Etsy, the online marketplace which connects craft-makers and craft-lovers from around the globe is the latest in a slew of lay offs which have happened over the past year.
Etsy announced an 11% job cut yesterday, representing an attempt to streamline costs in what it has called a “very challenging” environment.
The e-commerce giant looks poised to undergo an overhaul of its structure as chief executive Josh Silverman seems laser focused on ensuring the future growth of the company.
Unsustainable Trajectory for Etsy
In the letter to his staff, CEO Josh Silverman blamed “essentially flat” merchandise sales for the past two years for the jobs cut.
His letter continued, “This means we are not bringing our sellers more sales, which is the single most important thing we can do for them. At the same time, employee expenses have grown, even as we have introduced significant cost-cutting measures and adjusted or paused hiring plans. This is ultimately not a sustainable trajectory and we must change it.”
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“Increased competition” was among the factors cited by Silverman which contributed to the challenging macro environment. He did not reference competitors by name, however the likes of Shein and Temu, who offer consumers cheap manufactured goods from China and have recently flooded the market with aggressive online advertising strategies, come top of mind.
The news broke at the same time as an updated fourth-quarter guidance was published for Etsy. In the guidance report the company forecast that gross merchandise sales will decline between 1% and 2% during the fourth quarter of this year compared to the same period last year. Revenue figures look set to increase by 2% to 3%.
What’s more, shares in Etsy declined by a further 2.2% following the announcement from Silverman, falling as low as $78.54.
Poor Timing by Silverman
The news coming just two weeks before Christmas was unlikely to be a popular decision, however Silverman reassured affected workers that they will remain on Etsy payroll until “at least” January 2nd although many of them had their last day on Wednesday.
The cut has affected workers on all levels, with several executives including Ryan Scott, chief marketing officer, already announcing his departure.
The lay offs come at a cost of between $25m and $30m to the company in severance packages and other related costs, according to their regulatory filings.
Speaking about the announcement of Wednesday, Silverman said it was “one of the hardest [days] we’ve experienced at Etsy”, he continues addressing workers who will remain employed at Etsy.
“The waters may be rough right now, but there’s no other ship I’d rather be on, and no other crew I’d rather be with, as we weather this cycle and emerge even stronger on the other side.”
Want to know how to go about the thankless task of laying off staff? Here’s some advice for dealing with lay offs.