Another week, another collection of contenders hoping to sizzle. Some — like PayPal, Amazon and Lyft — managed to do so. Others — like grocery stores and the legalized cannabis industry — had a slightly more fizzly feel about them.
But the most Fizzly feeling of all this week came out of Etsy, which six months into the year has cut 25 percent of its workforce.
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PayPal and Venmo Go Instant: PayPal announced that soon, Venmo and PayPal users will be able to send money transfers via its mobile app in an instant to anyone they want — and have the receiver access and use those funds instantly. The deal leverages PayPal’s deal with Visa and Mastercard a year ago and, according to COO Bill Ready, is the firm’s latest step in becoming “one of the best ways for issuers to engage their customers and drive engagement and revenue for them and for the ecosystem.”
Amazon Dresses Up Prime: Jeff Bezos famously said his goal was to make Amazon Prime so fantastic that signing on is simply the “responsible” thing for any consumer. And this week, Amazon gave Prime its latest makeover with the launch of Prime Wardrobe, which, coincidentally will make it easier for Amazon’s customers to give themselves a makeover. Prime Wardrobe will allow consumers to fill a box with various pieces of apparel at no upfront charge. After seven days, customers decide what they will keep and pay for, and the rest goes back free of charge. Plus, the service itself is free of charge as well — provided one has already paid the annual Amazon Prime membership fee. Oh, and to avoid those costly returns and make sure that people keep what they order, Amazon will offer a discount on items purchased at the end of that seven day window.
Lyft Gets A Lift: Uber, as most everyone knows at this point, has fallen into some difficult times — capped off most recently by the resignation of its high-profile CEO. As it turns out, Uber’s latest losses have been long since surpassed by rival Lyft’s good luck of late. The service has added 150 new cities this year and snapped up $600m in fundraising in April. Revenue was $708m — one-ninth of Uber’s. But it has slowly gained market share as Uber has lost it — Uber’s market share went from 84 percent to 77 percent over the last few months. Lyft, on the other hand, reports its bookings have increased sharply. April had booking up 135 percent year over year.
Prepaid Card Rules: After what was a long process, the CFPB managed to put some new prepaid card regs on the board at the end of last year. It appears they are already rethinking them in response to industry complaints about consumer authentication in fraud cases and how the rules will affect various mobile wallet operators. As of yet, the CFPB has not announced whether they are rethinking the most controversial part of the rule change that moves to classify prepaid cards as more similar to credit cards than debit cards. Maybe this fizzle will turn into a sizzle for the industry.
Grocery Stocks: As is often the case, Amazon’s sizzle — the big Whole Foods buy, in particular — is physical retail’s fizzle. Amazon and Whole Foods’ stock went up. Kroger, Supervalu, Weis, Ahold, Tesco, Sainsbury, Carrefour, Casino Group and Metro Group were all grocery chains that took a drubbing. Walmart and Target also saw their numbers plunge — by 7 percent and 10 percent, respectively.
Cannabis Commerce: Looks like financial institutions are getting worried about the rumored coming crackdown on legalized marijuana sales. PNC Bank has closed the Marijuana Policy Project’s accounts after over two decades, noting continuing with the accounts is “too risky.” The MPP, incidentally, does not deal in the sale of pot — they are a non-profit advocacy group — but they take donations from those who do trade in cannabis.
Fizzle of the Week: Etsy
When Amazon launched its handmade marketplace in October of 2015, it seemed almost like a bit of a sneak attack on Team Etsy. There had long been rumors that Amazon might make a play for the crafty commerce audience — but when Handmade actually appeared, Amazon literally launched it overnight.
Almost as soon as that launched, the entire ecosystem more or less had the same thought — it is not a good day to be Etsy, Amazon has come for them after all.
“Amazon has all the capabilities they need to make their program a big success. They have all the marketing power in the world, and they’re already so global,” Dani Marie, chief executive of Handmade Seller magazine and author of “The Handmade Entrepreneur,” noted at the time.
Still, for its part, the team at Etsy tried to remain focused and upbeat — even as the announcement sent its stock prices tumbling.
“We believe we are the best platform for creative entrepreneurs, empowering them to succeed on their own terms,” Chad Dickerson, Etsy’s former chief executive, said in a company statement at the time. “Etsy has a decade of experience understanding the needs of artists and sellers and supporting them in ways that no other marketplace can.”
And while they should be commended for their positive attitude, things have been tough at Etsy in the intervening year and half, as the site’s stock prices have continued to fluctuate and its sellers are increasingly lured by the rival team at Amazon.
It’s hard not to look when they bring oh-so-many buyers.
Which in turn, has caused conflict within the firm’s leadership that lead Dickerson and Etsy to part ways about a month ago after running into conflict with activist investor group Black-and-White Capital LP. The group would like to see Etsy fix search functionality and other features on its site in order to increase repeat customers and improve retail sales figures. They are also pushing to pursue other strategic alternatives including a possible sale.
“The Board decided that it was time for new leadership to take Etsy forward and I support that decision…I have the greatest degree of confidence in the long-term growth opportunities for Etsy under Josh’s leadership. I wish the company and the community the greatest success and look forward to supporting the global community of Etsy sellers as a regular buyer after the transition.”
Board member Josh Silverman was named to fill the role. Silverman is a seasoned CEO — having previously held chief executive jobs at Skype and Evite.
Experienced or not, however, Etsy still continues to struggle with costs and its share price. This week that persistent weakness netted the announcement that 15 percent of its workforce is being laid off.
And no, you aren’t experiencing deja vu — this is the eCommerce firm’s second big round of layoffs in two months.
According to a statement put out by the firm, 140 employees will be on the chopping block — combined with a different round of job cuts announced in May, 230 total positions have been eliminated. That is a bit under a quarter of Etsy’s total workforce at the beginning of 2016.
“In order to drive focus, we took decisive steps to double down on the fewest, highest-impact initiatives in our core marketplace while de-prioritizing other projects and streamlining our resources. Parting ways with our colleagues is not easy and I am thankful for their contributions. We are moving forward with a more nimble structure that supports our current business needs and allows for faster execution so we can better serve creative entrepreneurs around the world,” noted Etsy CEO Josh Silverman in a statement to media.
The biggest effect of the layoffs will be felt in Etsy’s headquarters in Brooklyn, where the marketing and general administrative departments were hit the hardest.
The layoffs are expected to incur about $6 million to $8.8 million in exits costs (things like employee severance packages). That will come on top of the $6.5 million to $8 million in exit costs Etsy netted due to its May layoffs.
Will the costs leave Etsy a leaner, meaner fighting machine ready to take on the Empire? Hard to say — but so far, their efforts have not been an overwhelming success.
But, perhaps Etsy can at least find comfort with its brick-and-mortar brethren, who are also wondering when those other shoes might drop.