Etsy, the popular e-commerce platform known for its marketplace of handmade items and connection to local artisans, is facing significant challenges. In an attempt to restructure the business and cut costs, the company announced on Wednesday that it will be laying off approximately 11% of its workforce, totaling around 225 employees. This decision comes at the height of the holiday season, which makes it particularly impactful for those affected.
Etsy’s CEO, Josh Silverman, acknowledged in a letter to employees that while the marketplace has experienced tremendous growth since 2019, it is currently operating in a “very challenging macro and competitive environment.” Despite its expansion, gross merchandise sales have remained relatively flat since 2021, which is a significant concern for both the company and its sellers. Silverman emphasized that increasing sales for sellers is of utmost importance and that the current trajectory is not sustainable, hence the need for change.
In conjunction with the announcement of the layoffs, Etsy also provided an updated fourth-quarter guidance. The company now expects gross merchandise sales to decline between 1% and 2% compared to the same period last year, with revenue projected to increase between 2% and 3%. Additionally, the adjusted EBITDA margin is expected to be between 27% and 28%, reflecting a slight improvement from previous forecasts. Following the news, Etsy’s stock experienced a 2% decline, after having fallen as much as 7% earlier in the day.
Etsy is determined to reignite growth and deliver value to its sellers and stakeholders. CEO Josh Silverman stated, “Etsy is intensely focused on driving sales for our nearly 7 million sellers around the world.” The company aims to double down on these efforts by reorganizing its internal structure. However, this reorganization unfortunately comes at the expense of approximately 225 employees. Despite the necessary layoffs, Etsy remains committed to its mission of supporting small businesses and independent creators.
The decision to lay off employees is never easy, especially during the holiday season when individuals are relying on their income to purchase gifts for loved ones. To mitigate the negative impact, Etsy has pledged to pay affected staff through at least January 2nd, providing them with severance pay and additional benefits. The company recognizes the importance of supporting its employees during this challenging time.
As part of the restructuring process, Etsy’s chief marketing officer, Ryan Scott, will be leaving the company. His role will be consolidated under the chief operating officer, Raina Moskowitz, who has a background as a former executive at American Express. Additionally, Kimaria Seymour, the chief human resources officer, will be departing, and Toni Thompson, the current vice president of global people and talent strategy, will take over the position. These changes reflect Etsy’s commitment to reorganizing its leadership structure to enhance operational efficiencies.
Although the layoffs are challenging for the affected employees and Etsy as a whole, the company believes that this restructuring will ultimately lead to operational efficiencies and cost savings. The expectation is that salary costs and benefits will be significantly reduced, resulting in improved financial performance. The complete restructuring process is estimated to conclude by the end of the first quarter of 2024.
Etsy’s decision to initiate layoffs during the holiday season demonstrates the company’s willingness to make difficult choices in the face of a challenging business environment. The focus on reigniting growth and delivering value to sellers remains a top priority, and Etsy is taking proactive steps to achieve these goals. By implementing a comprehensive restructuring plan and making necessary leadership changes, the company aims to position itself for long-term success in an increasingly competitive e-commerce landscape.
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