Etsy is reorganizing behind-the-scenes, which includes another reduction of 15% to its global workforce.
The Brooklyn, N.Y.-based business counted approximately 1,000 employees at the end of 2016, and had previously announced a headcount reduction earlier this year. All in all, Etsy’s workforce will be cut by 22% this year, or approximately 230 people. Cuts were made across the organization with the intention of streamlining middle management and senior levels, according to Etsy. Many of reductions affected product management, marketing, and administrative roles.
Etsy’s new CEO Josh Silverman tells Fortune exclusively that these changes are about realigning resources around the “fewest, most impactful areas where we need to succeed” with a cleaner organizational structure, less bureaucracy, and more focus on growth. “While there are often talented people in those roles, it slows us down,” Silverman says.
Etsy said it expects to incur employee severance charges and other exit costs of between $6 million and $8.8 million related to the latest round of layoffs on top of the $6.5 million to $8 million of severance charges and other charges expected for the reductions announced in May.
Etsy is enduring a tumultuous period, and shares have fallen off by as much as 30% since its initial public offering two years ago. For the first quarter of 2017, the marketplace reported a loss of $421,000 after earning $1.2 million a year ago. One of its shareholders—Black-and-White Capital, which owns 2% of the company—then called for Etsy to explore a sale as well as separate the roles of chairman and CEO.
Black-and-White, according to Reuters at the time, said growth in Etsy’s gross merchandise sales (a.k.a. GMS, or the dollar value of items sold in its online marketplace) had slowed due to problems with its search algorithm.
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Chad Dickerson quickly stepped down as Etsy’s CEO, succeeded by board member Silverman. Fred Wilson, a director on Etsy’s board since 2007, assumed the chairmanship.
In his first interview since assuming the top job five weeks ago, Silverman tells Fortune that the restructuring is about doubling down around areas focused on creating the best buying experience on Etsy.com.
Etsy counted approximately 1.8 million active sellers and 29.7 million active buyers as of March 31, 2017—up from 1.6 million sellers and 25 million buyers the same quarter the year prior. Etsy is also seeing incremental but noticeable GMS growth both on mobile and internationally. Mobile GMS climbed to 51% of sales in Q1 2017 year-over-year, and international GMS grew from 30.3% to 32.1% over the same timeframe.
One recent project that might serve as an example of a distraction from Etsy’s core mission: Etsy Studio, a new wing of the digital marketplace introduced this past February, catering to craft suppliers and Do-It-Yourself (DIY) practitioners. The project aimed to woo customers into staying around longer through its own DIY tutorials developed in-house while enticing them to buy the products on the same page as the lesson.
Etsy stressed this market’s value when Studio debuted, highlighting the craft supply market is worth approximately $44 billion in the U.S. alone, according to a 2016 study from the Association of Creative Industries.
“I think the craft marketplace is a great marketplace for us,” Silverman says. “But the investment to create a new top-level domain is very significant, and we’ve only begun just to tap the core Etsy.com market. So we reallocated resources back to Etsy.com so it can achieve full potential.”
But it’s not the end of Etsy Studio or similar projects as Silverman says the company will reevaluate over the next several months if separate branches like Studio contribute to the brand.
