The decision will affect 74 employees based in Swindon, London and Liege in Belgium. Some of the staff will be kept on to facilitate the closure but most of them will lose their jobs later this month.
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The cash-strapped company has shed its loss-making European operations in a bid to concentrate on its fight for survival in the US. Earlier in December, the company had warned that sales were below expectations and that it would only have enough funds to continue operating until March.
eToys, which is one of the largest online toysellers in the UK, is the latest in a long line of US-based dotcoms which have been forced to either withdraw from the European market or to shelve expansion plans due to poor sales and shortage of cash.
Etoys will be reducing its stock by at least 50% in the run-up to the closure of its UK arm in a bid to raise revenue.