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Amid e-commerce struggles, Shopify lays off 1,000 employees

On Tuesday, giant online store Shopify announced that they would lay off 1,000 employees. The online platform has not been able to stand in the same position as it used to be and failed to envision the company will grow post-pandemic, thus it laid off 10% of its global employee.

Tobi Lutke, CEO, of Shopify, has said in a statement that the company will go through a drop in its workforce of about 10%.

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“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,” he informed.

The company was sending emails to those affected and they will “have a meeting with a lead in their team”.

Lutke said that before the pandemic, e-commerce growth had been steady and predictable.

“Was this surge to be a temporary effect or a new normal? 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”, he mentioned.

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The company’s workforce increased from 1,900 in 2016 to 10,000 in 2021 so that it can meet the required company growth.

However, Lutke said that it is now clear that the bet didn’t pay off.

“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,” he informed.

Those affected in the layoff will get 16 weeks of severance pay, plus an additional week for every year of tenure at Shopify.

“We’ll remove any equity cliff, and extend any medical benefits. Knowing that Shopify is just one stop on a career journey, we’d also like to help set everyone up for success as they take their next steps,” said the CEO., adding that the company will offer outplacement services with access to career coaching, interviewing support, resume crafting, etc.

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