Global e-commerce marketplace Etsy announced on Wednesday it will lay off approximately 220 employees, representing about 12% of its total workforce. The online marketplace is aiming to streamline its organizational structure and accelerate innovation within an increasingly competitive e-commerce landscape.
Chief Executive Officer Kruti Patel Goyal, who took over the company earlier this year, stated in a memo to staff that the job cuts will help the company "build the organization we believe Etsy needs for the future." Most of the reductions will impact the product and engineering teams, the company said.
The layoff plan was disclosed alongside Etsy's second-quarter earnings report. In a letter to shareholders, the company emphasized that this is not a cost-cutting measure but rather an effort to help the company "invest during a period of momentum to move faster and execute with more focus." An Etsy spokesperson also clarified that the layoffs are not driven by artificial intelligence.
"You have heard me say that our number one priority is returning the business to growth," Patel Goyal wrote in the employee memo. "However, our ultimate goal has always been to push Etsy toward higher levels of growth to fully realize our mission and potential. We have now reached a moment where we need to make a shift—to build the team, culture, and organizational structure that can achieve this."
Etsy operates a digital marketplace known for handmade and craft items. The company experienced a surge in business during the COVID-19 pandemic as consumers flocked to online retailers, but it has struggled to maintain that momentum as lockdown restrictions eased and shoppers returned to physical stores. The company also faces growing pressure from competitors such as Amazon and Walmart, as well as newer entrants like TikTok Shop and Temu.
Under the leadership of Patel Goyal and her predecessor Josh Silverman, Etsy has been working to reinforce its reputation as a marketplace for unique products while removing mass-produced generic items sold by resellers. As a warning to Amazon, the company launched a "Shop Other Jeffs" advertising campaign in June during the retail giant's Prime Day promotion, featuring "non-billionaire creators" named Jeff. Additionally, Etsy has improved its website search function to provide shoppers with more personalized results, helping them discover items faster.
These changes appear to be yielding some results. Second-quarter sales rose 6.2% year-over-year to $668.3 million, surpassing the $649.1 million expected by analysts surveyed by LSEG. However, Etsy reported an adjusted loss of 36 cents per share, compared to adjusted earnings of 25 cents per share in the same period last year. The company attributed this performance to the impact of selling its musical instrument marketplace, Reverb, in June 2023.
As part of its effort to focus on its core marketplace business, Etsy has been divesting other brands from its portfolio. The company last month completed the sale of Depop to eBay for $1.2 billion, roughly a year after acquiring the secondhand clothing platform for $1.6 billion.
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