Etsy joined the layoff trend among companies in 2023 after CEO Josh Silvermann confirmed the 11% reduction in the workforce along with leadership reshuffling for the next year.
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Etsy Cites Reorganization of Internal Structure
The 11% employee reduction marked Etsy's first significant layoff in recent years. Around 225 team members are said to be affected by the cut as the company prioritizes restructuring.
"After deep discussion and careful consideration, we are reorganizing our internal structure to more closely align our resources with our most important business priorities and better serve our customers," Silverman wrote.
The CEO also revealed that Etsy is experiencing slow consumer spending, citing that it has been an "incredibly challenging environment" for consumer discretionary items. The company's revenue growth started to stall as the customers adjusted their spending habits post-pandemic.
Etsy Links Challenges to Shein, Temu
Silverman also mentioned how leading e-commerce platforms like Temu and Shein affect the market. The two market leaders are allegedly driving up Etsy's advertising costs.
"And the other thing that is happening is they're spending a large amount of money on marketing, not clear that they're using ROI thresholds to do that," he explained. The CEO also believes that Shein and Temu can single-handedly affect the cost of advertising on paid channels like Google and Meta.
As for 2024, the company is expected to undergo reshuffling in leadership starting with the departure of two executives. Regardless, Silverman remains optimistic about Etsy's "quality, value, and reliability."
"I have great confidence in these plans, but we need the right structure and resources in place to successfully execute on them," he added.
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