Etsy has undergone a restructuring that has led to the layoff of 11% of its workforce, or about 225 employees. Etsy shares fell after the decision, which was announced by the company, which complained of a “very difficult” situation.
Etsy CEO Josh Silverman explained in a letter to employees that this decision was due to the need to restructure the business and optimize costs in the face of challenging macroeconomic and competitive markets.
As a result of these changes, Etsy's core workforce has been reduced to approximately 1,770 people, which is in line with the company's level at the beginning of 2022 and higher than in 2020. Etsy, which specializes in selling handmade goods and connecting buyers with artisans, has seen significant growth since 2019, but has emphasized the need to adapt to modern realities.
Etsy's CEO also expressed outrage that, despite the increase in the number of sellers, gross sales of goods have barely changed since 2021. The letter speaks of the need to make drastic changes to adapt to the unstable trajectory.
Looking ahead, Etsy plans to refine its strategy to drive sales and deliver value to sellers. The company updated its guidance for the fourth quarter, expecting a slight decline in gross merchandise sales and an increase in revenue.
The restructuring, which cost the company an estimated $25 million to $30 million, will help drive operational efficiencies and cost savings. The process is expected to be completed by the end of the first quarter of 2024. It also said that Etsy's chief marketing officer, Ryan Scott, will leave the company, and Tony Thompson will take over as chief human resources officer.
The company promises to provide severance pay and benefits to affected employees, including expanded health insurance and the ability to keep company laptops. The peculiarity of the restructuring is that the layoffs occurred in the middle of the holiday season, and the company pledged to pay compensation by January 2, even if most employees finish work on Wednesday.
