Etsy cuts 12% of workforce as it reshapes operations for faster growth

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Etsy cuts workforce for growth

Highlights

Etsy will cut about 220 jobs, or 12% of its workforce, primarily in product and engineering to streamline operations for faster growth.
Second-quarter sales rose 6.2% to $668.3 million, surpassing expectations of $649.1 million, though Etsy reported an adjusted loss of 36 cents per share.
Etsy completed the sale of Depop to eBay for $1.2 billion last month and continues portfolio reshaping amid intensified competition from Amazon, Walmart, and TikTok Shop.

Layoffs tied to organizational overhaul

As reported by CNBC, Etsy said Wednesday that it is laying off about 220 employees, or roughly 12% of its workforce, as it works to simplify its structure and speed up innovation. The company says most of the cuts affect its product and engineering teams.

Chief Executive Kruti Patel Goyal, who took over at the beginning of this year, told employees in a memo that the changes are meant to help build the organization Etsy needs for the future. In its letter to shareholders, Etsy says the layoffs are not a cost-cutting effort, but are intended to help the company move faster and execute with greater focus during what it describes as a period of strong momentum.

An Etsy spokesperson says the decision is not driven by artificial intelligence. Patel Goyal says the company first focused on getting the business growing again, and is now shifting toward building the team, culture and organization needed for its next phase of growth.

Competitive pressure and portfolio focus

Etsy, known for handcrafted and artisanal goods, saw demand surge during the Covid-19 pandemic but has faced a tougher environment as consumers returned to physical stores. The company is also under pressure from larger rivals such as Amazon and Walmart, as well as newer e-commerce entrants including TikTok Shop and Temu.

Under Patel Goyal and former CEO Josh Silverman, Etsy has been reinforcing its position as a marketplace for unique products while removing more mass-produced items sold by resellers. In June, the company launched its “Shop Other Jeffs” advertising campaign during Amazon's Prime Day promotion, highlighting “non-billionaire makers” named Jeff, and it has also upgraded search on its website to deliver more personalized results.

The company says those efforts are starting to show results. Second-quarter sales rise 6.2% from a year earlier to $668.3 million, ahead of analysts' expectations of $649.1 million, according to LSEG, though Etsy posts an adjusted loss of 36 cents per share versus adjusted earnings of 25 cents a year earlier. Etsy says the comparison reflects the impact of its sale last June of musical instrument marketplace Reverb, while its broader portfolio reshaping continues after completing the sale of Depop to eBay for $1.2 billion last month.

In our earlier coverage of the debate over a “K-shaped” versus “C-shaped” U.S. economy, we examined claims that lower earners are seeing firmer wage gains and some easing pressures. We also noted that spending and housing data still show higher-income households outperforming, suggesting the income divide is softening only at the margins rather than truly closing.

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