Elo7, one of the most famous Brazilian online markets, will be bagged by Etsy for $217 million. By acquiring Elo7, one of Latin America’s most popular eCommerce sites, Etsy will have a wider market presence. Not long ago, Etsy bought Depop for $1.6B to extend its existence to Gen Z Market. Now, it’s still working on securing a sturdy platform filled with different generations.
Let’s take a deep dive into Elo7 and why it’s worth $217 million?
Elo7’s Marketplace
Elo7 is one of the leading eCommerce websites in Latin America, with more than 1.9 million active shoppers. It’s a marketplace that allows users to buy or sell handmade goods. Its marketplace includes a total of 40 categories with at least 50% gross merchandise sales or GMS.
Overall, the online marketplace ranks as the top 10 most visited eCommerce sites in Brazil. It has 56,000 active merchants and up to 8 million items for sale. The numbers that Elo7 offers are a substantial boost for Etsy’s presence in the online market.
As Etsy acquires the online market, the company will continue and function as a separate brand. Elo7’s current management is based in Sao Paulo, Brazil. The Brazilian online marketplace has a lot of similarities with Etsy. Admittedly, the CEO of Elo7 said that Etsy has always been an inspiration and reference for the brand. Elo7 is excited to be part of Etsy, whose culture and mission closely match their own.
According to Josh Silverman, Etsy’s CEO, Elo7 is the “Etsy of Brazil.” Silverman further explained that both marketplaces have a similar business model to each other. Like Etsy, Elo7 has accessories, handmade goods, and customized items.
Elo7 and Etsy Transaction
Etsy acquired Elo7 by paying $217 million in cash. The amount is subject to specific changes considering Elo7’s transaction expenses, working capital, money, and indebtedness. It’s also reduced by the value of certain equity awards granted to the Elo7 employees connected with the transaction.
Reverb, Depop, and Elo7
Closely following Etsy’s agreement to purchase Depop, Elo7 enters the Etsy Family. One of the main reasons Etsy bought the Brazilian marketplace is to gain a customer base from Latin America.
Although Etsy is one of the biggest online marketplaces out there, Latin America is an under-penetrated region. Through the transaction, Etsy hopes to build a strong foundation and a meaningful customer base. Despite COVID-19’s effects on the economy, the eCommerce growth grew by at least 15%. According to Etsy, Brazil’s eCommerce growth is expected to increase up to 26$ by 2024.
Meanwhile, according to Rachel Glaser, Etsy’s CFO, aside from continuing Etsy’s further growth this year, the company will focus on integrating acquisitions. Specifically, Depop and Elo7’s integration. Etsy’s acquisitions Reverb, Depop, and Elo7 will continue to be managed by their empowered teams.
Etsy will approach the three by connecting essential functions that users can find across the brands. Each is designed to accelerate value creation. Also, take a whole worth rather than the sum of its part.
Final Note
Overall, Etsy has been acquiring different kinds of companies to expand its marketing reach. Now that Etsy made a power move to achieve at least three online marketplaces.
Reverb is a marketplace for used, vintage, and new music gear for $275 million. Then, almost two years later, they also acquired Depop for $1.6B. Then the latest acquisition throne goes to Elo7 for $217M.
For now, let’s sit back and observe how Etsy adjusts its growth plan. At the same time, let’s watch how Etsy fully integrates Depop and Elo7 into the “family.”
