Business

Etsy scrambling back to basics

Etsy Scrambling to Get Back to Basics

When Etsy first arrived in 2005, the concept of selling homemade arts and crafts took on a high-tech approach that met with immediate acceptance from a worldwide audience. Evolving from a small startup that had just four employees on its payroll to a publicly-traded company a decade later showed that there was money to be made in this specific marketplace.

The problem is that ever since that 2015 IPO infused the company with plenty of capital, the influence of stockholders has had a negative effect on the original concept. Just prior to going public, Etsy made a dramatic shift in its business model by removing what had been an edict that anything sold had to be a handmade item.

That sort of philosophy had endeared the company to what became a loyal customer base. However, once that was removed, major manufacturers began flooding the site with cheaper knockoffs that effectively cut out what had been trusted suppliers of quality products. In addition, activist investors began pushing to take a cleaver to the budget by claiming that costs could be effectively cut.

Plenty of revenue continues to flow into the company, yet the lack of profits stands out to individuals whose only concern is maximizing their investment. To reduce the company budget, two rounds of layoffs have already been conducted, with the first excising 80 people on May 2 and the second eliminating 140 more jobs.

Those two financial haircuts accounted for 22 percent of the workforce. The first series of layoffs also resulted in the ouster of former CEO Chad Dickerson, whose replacement, Josh Silverman, will be doing battle with rival company, Handmade, which is backed by Amazon. The possibility of the sale to an entity such as Wal-Mart has also been a topic of conversation in the business world.

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