening up various shops on social media platforms where consumers can browse and purchase individual products right there. They don't have to leave the website. They don't have to go to another website. It's less clicks.

The entire transaction from introduction to advertisement, to cart, to checkout, it's all in one place. From there, you're getting real-time data and feedback on who is buying your product. At what point are they buying your product? What brought them to buy your product? So, you know, it's not only tapping into the right consumer, but you're getting further feedback on, okay, which one of these consumers are we actually converting into full sale? And there's more consumers who are expecting a frictionless shopping experience as well. And that one-stop shop,

Especially Gen Z. How do you see social media reacting to the preferences of Gen Z, whether it comes to things like buying vintage or recycled materials or an appeal to sustainability when it comes to e-commerce? How do you think social media is reacting to those trends? I think like the rest of us, they're trying to figure it out. And I

I say that, you know, there's a bunch of interesting studies and articles that have been written about Gen Z's shopping habits, and it's tough to put a finger on it. You know, it seems as though sustainability is a real focus, but I think it's just one component to Gen Z shopping preference. You look at some of these studies, they all pretty much across the board talk about Gen Z very interested in luxury.

but not really luxury in the way that folks have consumed brands before. It's more unique. So what they found was Gen Z isn't really concerned so much with the brand itself, but whether or not it does make them unique. There's not a ton of brand loyalty, but that loyalty kind of, it happens within interaction on social media with the brands themselves. Beyond that, seeing others or celebrities in those brands interaction again with the celebrity itself or kind of brands having a very robust social media presence, I think ultimately

all appeals to the Gen Z consumer. Then from a company's perspective, okay, how can we get this notion of high quality goods in the hands of the right influencer? That I think in and of itself is very telling for Gen Z, but like everybody else, I think folks are trying to figure out what exactly Gen Z shopping habits are other than, hey, we want a frictionless transaction that's easy to undertake. My guest today is Ryan McCormick. Ryan, always a pleasure talking to you.

Thanks so much, Ted. Appreciate the time. Inside the Industry is produced by Fasco Works in partnership with Invesco QQQ. I'm Ted Brown, and now back to Most Innovative Companies.

So just about every company and brand wants to understand how Gen Z operates and how they can reach this vital and growing group of consumers. But few companies are as tapped into Gen Z as Depop, the social shopping app that launched in 2011 and has since grown to 30 million users, 90% of whom are under the age of 26.

They use Depop to buy and sell vintage fashion, streetwear, and one-of-a-kind items. They connect with one another through the platform, and they spot and participate in emerging fashion trends. They're using Depop to express themselves, basically. Depop's robust community caught the eye of e-commerce giant Etsy, which recently acquired Depop for $1.625 billion. I'm delighted to have Depop CEO Maria Raga, who has been with the platform since 2014, on the podcast today.

to discuss how Gen Z is using social networking to shop and where her company is going next. Maria, thank you so much for joining me and congratulations on the Etsy acquisition. Thank you so much, Amy, for having me. So I'd obviously love to know what this means for Depop going forward, but I'd really like to start with where Depop is today. And I wonder if you can give us

your perspective on what drew Etsy to Depop in the first place. What is it about this community and how your platform works that's so unique? Yeah, so like you mentioned earlier, Depop is not just a marketplace app. It's a place where people come to buy and sell, but also connect and get inspired through its unique fashion, but also the way people style their clothes, the trends that come out of it, and

And yeah, it's a very vibrant community with loads of entrepreneurs that are looking either to do deep on a side hustle or they are actually building a creative business. And when you think about Etsy and the things they care about, actually, there's a lot of similarities. They think about supporting businesses that are very entrepreneurial, that are creative, that connect. So they really value this concept of like social commerce.

which is something that Deepop has had from day one. And yes, while it's a different kind of inventory, it's a different type of audience, in many ways we share the same values or the same principles about what we think is important in commerce. We've been in contact with them for a while.

because obviously they've been in the business for longer. So they went through similar challenges that we are going through right now. So we thought that it could be a good way for us to like deliver our mission and support our users in a faster and better way. To give people a grounding in Depop who may not have used Depop or may be a more casual user. I think what's so interesting about Depop is that there's so many levels

and ways you can use it. There's obviously the casual users, there's power users, there's a slew of different kinds of sellers from individuals, as you said, who are pursuing a side hustle to leading fashion brands. But to a casual user, it may appear that Depop is simply a resale platform that connects buyers and sellers.

