Etsy chief Josh Silverman told staff on Wednesday that the online marketplace operator was laying off more than 200 employees.
Silverman elaborated on the decision in an email to staff, which has been published on the company's website.
The layoffs, which Silverman said would affect approximately 225 team members, are coming at a challenging time for the online marketplace, as it fends off competition from rivals like Shein and Temu.
"We are operating in a very challenging macro and competitive environment, and GMS has remained essentially flat since 2021," Silverman wrote in his email, using the acronym for gross merchandising sales.
"At the same time, employee expenses have grown, even as we have introduced significant cost-cutting measures and adjusted or paused hiring plans," Silverman said. "This is ultimately not a sustainable trajectory and we must change it."
The company also announced the departure of its chief marketing officer, Ryan Scott. Scott, whose responsibilities will be absorbed by COO Raina Moskowitz, joined Etsy in April 2019.
Silverman acknowledged the bad timing of the announcements, given that they were "sharing this news amid the winter holidays."
The Etsy chief said that "all impacted Admin will remain on Etsy payroll until at least January 2, 2024" even though their last working day would have been on Wednesday.
In addition, Etsy said it is offering laid-off staff an "enhanced severance package," which includes severance equivalent to 16 weeks of base pay, with an additional one week for each full year of service. Staff would still receive bonus payments for the year.
Etsy isn't the only company that has turned to downsizing to manage costs.
Last week, streaming giant Spotify laid off 17% of its staff, over what its CEO Daniel Ek said was a difficult economic environment.
"Economic growth has slowed dramatically and capital has become more expensive. Spotify is not an exception to these realities," Ek wrote in a blog post.
"Today, we still have too many people dedicated to supporting work and even doing work around the work rather than contributing to opportunities with real impact," Ek said, adding that Spotify needed to become "relentlessly resourceful."
Representatives for Etsy did not immediately respond to a request for comment from Business Insider sent outside regular business hours.
