KEY HIGHLIGHTS
- Etsy CEO Josh Silverman announced over 200 layoffs, affecting approximately 225 team members.
- The layoffs are attributed to a challenging macro and competitive environment, with flat gross merchandising sales (GMS) since 2021.
- Despite significant cost-cutting measures, employee expenses have grown, necessitating a change in trajectory.
- Chief Marketing Officer Ryan Scott is departing; responsibilities will be absorbed by COO Raina Moskowitz.
- The company acknowledges the challenging timing of the announcements during the winter holidays.
- Laid-off staff will remain on Etsy payroll until at least January 2, 2024, and will receive an enhanced severance package equivalent to 16 weeks of base pay plus additional compensation based on years of service.
Etsy CEO Addresses Company’s Unsustainable Path; Cuts 11% of Staff
Etsy CEO Josh Silverman announced on Wednesday that the popular online marketplace will be letting go of around 11% of its workforce. The decision, detailed in an email to the staff and posted on the company’s website, comes during a challenging period for Etsy as it faces tough competition from rivals such as Shein and Temu.
In the email, Silverman explained that the layoffs would impact around 225 team members. The move is a response to the difficult economic and competitive landscape, with gross merchandising sales (GMS) showing minimal growth since 2021. Despite implementing significant cost-cutting measures and adjusting hiring plans, employee expenses have continued to rise, leading to an unsustainable situation that requires a change, according to Silverman.
The company also revealed the departure of its chief marketing officer, Ryan Scott, whose responsibilities will now be taken on by COO Raina Moskowitz. Scott had joined Etsy in April 2019.
Silverman acknowledged the unfortunate timing of the announcements, recognizing that they were being shared during the winter holidays. Despite the layoffs taking effect immediately, impacted employees will remain on Etsy’s payroll until at least January 2, 2024.
To soften the impact, Etsy is offering an enhanced severance package to the affected staff. This package includes severance equivalent to 16 weeks of base pay, with an additional week for each full year of service. Additionally, the employees will still receive bonus payments for the current year.
Etsy’s decision to downsize is not unique, as other companies, including streaming giant Spotify, have also resorted to layoffs to manage costs. Last week, Spotify laid off 17% of its workforce due to what CEO Daniel Ek described as a challenging economic environment. Ek emphasized the need for the company to become “relentlessly resourceful” in the face of slowed economic growth and increased capital expenses.
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Source(s): Business Insider
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