Etsy laying off 11% of staff, citing competitive environment

Etsy is laying off 11% of its workforce at the height of the holiday season as the e-commerce giant looks to restructure its business and streamline costs against a “very challenging” macro and competitive environment, the company announced Wednesday. 

Approximately 225 employees will be cut from Etsy’s workforce, which will bring the headcount for the core Etsy marketplace to about 1,770 people, similar to the company’s headcount in early 2022 and above 2020 levels. 

Etsy CEO Josh Silverman noted in a letter to employees that Etsy’s marketplace — known for selling handmade items and connecting buyers with local artisans across the globe — has more than doubled in size since 2019 but said today’s realities call for sweeping changes. 

“We are operating in a very challenging macro and competitive environment, and [gross merchandise sales] has remained essentially flat since 2021,” the letter reads. “This means we are not bringing our sellers more sales, which is the single most important thing we can do for them. At the same time, employee expenses have grown, even as we have introduced significant cost-cutting measures and adjusted or paused hiring plans. This is ultimately not a sustainable trajectory and we must change it.”

The news comes alongside updated fourth-quarter guidance for Etsy. The company now expects gross merchandise sales to decline between 1% and 2% during the period from the year-ago quarter and revenue to increase between 2% and 3%. It’s expecting adjusted EBITDA margin of between 27% and 28%, up from previous guidance of 26% to 27%. 

Shares of Etsy closed 2% lower following the announcement, after falling as much as 7% earlier in the day.

“Etsy is intensely focused on reigniting growth, driving sales for our nearly 7 million sellers around the world, and delivering value to all of our stakeholders. Today, we announced that we are reorganizing our internal structure so that we can double down on…