Etsy made 2 massive acquisitions at peak tech valuations. Two years and a $1 billion write-off later, it has buyer's remorse as it sells Elo7.
Etsy bought Elo7 and Depop at a time when tech valuations were sky-high. Two years after it made two splashy acquisitions, Etsy executives said Tuesday that one had not gone according to plan.
The last two years have also brought high inflation, a recessionary environment, and a return to normal rates of growth for e-commerce companies that saw huge sales boosts in the early days of the Covid pandemic. on Tuesday, Etsy CEO Josh Silverman said that Elo7 had underperformed despite the team's best efforts.
Still, the sale came as a surprise because many had high hopes that it could eventually become a bigger driver of growth for Etsy in Latin America, a region where it does not yet have much reach. less than a year after it had spent more than $2 billion on warehouse software company Deliverr. Shopify executives said the company had been distracted by its acquisition and that it needed to refocus on its"main quest."
But like Elo7, Depop has had some challenges with growth once the pandemic-related e-commerce boom ended, and it is also not profitable. Now Etsy will have to show investors it can make Depop profitable while also continuing to grow the core Etsy platform.
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