Shopify Lays Off 10% Of Its Staff

Canadian multinational e-commerce company, Shopify, has announced that it has laid off about 10% of its staff.

The company has more than 10,000 employees.

This was announced in a company newsletter signed by the CEO, Tobias Lutke, on Tuesday, where he explained that the company will have to eliminate over-specialized roles and duplicate roles among others.

“Shopify has to go through a reduction in workforce that will see about 10% leave by the end of the day. 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.

“Emails will go out in the next few minutes that will clarify if your role was affected; those impacted will then have a meeting with a lead in their team,” he said.

The CEO attributed the massive layoff to a mistake he made in yearly projections for ecommerce growth after it grew exponentially during the pandemic in 2019. Following the growth, the company wrongly bet that they would need to expand to keep up.

“Shopify has always been a company that makes the big strategic bets our merchants demand of us – this is how we succeed. Before the pandemic, ecommerce growth had been steady and predictable.

“…. Given what we saw, we placed another bet: We bet that the channel mix – the share of dollars that travel through ecommerce rather than physical retail – would permanently leap ahead by 5 or even 10 years. We couldn’t know for sure at the time, but we knew that if there was a chance that this was true, we would have to expand the company to match.

“It’s now clear that 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. Our market share in ecommerce is a lot higher than it is in retail, so this matters. Ultimately, placing this bet was my call to make and I got this wrong. Now, we have to adjust. As a consequence, we have to say goodbye to some of you today and I’m deeply sorry for that,” he said.

Lutke expressed his gratitude to them for their time with Shopify and added that those losing their jobs would receive a 16 week severance pay as well as other severance benefits.

“Those affected today 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. We’ll offer outplacement services with access to career coaching, interviewing support, resume crafting, etc.

“And because every path taken requires some basics, we’ll continue to pay internet costs for the period, the home office furniture we provided is yours now, and while we’ll need to recover our hardware, we’re offering a kickstart allowance that can be used to buy new laptops. If you want, you can add your email addresses to a list that we will share with other companies looking for talent. And for those who find themselves drawn to the path of entrepreneurship, Shopify also covers a free account for everyone,” he said.

Shopify as a platform offers numerous services. It is a platform for online stores and retail point-of-sale (POS) systems. It also offers online retailers a number of services like payments, marketing, shipping and customer engagement tools.

As of May 2021, Shopify reported that it had more than 1.7 million businesses in about 175 countries making use of its platform.

It is publicly traded on the Canadian stock exchange and it is currently among the top 20 largest publicly traded companies in Canada. Its total revenue for last year was $4.600 billion.

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