A Shift in Strategy for the E-Commerce Giant
Etsy Inc. experienced a significant drop in its shares on Wednesday, with a decline of over 7%, placing the company among the S&P 500 index’s least performing stocks. This setback comes as a result of the e-commerce giant’s recent announcement of staff layoffs.
In an effort to undergo a broader restructuring, Etsy plans to reduce its workforce by approximately 11%, which translates to around 225 employees. Once the restructuring is complete, the company’s core marketplace team is expected to consist of approximately 1,770 people, bringing it close to its early 2022 numbers.
Acknowledging the need to adapt to current realities, Etsy’s CEO, Josh Silverman, expressed his thoughts on the matter in a note to employees that was also submitted to the Securities and Exchange Commission. He stated, “While the Etsy marketplace has experienced significant growth since 2019, we must address the challenges of today.” Silverman further emphasized that despite Etsy’s stagnant gross merchandise sales since 2021, it is crucial to focus on generating more sales for sellers.
Citing rising employee costs alongside a challenging business environment, Silverman believes that the restructuring will help veer Etsy away from its current unsustainable trajectory. By implementing these changes, he aims to make the company more agile and concentrate on key growth priorities moving forward.
In conjunction with the restructuring, Etsy will undergo leadership changes, with Chief Marketing Officer Ryan Scott departing from the company. Stepping into the role of CMO will be Raina Moskowitz, who is currently serving as the chief operating officer.
Silverman has high hopes for Moskowitz and expects her to drive global growth by expanding brand consideration and enhancing customer trust and loyalty.
As a result of the restructuring, Etsy foresees charges totaling between $25 million and $30 million.
Although Etsy’s shares have experienced a 33% decline thus far in 2023, the S&P 500 index has seen a significant 21% increase during the same period.
