Why does this have anything to do with it's status as a B-corp, rather than other market pressures on Etsy specifically, including Amazon's efforts in the space?
Etsy is a test, in some ways, to see if the b corp model can fit in a large, publicly traded company. The hope was that the b corp model would break out of its niche, and be applicable more globally.
Etsy's problem is not that it is a B Corp, it's that it loses money and has slowing growth (which means it will likely lose a lot more money!). If they had great numbers it could be run as a sketchy holding company in the Cayman islands and still attract investors.