When an online shopping site cuts 11% of its staff two weeks before Christmas, you know something’s up. This should be the happiest time of the year for Etsy, an online marketplace that today was promising “Last-minute gifts at every price!” Instead, the firm joined a growing list of businesses laying people off in recent days—including Spotify last week and toy maker Hasbro on Monday. Tougher economic times caused by higher interest rates are likely hurting all these companies. Etsy has cited the impact of consumers’ belt-tightening, as well as competition from overseas-based online sellers such as Temu. And yet something doesn’t add up.
In a blog post, CEO Josh Silverman explained today’s layoffs by pointing to the fact that Etsy’s gross merchandise sales—the total amount of money spent on the site, a key measure of business health—“has remained essentially flat since 2021.” He noted that employee expenses have grown over the same period. Etsy’s management realized a “leaner, more agile team would enable us to…move bold and fast.” That’s a familiar refrain—we’ve heard similar comments from many tech company executives, particularly last year. And that’s why Silverman’s explanation is a little puzzling. Surely he knew last year and throughout this year that consumer spending on the platform wasn’t growing. Why did Etsy keep hiring? Could it be that executives believed their own upbeat proclamations about how well its business was doing?
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