Etsy has undergone a restructuring that has resulted in the layoff of 11% of its workforce, which is approximately 225 employees. Etsy shares fell after the decision was announced by the company, which complained of a "very difficult" environment.
Etsy's CEO, Josh Silverman, explained in a letter to employees that this decision is related to the need to restructure the business and optimize costs in the context of macroeconomic and competitive market challenges.
As a result of these changes, Etsy's core workforce has decreased to approximately 1,770 people, which is in line with the company's early 2022 level and above the 2020 figure. Etsy, which specializes in selling handmade products and connecting buyers with artisans, has seen significant growth since 2019, but stressed the need to adapt to today's reality.
Etsy's CEO also expressed outrage that, despite the increase in sellers, gross product sales have barely changed since 2021. The letter mentions the need for drastic changes to adapt to an unstable trajectory.
Looking ahead, Etsy plans to improve its strategy to drive sales and provide value to sellers. The company updated its outlook for the fourth quarter, expecting a slight decline in gross merchandise sales and revenue growth.
The restructuring cost the company approximately $25 million to $30 million and will improve operational efficiency 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 lead the chief human resources department.
The company promises to provide severance and benefits to affected employees, including extended health insurance and the option to keep company laptops. The peculiarity of the restructuring is that the layoffs took place in the middle of the holiday season, and the company pledged to pay compensation until January 2, even when most of the employees' work ended on Wednesday.