What makes it truly a social network? So first and foremost is the ability to be able to like items, comment on items, engage with the seller, have discussions about the actual item, or even become close friends with some of the sellers, right? You keep hearing about these stories about

users either getting together to build a business on the back of those conversations or some sellers becoming shopping assistants in a way, like finding specific items that a buyer wants. So because of the ability to interact with users, you see that dynamic, that social dynamic happening.

You have unparalleled insight into what Gen Z values right now. And I know you've done studies of your users to get further insight. What is it that they value that you see coming through on DeepHop? Is it really all about self-expression and appreciation for sustainability that's driving their interactions? Are there other elements to their interactions?

Yeah, there's lots of very interesting aspects about Gen Z that differentiates them quite a lot from other generations. First and foremost, it's worth mentioning that we didn't build this platform necessarily for the Gen Z. We basically had, you know, we have a set of values that happened to resonate quite well with Gen Z. And therefore we ended up having a large majority of our users being Gen Z. But with this process, we've been able to learn loads about them, right? Because we engage with them. We have higher people from our communities.

Back in the days when we were at the office, you could see users every day. I talked to our sellers on a weekly basis. So we're quite close to them. But it's true that recently we partnered with Bain and Company to really have a more sophisticated way to get more quantitative sales.

insights around what makes them different. And the first thing that comes as a main, main insight is the fact that Gen Z is an extremely fluid and very interconnected in the way they process the world. It's not this or that, it's this and that. You know, one day they want to be the posh kind of style. Another day they want to be the sporty person. Another day they want to be more male-ish looking. And they are constantly changing the way they look. And it's

It's true that they are more sustainable, like 90% of GNCs say that they have changed the way they do things to be more sustainable. They also are more likely to purchase from a business that have specific commitments to environmental issues.

plans, and they are really, really activists. Like they really feel that whether it's through social media or through physical interventions, they can actually influence change. And they are also, like you said, they are very entrepreneurial. They are basically defining new paths to become successful. Back in the days, my generation, we had a very set path.

You go to university, then you do consulting or you do banking or you do whatever other industry. And then we'll see. For them, they don't even think about necessarily going to university. They think about, okay, what are the things that I want to do? It makes me passionate about. And then, you know, that basically means that I will have to have multiple jobs. And one of them could be a deep up shop that helps fund

some other jobs that are not necessarily, that have a recurring income, then that would be it. And so you see that through this research, that this is not just deep communities, that definitely very much the Gen Z, the way they approach life. I'm curious because there's sort of a sense of the early YouTube

generation and Instagram users very consciously became content creators. I wonder if it's as, if it's more organic on Depop when somebody sort of puts themselves out there and starts becoming a content creator, are they really positioning themselves that way, positioning themselves as an influencer, or is it a little bit more organic? I would say it's both in a sense that they

They see themselves as content creators with fashion. Just like YouTube, you do videos. Instagram, you do photos. On Depop, you style your clothes. And the way you style your clothes is in an extremely creative way. They all have their specific branding. You can go to an item and recognize who the seller is just by looking at the actual photo. So in some ways, they are content creators. Depop has not really influenced the way they do it. We've been very much supporting them to let them do the way they want to do it.

But it is true that some of them, because they managed to create a strong following base, they've been able to become influencers in their own right. And they've also done that through other mediums. So you've got some sellers that I don't know if you heard about Internet Girl. She's one of our top sellers in the US. She makes more than a million dollars in revenue on a yearly basis with her shop. But she also has a YouTube channel where she teaches people or she tells people how to become entrepreneurs.

