Shopify gives notice it’s laying off 10pc of workers ‘by the end of the day’

26 Jul 2022

Image: © Jerome/Stock.adobe.com

An expansion plan built on pandemic-driven growth in e-commerce has been shelved as Shopify drastically cuts back to focus on product.

In an email to staff today (26 July), Shopify co-founder and CEO Tobias Lütke stated: “Shopify has to go through a reduction in workforce that will see about 10pc [of its team] leave by the end of the day.”

The layoffs will mostly impact workers across recruitment, support and sales as the company whittles down the team to focus on building products.

Lütke added that the company will be “eliminating over-specialised and duplicate roles, as well as some groups that were convenient to have but too far removed from building products”.

The CEO said that his own email, which was published on the Shopify website, would be swiftly followed by emails directly to those affected, who would also be meeting with team leads.

During the pandemic, when people worldwide were restricting their movements, Shopify saw demand for its e-commerce platform skyrocket. In February 2021, when the company reported a 94pc year-on-year increase in quarterly revenue, it also noted that the sharp growth in e-commerce due to the pandemic would “likely resume a more normalised pace of growth”.

However, in his email today, Lütke blamed the layoffs on a mistaken bet that growth would permanently accelerate e-commerce’s triumph over physical retail by five to 10 years. Shopify underwent a period of expansion to match this expected growth.

“It’s now clear that bet didn’t pay off,” Lütke 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 five-year leap ahead.”

Shopify, which was a proponent of remote work long before it became a typical mode of working, announced a recruitment plan to bring in more than 2,000 engineers globally in 2021. At the time, Ireland represented Shopify’s largest base outside of its native Canada.

Those leaving Shopify today have been promised a “generous severance package” along with a number of extended benefits and supports, including interview coaching, a “kickstart allowance” to buy new computing equipment, and a free Shopify account for any who decide to become online retailers themselves.

Shopify is due to announce its latest financial results on Wednesday (27 July).

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Elaine Burke is the editor of Silicon Republic

editorial@siliconrepublic.com