Shopify Lays Off 10% Of Staff As E-Commerce Growth Sags
Slowing demand for online shopping is causing the e-commerce platform Shopify to lay off 10% of its staff.
The staff cuts are the result of Shopify overestimating the rate of e-commerce growth, according to company CEO Tobias Lutke, who announced(Opens in a new window) the layoffs in a public announcement.
Shopify initially saw skyrocketing demand due to the COVID-19 pandemic, which caused millions of Americans to work and study from home. The surge in demand prompted the company to take a bullish outlook on future of e-commerce in the US.
“And so, given what we saw, we placed another bet: We bet that the channel mix —the share of dollars that travel through e-commerce rather than physical retail— would permanently leap ahead by 5 or even 10 years,” Lutke wrote.
The bet caused the company to expand its operations. But since then, the e-commerce demand has sagged behind Shopify’s expectations.
“It’s now clear that bet didn’t pay off,” Lutke wrote. “What we see now is the mix reverting to roughly where pre-Covid data would have suggested it should be at this point. Still growing steadily, but it wasn’t a meaningful 5-year leap ahead.”
“Ultimately, placing this bet was my call to make and I got this wrong. Now, we have to adjust,” he added.
According to an investors filing(Opens in a new window), Shopify employed over 10,000 employees by the end of last year, up from 7,000 back in Dec. 2020. So Tuesday’s layoffs are expected to affect at least 1,000 staffers.
“Most of the impacted roles are in recruiting, support, and sales, and across the company we’re also eliminating over-specialized and duplicate roles, as well as some groups that were convenient to have but too far removed from building products,” Lutke
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