So she has become an influencer herself. So is there a sense that this Gen Z perspective and this kind of fluidity that you're talking about is starting to influence other generations? Are you finding that millennials and even older consumers are coming to Depop and maybe embracing the user behaviors that originated with the Gen Z users? Yeah, totally. So there's also a piece of insight from the

the report that says that a large majority of Gen Cs are also influencing the purchases of their own household. And so that together with the fact that Gen C is going to be one of the largest generations, Gen Cs are going to change the future because they are the future, not just because they are influencing all the generations, but because they are the ones that will become the future. So

I'm really optimistic because of the traits that I see from GNCs in terms of sustainability and entrepreneurship, I think are very positive changes to the world. And so, yeah, I think they are also influencing other generations as a result. They definitely got me to buy a pair of Levi's 501s for the first time in maybe 20 years. So there we go. Amazing. I'm back to wearing what I wore in high school. Thank you.

Same size? Yes, I'll say yes on the podcast. There was that. Sure, I'm not going to tell the truth, but yeah, yeah. And how has user behaviors and sort of patterns changed over the past year? Has the pandemic changed the way people are using Depop? Have people become more entrepreneurial and looking for sort of new revenue or

new cash flows during the pandemic? Yeah, 100%. So last year was obviously, I mean, I must say that it's been a dramatic year for many people. At DeepUp, it's been really great to see that we've been able to create a source of income for many people that were either furloughed or lost their jobs. So

because ultimately you only need a phone and, you know, the clothes that you have in your closet. So we've definitely seen a spike in usage on the back of lockdown, people spending more time on the app, people also using the app to be connected with other people when, you know, from their homes. So,

There's definitely been a lot more activity. It is true that there's been some challenges around sourcings, for instance, but you see how that entrepreneurship mindset really kicks in and you see very innovative ways that people have found to get inventory. So yeah, it's been a very interesting dynamic to see. Of course, things now are going back to a new normal.

It's probably not going to be the same as it was before. Not even us are going to the office on a day-to-day basis. But yeah, we're adapting. Our sellers are adapting and we keep on carrying on. So Among Your Sellers are big fashion brands, as I mentioned in my intro. And you've been growing these brand partnerships in recent months. We've seen established brands like Anasui and Benetton plant flags on Depop.

How do you bring them onto the platform in a way that feels very authentic and helps them engage with the consumers that are on Depop? Yeah, so we've always been partnering with brands from a very much like community sense, meaning these are brands that our users love.

they tend to have certain values that are aligned with us. And so you mentioned Benetton where there's loads of inventory in the platform that come from Benetton. So we basically just came up with a partnership where you can basically find loads of Benetton items on Depop or we had last year, we had a very interesting one with Vans where we basically had Vans partner with some of our sellers and they design pairs of sneakers and then we produce them and we sell them in Depop or Foot Locker.

it's very easy for us to find really fun and engaging ways to partner with brands. And it's, it's all about, you know, showcasing creativity or bringing heritage brands back. And yeah, there's loads of opportunities for us to do that because fashion, even if it's from previous seasons, still, it can be very fashionable. So if a, if a fashion brand really wants to

boost a revenue stream based on resale, are they turning to Depop? Or is that more sort of a thing where they'd work with a company like Trove, which would sort of help set that up on the back end? And is Depop really a place for them to introduce themselves to new generation and to increase their basically their street credibility? Yeah, so the type of

partnerships that I just mentioned are actually very beneficial for these brands to be more connected with Gen Z's because again, we've got a community appeal and we've got a sustainability appeal. But it's true that brands are becoming more and more, probably the word is no concern, but more aware

of the need to change some of the dynamics in the fashion industry. So they are partnering with people like Trove or some others are doing it on their own. And we actually welcome that. I think it's really, really great that the fashion industry is finding new ways for them to be more sustainable. And so...

We as well are going to be iterating and we're going to be testing and experimenting new models. But I find it very, very positive and very also it confirms also the fact that the category is here to stay and it's going to grow. Actually, it's projected to be bigger than fast fashion in the future. So those things we really welcome. So reading between the lines, am I hearing this right? That there is a possibility that Depop could be really helping brands build up a resale platform for themselves in the future?

