A sign advertising the online seller Etsy Inc. is seen outside the Nasdaq market site in Times Square following Etsy's IPO in New York
Etsy, founded in 2005, has seen significant growth over the years, becoming a go-to platform for individuals seeking unique, handmade, and vintage items. Reuters

Etsy, the e-commerce platform specialising in handmade and vintage items, has confirmed the layoff of 225 employees due to what CEO Josh Silverman described as "essentially flat" sales.

The staff received the disheartening news through a live stream on Wednesday, with Silverman acknowledging the less-than-ideal timing during the bustling holiday season.

The e-commerce giant has announced a workforce reduction of approximately 11 per cent, citing the need for a "leaner, more agile" team to bolster growth.

Silverman attributed the move to the sustained stagnation of gross merchandise sales on Etsy over the past two years.

The announcement underscores the challenges faced by Etsy, which has become a popular marketplace for independent sellers and artisans.

Despite the platform's reputation for unique and personalised offerings, it appears that it has encountered headwinds resulting in a need for strategic adjustments.

In an internal email, he wrote: "In the meantime, personnel costs have increased, despite the implementation of substantial cost-cutting initiatives and alterations or pauses in our hiring plans. This trajectory is ultimately unsustainable, and we need to make a change."

Acknowledging the unfortunate timing of the decision during the holiday season, Silverman assured that all affected employees would remain on Etsy's payroll until "at least" 2 January.

He emphasised the company's commitment to ensuring that those impacted receive appropriate support during this transition.

This development follows Hasbro, the toy manufacturer, announcing two weeks before Christmas that it would trim 1,100 employees due to lacklustre sales.

Mattel also saw a considerable decrease in sales as the company's shares were down about 12% in extended trading, having also missed fourth-quarter revenue and profit estimates.

Etsy, founded in 2005, has seen significant growth over the years, becoming a go-to platform for individuals seeking unique, handmade, and vintage items.

The company's commitment to supporting independent sellers has set it apart in the competitive online marketplace landscape.

However, as the e-commerce sector evolves, companies like Etsy face the ongoing challenge of adapting to changing consumer preferences and market dynamics.

The announcement of layoffs has prompted discussions about the broader implications for e-commerce platforms in a competitive and dynamic market.

Industry analysts suggest that Etsy's move may be a strategic response to the shifting landscape of online retail, emphasising the need for adaptability and resilience in the face of evolving consumer behaviours.

Etsy's shares experienced a 2.2 per cent decline as it unveiled its restructuring plans. Notable departures include Ryan Scott, the chief marketing officer, resulting in Etsy's headcount decreasing to 1,770 people.

As part of the restructuring, the company anticipates costs ranging between $25 million and $30 million for severance payments, employee benefits, and associated expenses, as disclosed in regulatory filings.

In an effort to boost morale among retained staff, Silverman, describing Wednesday as "one of the hardest [days] we've experienced at Etsy", sought to inspire confidence.

He conveyed optimism, stating: "The waters may be rough right now, but there's no other ship I'd rather be on, and no other crew I'd rather be with, as we weather this cycle and emerge even stronger on the other side."

The affected employees encompass various departments within Etsy, reflecting a broad-scale restructuring initiative.

The layoffs are expected to streamline operations, allowing the company to focus on key areas that drive value and innovation within the e-commerce space.

Etsy has assured its remaining employees that the company remains dedicated to its mission of providing a platform for creative entrepreneurs.

As news of the layoffs circulates, stakeholders, including sellers and customers, are keenly observing how Etsy's restructuring will impact the platform's offerings, services, and overall user experience.

The company's ability to navigate these changes while maintaining its commitment to creativity and individuality will likely shape its trajectory in the competitive e-commerce landscape moving forward.