Shopify lays off around 1,000 people amid e-commerce struggles

Shopify announced on Tuesday that it was laying off 10% of its staff as the e-commerce platform’s growth prospects — following a pandemic-driven boom — are not unfolding as officials had expected. the company.

The layoffs, around 1,000 employees, will take place on Tuesday and will mainly affect those working in recruiting, sales and support, CEO Tobias Lütke said in a company blog post. Publish. Lütke said Shopify is also “eliminating overly specialized and duplicate roles and some groups that were convenient to have but too far removed from product building.”

“Everyone will feel this news in their own way, but what is universally true is that it will be difficult for everyone,” he said.

Based in Ottawa, Canada, Shopify is an e-commerce service that allows merchants to quickly create and customize websites to sell products online. In addition to plan fees, Shopify partly makes its money by taking a percentage of customer transactions.

Lütke said growth was steady and predictable just before the coronavirus pandemic began. At the time, the company had about 10,000 employees and contractors, according to company documents. E-commerce has been given a big boost by the pandemic as retail stores have been forced to close and shoppers have shopped online. Lütke said he expects business to continue growing even after retail stores reopen and that he and other company officials are betting the company’s immediate future on that growth.

“It is now clear that the gamble did not pay off,” Lütke said in the blog post. “Now we have to adapt. As a result, we have to say goodbye to some of you today and I am deeply sorry for that.”


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Terminated employees will receive 16 weeks of severance pay and an additional week for each year they worked at Shopify. They will also see their internet service paid for a few more weeks and be able to keep home office furniture provided by Shopify, Lütke said in the post.

However, the layoffs don’t spell total disaster for Shopify. The business is much bigger and more profitable now than it was at the start of the pandemic, said Adam Crisafulli, market analyst at Vital Knowledge.

“It is expected to generate approximately $5.7 billion in revenue this year compared to $865 million in 2019,” Crisafulli said in a research note. “So while growth slows, revenue continues to rise and they are among the best-positioned companies in e-commerce after Amazon.”

In May, Shopify bought order tracking software company Deliverr Inc. for $2.1 billion. It has also rolled out new features in recent weeks, such as the ability for shoppers to purchase items directly from merchant posts on Twitter or YouTube.

Shopify announced its layoffs a day before the company released its second quarter results. The shares were down almost 15% in afternoon trading.

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