Yeah. I mean, we are experimenting in different areas. We would be really happy to be able to support brands to be able to do that. Shape and form, we don't know. But like I said, we also welcome the fact that they are finding ways to do it on their own. Our differentiator ultimately is our community and being able to bring people together and being able to bring that unique fashion. And yeah, the way we include brands, we shall see, but it's definitely an interesting angle for us to consider. So given...

the community that you have. And also, as we've been talking about the growth of this idea of circular fashion and resale, and there's, you know, lots of platforms out there. Obviously we have Trove working behind the scenes, but places like ThredUp and Poshmark as well. How do you see Depop fitting into this world, say fitting in between shopping on Instagram and shopping on ThredUp? So like, how do we differentiate ourselves again? Yeah. And, and what's your sort of, uh,

role in that larger ecosystem? Our differentiator, it's not really our business model. It's basically our community and the fact that we are a place to find unique fashion and we have very strong values around sustainability and D&I, so diversity, but also our cultural influence.

We want to be a place where you can find the coolest, the biggest brands, the influencers, all those personalities that are strong in fashion. And to do that, you have to have a platform that has a very strong identity, but it's at the same time very authentic and it's very connected to its community. We believe there is a place for Depot. We believe that place is large enough.

And we'll continue to build on that. I mean, I think Depop is so interesting because it really is. You see these emerging fashion trends that I'll admit are, you know, filter up to my generation in just the form of Levi's 501 jeans. But, you know, something like dark and light academia. I mean, I'd never heard of this, but this is amazing.

this is a legitimate fashion trend and you see this on Depop and a community growing around it, right? Exactly, exactly. And we see that both ways coming from within the community, but also being inspired by places like in TikTok and whatever. And then you see them like searching for

In order for those things to be able to be nourished and grow, you need to have that community and then, yeah, that stamp of like, hey, this is the place where you can find these sort of things. So you joined Depop back in 2014 as the VP of operations. And I'm curious what attracted you to the platform and the company back then. You said earlier that, you know, Depop wasn't started as a Gen Z platform and it sort of

was embraced by Gen Z and now it really has that identity. But what was it like back in 2014? What drew you to it? Did you see all of this potential? Yeah. So initially what drew me to DeepUp, believe it or not, was the fact that it was a mobile first business. And the second piece that I found was super interesting about DeepUp is the way it was growing.

It was growing in an extremely organic way. It is true that when you don't have the resources, you have to find ways to do it. That doesn't cost you any money. But in reality, what happened was that through that organic flywheel of basically people talking about a word of mouth, we managed to build a stronger community and also allow the business to grow in a super efficient way. For me to see that those interactions that were happening in depot, like lots of messaging, lots of sharing or

outside of Depop, people talking about Depop in Instagram or the way Depop was actually engaging with all the social media platforms. I found it super, super interesting. And also the fact that it was, you know, back in the days we were 20 people. And so the feeling of like being part of something that was growing was super interesting. And to your point about resale, I remember back in the days that it was a bit embarrassing for me to say that I was working in a

business that was all about resale. My friends were like, what are you talking about? Why would you do that? And just so our listeners know, you were a Gilt group right before you came to Depop? No, no, no. I was at Groupon. A Grouponer. And before that, I actually worked for a company similar to Gilt in Spain. It was called Privalia, basically the same flat sales model. So I was familiar with the commerce, fashion, but resale, it was not something that I had done before. And

But I was seeing how this generation were basically taking clothes from their closet and making them look so cool in the way they were styling them, in the way they were presenting it. And it was like, it's so nice. And I was like, I was looking at the brands that I like. And I'm like, OK, if I can find those brands for like, you know, a third of the price, why not try? And then once you start trying, you're like, oh, you know, you get this box.

with like, you know, a very nice car from the seller. Thank you so much for buying from me. And then you start buying from the same seller because you like their style. Then you get hooked into it. You don't need to be GMC to be that. But it is true that it took a lot of convincing, especially on the investor front when I had to go fundraise. People were like, why would you get into this? And so I saw myself for like three or four years evangelizing, like recently it's going to be big.

