Etsy Eliminates CMO Position in Response to Sluggish Sales, Reducing Staff by 11%

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Etsy has announced a workforce reduction, with 225 employees being laid off, representing approximately 11% of the company's total workforce. In addition, the company is streamlining its marketing and operations executive functions into a single role.

The decision to restructure comes after CEO Josh Silverman revealed that sales on the online marketplace have stagnated for the past two years. As part of the restructuring, the company's long-time Chief Marketing Officer, Ryan Scott, will be departing. Scott had been with Etsy for five years and was responsible for raising awareness of the platform's products.

Silverman expressed gratitude to Scott for bringing in "tens of millions" of new customers to Etsy and for playing a key role in the brand's global transformation during a critical growth period.

However, despite this, the CMO position will be eliminated, and marketing operations will now be handled by Raina Moskowitz, the current chief operating officer. In an internal memo to staff, Silverman explained that in her new role as Etsy's chief operating and marketing officer, Raina will focus on driving global growth by increasing brand consideration and enhancing customer trust and loyalty.

Moscowitz previously served as the vice president of customer marketing at American Express from April 2016 to April 2018.

Silverman attributed the need for layoffs to significant economic challenges, which will result in costs of up to £23.7 million ($30 million) in redundancy pay and associated benefits. He pointed out that despite the Etsy marketplace being more than double its pre-pandemic size, sales have "essentially remained flat since 2021".

The company is prioritizing "Vital Few" projects aimed at revitalizing growth and sales for sellers on its platform. In a memo, Silverman acknowledged that Etsy's market share is still small but expressed confidence that maintaining a human touch in commerce would lead to growth with the right team structure. It was explained that an assessment was conducted to match each team at Etsy with growth priorities and to review every team member, from senior levels downward, to ensure alignment with current and future business needs.

During Q3 earnings released in November, the company reported a 4% year-over-year increase in active buyers, reaching an "all-time high of 92 million." It also reactivated six million previous customers, a 19% increase from the prior year, and gained six million new customers. With just under seven million sellers on its platform, the company connects creators of personalized or vintage gifts with potential buyers.

In the same results, the company announced quarterly revenue of £502m ($636.3m), a 7% year-on-year increase. The revenue growth was attributed to its advertising platform Etsy Ads and payments revenue.

Despite the slowing revenue growth post-pandemic, Etsy had to pause its hiring plans, leading to the recent redundancies as part of their efforts to adjust after the pandemic boom. CEO Silverman noted that despite significant cost-cutting measures and paused hiring, employee expenses have continued to grow, creating an unsustainable trajectory that needs to be addressed.