RIO DE JANEIRO, BRAZIL – To begin its expansion throughout Latin America, U.S. e-commerce company Etsy, owner of marketplaces for handmade products, has signed an agreement to buy Brazilian website Elo7 for US$217 million (about R$1 billion).
Elo7, a sort of “Brazilian Etsy,” has more than 56,000 sellers and 1.9 million customers on its marketplace. There you can find everything from handmade bijouterie and wedding items to home decorations and fabric masks.
In an interview with Exame, Elo7 founder and president Carlos Curioni said the transaction was a “natural step” because the Brazilian company, founded in 2008, was inspired by Etsy, which was founded three years earlier in the U.S. by Robert Kalin, Chris Maguire, Haim Schoppik and Jared Tarbell. “We’ve known each other for a few years and have a similar understanding of company culture and mission. So the acquisition was a natural fit,” says the founder.
The acquisition, which is expected to close in the third quarter of this year, was made in cash and not through a stock swap. The founder and the company’s 150 employees will remain in business. In the coming months, Etsy and Elo7 will define the management and relationship between the teams will be.
What is already clear is that the brand and the headquarters in São Paulo will remain. “What attracted interest was our brand, our internal structure, and the base of sellers. The idea is that we keep that and take advantage of the synergies with them,” Curioni says.
Elo7 is expected to help Etsy tap into the growing Latin American e-commerce market, which has a penetration rate of less than 10% but is expected to grow 26% annually and reach $29 billion in transactions by 2024, according to Euromonitor data.
Brazil, the largest market in the region, has shown significant growth since the pandemic began. Last year alone, e-commerce in the country grew 41%, and 13 million Brazilians made their first online purchase.
“This transaction will give us a foothold in Latin America, an underutilized e-commerce region where Etsy currently has no significant customer base. We look forward to welcoming Elo7’s talented leadership team and employees to the Etsy family,” Josh Silverman, president of Etsy, said in a statement.
Etsy, founded in 2005 with a mission to “keep e-commerce human,” is now valued at about $23.4 billion. In total, the marketplace has more than 4.4 million sellers and 81.9 million buyers, resulting in nearly $4 billion in revenue for sellers last year.
The company is benefiting from the e-commerce boom in the world and is in an expansion phase. In early June, the company announced the purchase of the UK used clothing marketplace Depop for $1.62 billion.
Founded in 2011, the website now has more than 30 million customers in 150 countries. It is prevalent with Generation Z. Earlier, in 2019, the American acquired used music equipment sales platform Reverb for US$275 million.
“In addition to our initial mission to continue to grow our core marketplace, Etsy.com, we will now focus on integrating Depop and Elo7 into the Etsy family,” Etsy Chief Financial Officer Rachel Glaser said in a press statement.
As with Reverb, Etsy assures that Depop and Elo7 will operate independently but will have access to Etsy’s help in product management, marketing, technology, and customer support.
“We look forward to leveraging Etsy’s expertise to help the Elo7 marketplace, community and team reach our full potential in Brazil,” Curioni says.
Source: exame