It has so many things to it, right? The fashion industry is extremely unsustainable. This is a way to do that. It brings entrepreneurship, creativity. People love that. It's a social way to shop online. Why not? But of course, at the beginning, it was not that straightforward. That's so interesting. So I'm curious, as the platform started growing and you were really attracting Gen Z users, and even today with the majority of your users under the age of 26,

how do you and your leadership team who may not be of that generation stay tapped into youth culture and, you know, the notorious vicissitudes of youth culture? Yes, so very important. So at the beginning

I thought that it could be an issue, the fact that I was not part of the generation, I was not able to understand them. But then I realized that probably the fact that I was not part of the generation made me more open-minded, more willing to learn from them, understand how they think, be super obsessed about them as a user base versus trying to build things with my own taste.

So I can give you an example. It's really funny. When we built our social media team, I remember I was looking at the posts in social media and I was like trying to comment on me. I was like, why would we do this? And it really hit in my head. It's like, you should not be commenting on this. If we are posting things that you think are cool, then we're done. And so from that day onwards, like I never...

never commented. I remember my husband sharing me a post saying, Maria, really? Do you really want to put a picture of earrings that have like a fish, a real fish? And those were the ones that had like the most views. And I'm like, I'm never going to do this. I'm always going to hire people from that generation or that community. I want to make sure that our user, our employees are also users. So in the office, we have like a stationary, like tools for them to be able to sell. We provide shipping labels for them. They are very, very

open-minded. They like to be in touch with our community, but yeah, super, super important to be able to run the business and suit their needs. So you mentioned that you were interested in Etsy because Etsy had faced similar challenges that Depop is facing right now. Can you outline what those challenges are now that you're at 30 million users?

what are the big hurdles that are facing the platform? Yeah, so I would say they are the typical hurdles that a company faces when they scale. So we've got 30 million items to sell. So how do you serve? How do you actually match the inventory with the demand? How do you

to maintain your users safe. So the trust and safety pieces. The beginning, it's not important, but as you grow, it becomes very relevant. What shipping mechanisms you put in place, payments, that's another area. So it's very much like the functionalities of a marketplace. As you grow, they need more sophistication.

And yeah, Etsy has gone through those. Etsy has also gone through another acquisition similar to Depop with Reverb, where they had to integrate and they also apply some of the wins that they had in Reverb. And so, yeah, we're basically planning to do the same. How important was it for you that Etsy is and, you know, has been a mission-based company, not just...

as a similar ish community to Depop, but that there is a sustainable ethos to Etsy. It's super, super important. Like I said, like sustainability and diversity are part of our mission statement to be part of a group that cares so much about that is instrumental. Like it would have been very, very hard for me to sell to the company and to the community that will be part of a group that doesn't care about these things. In fact, I would not have gone through this route. So

So it has been critical. So what's your vision for where Depop goes from here? What do you hope to be investing in and growing over the next 18 months, say? Yeah, so we are extremely excited about the U.S. It's a massive market, so we are very devoted. Again, with the help of Etsy, we think we can grow a lot faster in the U.S. What proportion of your community is in the U.S. right now?

Yeah, right now it's between 30 and 40%. It comes from the US, but I think it has potential to become a lot more than that. Once we get to that, then we'll be able to invest in other markets. And then there's lots of things that we want to do to improve the dynamic in the marketplace. Like I said before,

you know product related new technologies and then as we mentioned earlier working closely with brands to see how we can leverage each other to help with circular fashion and and things like that chamber form we will see but yeah there's loads of room for us to grow and finally a very important question if you had to choose a depop hashtag to describe your fashion style what would it be

My style? Oh, that's a very, very, very difficult one because I'm becoming a fluid myself as well. Like one day I'm like year 2K, one day I'm like 70s. Yeah.

90s, current. So yeah, so I would say fluid. Well, Maria, thank you so much for joining us today. This has been fascinating and wish you the best of luck in the coming months. Thank you so much, Amy. It was a pleasure.

It's fascinating to think about how Gen Z is using Depop not just to fuel their self-expression in terms of fashion, but also in creating new communities around fashion and around their interests, developing their sort of entrepreneurial side hustles. It's a fascinating look into the mindset of Gen Z, and Depop is a really interesting community and platform to watch in the coming months, especially after the Etsy acquisition. ♪

That's it for this episode of Most Innovative Companies. Subscribe on iTunes, Spotify, or wherever you get your podcasts. If you like the show, please leave us a rating or a review. I'm Amy Farley. Our producer is Avery Miles.