Once again, the announcement of layoffs at Etsy comes as no surprise, as the company faces challenges of junkification and intense competition, creating a tough path ahead.
Just as we previously discussed in regards to Spotify’s layoffs making logical sense, we also see the reasoning behind Etsy’s decision to lay off 11% of its workforce.
This is not to say that we are insensitive to the employees affected by these layoffs, nor are we making excuses for the circumstances that have led the NASDAQ-listed marketplace to this point and the potential ways it could have been avoided. Rather, we are simply acknowledging that these developments were somewhat inevitable.
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The company had already given insight into its fourth-quarter forecast, indicating to investors that they should expect a decrease in gross merchandise sales of 1-2% compared to the same quarter last year, with a revenue increase of 2-3%, according to CNBC.
But beyond the numerical figures, Etsy’s challenge lies in the quality of its operations.
The problem is not how to get bigger, it’s how to stay small.
This quote from Etsy’s CEO Josh Silverman highlights the core issue at hand. With the rise of mass-produced goods and big-name retailers infiltrating the marketplace, Etsy is struggling to maintain its original ethos of handmade, unique products.
Additionally, the rise of Amazon Handmade has presented stiff competition for Etsy, adding to the company’s troubles.
The Bottom Line
While layoffs are never an easy decision, especially during the holiday season, it seems like Etsy had been preparing for this road ahead. As the company continues to navigate the ever-changing marketplace, it will be interesting to see how they adapt and overcome the obstacles in their path.
