The popular crafting marketplace Etsy Inc is laying off 12% of its workforce, approximately 220 employees. According to the company’s US Securities and Exchange Commission filing on Wednesday (US time), the abrupt changes to the employee headcount were prompted by a restructuring plan that seeks to “improve coordination and speed of decision-making.”
Etsy CEO responds after layoff news
Chief Executive Kruti Patel Goyal, who is of Indian origin, has since shared a message to employees via email, confirming the extent of the impact and severance package details for those affected by the layoffs, Reuters reported. Goyal revealed that the latest job cuts will mostly take a toll on workers in the product and engineering department.
As per her admission to the employees, the cuts weren’t driven by the boom of artificial intelligence, contrary to how countless companies have attributed recent reshuffling drives to the advanced tech. As of this week, 125,759 employees have been laid off across 264 tech companies, according to layoffs tracker Layoffs.fyi.
Nonetheless, she acknowledged that AI was, in fact, changing how everyone works and will continue to change product manufacturing and problem-solving processes in the future.
She noted that given the evolution of the tools at their disposal, the company must also come to terms with the need to evolve employees’ skills, the way everyone works with each other and the organisation’s capabilities.
“Cost savings are a consequence of these changes, but they are not the objective. We didn’t start this work with a cost reduction target or a goal of making Etsy smaller,” Goyal said in the email to employees, as quoted by Reuters. “You’ll continue to see us invest in the business and the team and hire in areas that are important to our long-term strategy.”
She added, “You’ve heard me say that our first priority was to get the business growing again. Our ultimate goal, though, has always been to take Etsy to the next level of growth so we can fully deliver on our mission and our potential. We are now at the point where we need to make that shift – to build the team, culture, and organization that will make that possible.”
What’s next for laid-off Etsy employees?
They will be given at least 16 weeks of severance pay, with additional pay based on tenure. Additionally, they will continue to receive healthcare support for up to 12 months and other benefits, as per the company’s SEC filing.
The layoff announcement coincided with the company’s Q2 earnings report, which showed that Etsy’s revenue from continuing operations increased 6.2% to $668.3 million, while marketplace revenue surged 9.3%. Gross merchandise sales on the core marketplace increased 7.5%. Simultaneously, Etsy posted a net loss of $46.7 million.
The net loss figures were also attributed to discontinued operations, including the finalised sale of Depop to eBay for $1.4 billion in cash. The marketplace, which is facing heavy competition from industry titans like Amazon and Walmart and even newer rivals such as Temu, acquired Depop for $1.6 billion five years ago.